Nebraska Private Postsecondary Career School Agent Bond
Surety Bond Professionals is a family owned and operated bonding agency with over 30 years of experience. With access to a broad range of surety markets, our expert agents are ready to assist with all of your Nebraska Private Postsecondary Career School Agent bond needs.
What Are Nebraska Private Postsecondary Career School Agent Bonds?
It’s common for private postsecondary career schools to employ agents to recruit new students. Their recruitment efforts must comply with the Nebraska Private Postsecondary Career Schools Act. Violations, such as misrepresenting what students’ tuition and fees entitle them to, can result in an agent being charged with a Class II misdemeanor.
Who Needs Them?
Agents who recruit students for postsecondary career schools in Nebraska or represent them in some other manner must have a permit from the Nebraska Department of Education authorizing them to do so. A key requirement for obtaining such a permit is to purchase a surety bond in the amount of $5,000.
There is a blanket bonding option for schools employing multiple agents, in the amount of $5,000 per covered agent.
How Do They Work?
A Nebraska private postsecondary career school agent bond is a legally binding contract among three parties:
- The Nebraska Department of Education (the “obligee” requiring the bond,
- The career school agent (the “principal” required to purchase the bond), and
- The bond’s guarantor (the “surety”).
If the principal commits a violation that causes financial harm to a student who has paid tuition and signed a student contract, the student (or parent or sponsor) can file a claim for damages against the agent’s bond.
How Are Claims Paid?
The principal is legally obligated to pay valid claims, but the surety has guaranteed that they will be paid. It’s up to the surety to determine whether a claim is valid and must be paid.
The normal practice is for the surety to pay a valid claim initially, and then be reimbursed by the principal. In making that initial payment, the surety is extending credit to the principal, creating a debt that the principal must, by law, repay. Not repaying the surety can expose the principal to legal action by the surety to recover the claim amount, plus potential court costs and legal fees.
How Much Do They Cost?
The annual premium for a Nebraska private postsecondary career school agent bond is calculated by multiplying the $5,000 bond amount by the premium rate assigned to the principal by the surety through underwriting. The underwriters assess the risk of the surety not being repaid by the principal for claims paid on the principal’s behalf, relying largely on the principal’s personal credit score to measure that risk.
A principal with a good credit score is not likely to ignore a debt to the surety, and for that, low risk is rewarded with a low premium rate. On the other hand, someone with a low credit score would be considered a high risk and would be assigned a higher premium rate.
The average qualified principal will pay a premium rate in the 1% to 3% range.
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Our surety bond professionals will get you the Nebraska private postsecondary career school agent bond you need at a competitive rate.