Ohio Private School Certificate of Registration 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 Ohio private school certificate of registration bond needs.
What Are Ohio Private School Certificates of Registration Bonds?
Ohio private school certificate of registration bonds are a form of license and permit surety bond that holds private educational institutions responsible for complying with all applicable regulations. They specifically obligate career colleges and schools to operate in accordance with Ohio Revised Code Chapter 3332-1 and the terms of their certificate of registration.
Ohio private school certificate of registration bonds provides financial protection for students (or their sponsors) who have paid tuition with the expectation of receiving the services described in the student contract. Not receiving the services to which their tuition payments entitle them can result in claims against their school’s bond.
The Ohio State Board of Career Colleges and Schools was created to ensure that the development and operation of educational institutions in Ohio are up to State standards. This is done with the help of the School Registration Bond, which is required by the Ohio State Board of Career Colleges and Schools to be granted a certificate of registration.
Who Needs Them?
Ohio career colleges and schools (and schools based in other states that solicit Ohio students) must go through a registration process that results in a certificate of registration issued by the Ohio State Board of Career Colleges and Schools (SBCCS). School owners must purchase a certificate of registration bond as a mandatory step in the registration process. (Certain types of schools are exempt from the registration and bonding requirement.)
SBSS (the “obligee” requiring the bond) establishes the required bond amount for each school owner (the bond’s “principal”) based on revenue from tuition and level of financial responsibility. The minimum bond amount is $10,000.
How Do They Work?
Anyone who has incurred monetary damages because of the principal’s regulatory violation and cannot resolve the matter with the school should file a complaint with SBCCS. After an investigation that shows the complaint to be justified, SBCCS will reimburse the student out of the Student Tuition Recovery Fund and then file a claim against the school’s certificate of registration bond to recover the funds paid to the student.
How Are Claims Paid?
There is a third party to an Ohio private school certificate of registration bond—the “surety” who guarantees the payment of bond claims. The legal obligation to pay valid claims belongs entirely to the principal. But, having guaranteed their payment, the surety will pay the obligee’s claim initially, then be reimbursed by the principal. Not repaying the surety for the debt created by the surety’s payment of the obligee’s claim can result in the surety taking legal action against the principal.
How Much Do They Cost?
Ohio private school certificate of registration bonds are sold for an annual premium that is the product of multiplying the bond amount and the premium rate assigned by the surety on a case-by-case basis. The premium rate is based on how risky the underwriters believe it is for the surety to pay claims on behalf of the principal. The main risk, of course, is not being repaid by the principal.
The principal’s personal credit score is the primary measure of that risk. A principal with a high credit score poses little risk to the surety and deserves a low premium rate. On the other hand, a principal with poor credit is a much greater risk to the surety and is assigned a higher premium rate.
The average well-qualified principal will pay a premium rate that’s in the range of one to three percent.
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