South Carolina Postsecondary School or Institution 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 South Carolina postsecondary school or institution bond needs.
What Are South Carolina Postsecondary School or Institution Bonds?
South Carolina postsecondary school or institution bonds provide protection against financial loss when a licensed institution closes down without living up to the terms of its contract with students and without issuing tuition refunds or making other accommodations to deliver the educational services for which tuition payments have already been collected by the school.
Who Needs Them?
The South Carolina Commission on Higher Education requires a postsecondary school or institution to furnish a surety bond as a condition of licensure. The bonding requirement applies to both in-state and out-of-state institutions offering educational programs to residents of the state of South Carolina. The minimum required bond amount for out-of-state institutions is $20,000.
For in-state institutions, the minimum bond amount is based on the previous year's annual gross tuition income. For every $100,000 in tuition income, the minimum bond amount increases by $10,000. The minimum amount is $10,000. For schools with tuition income in excess of $301,000, the minimum bond amount is 10%, calculated at $100,000 intervals.
The bond must be purchased in the name of the school’s owner. There must be an active bond in place at all times to prevent license suspension or revocation.
How Do They Work?
There are three parties to a South Carolina post secondary school or institution bond. The South Carolina Commission on Postsecondary Education is the obligee requiring the bond, the school owner is the principal purchasing the bond, and the bond’s guarantor is the surety. Each party has different responsibilities under the terms of the legally binding surety bond contract.
When a school closes its doors for good without satisfying the terms of its “fee for services” contract with students, the obligee can file a claim against the school’s bond on behalf of those whose prepaid tuition was not refunded by the school. The obligee will then use the proceeds from the claim to issue refunds of unearned tuition.
How Are Claims Paid?
Although the principal is legally obligated to pay all valid claims, things work a little differently in practice than you might expect. Because the surety has guaranteed the payment of claims by the principal, the usual practice is for the surety to pay the claim in advance, on behalf of the principal, and then be reimbursed by the principal. The surety is indemnified against actual responsibility for claims and will take legal action against a principal who fails to repay that debt.
How Much Do They Cost?
The annual premium cost of a South Carolina postsecondary school or institution bond is a small percentage of the required bond amount. That percentage is the premium rate, which is set through an underwriting process that focuses on the risk of the surety not being repaid by the principal for claims paid on the principal’s behalf. The underwriters use the principal's personal credit score as a proxy for risk. A high credit score indicates a low risk to the surety and therefore deserves a low premium rate. Someone with poor credit, however, presents a much higher risk to the surety and will pay a higher premium rate.
The average well-qualified principal will pay a premium rate that’s in the range of one to three percent.
Get a Quote
Our surety bond professionals will get you the South Carolina postsecondary school or institution bond you need at a competitive rate.