West Virginia Private School 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 West Virginia private school bond needs.
What Are West Virginia Private School Bonds?
The West Virginia Council for Community and Technical College Education requires certain correspondence, business, occupational, and trade schools operating in the state of West Virginia to obtain a permit. A West Virginia private school bond is a type of license and permit bond that provides financial protection for those who have paid tuition with the expectation of receiving certain educational services.
If students do not receive the educational services they are entitled to, they (or their parents or sponsors) can file a claim against the school’s bond to recover unearned tuition. One of the main reasons for the bonding requirement is the possibility that a private school might shut down for good without teaching out their last class or issuing refunds of unearned tuition.
Who Needs Them?
Every proprietary school with physical premises in the state of West Virginia that is required to obtain a permit from the West Virginia Council for Community and Technical College Education is also required to furnish a surety bond. The amount of the bond is determined by the Council, the bonds obligee, with a minimum amount of $50,000 and a maximum of 100,000.
How Do They Work?
The state of Washington is the “obligee” requiring the bond. The institution is the “principal” purchasing the bond. And the company guaranteeing the bond, specifically guaranteeing the payment of claims, is the “surety.” In guaranteeing the bond, the surety agrees to extend credit to the principal up to the required bond amount, to ensure that valid claims are paid.
When a complaint is filed with the Council against an institution—for example, if a school ceases operating before completing the current term for which tuition has been paid—the Council will try to notify all potential claimants.
How Are Claims Paid?
In some cases, the Council may negotiate a compromise settlement resulting in release and discharge of the school’s degree-granting institution’s surety bond. If necessary, the Council may file a claim on the bond on behalf of all claimants—a claim that the surety has guaranteed to pay on the principal’s behalf. Within ten days of the claim being paid, the principal must repay the surety and post a new bond.
How Much Do They Cost?
The annual premium for a Washington degree-granting institutions bond is the product of multiplying the required bond amount by the premium rate established by the surety on a case-by-case basis. The primary factor in setting the premium rate is the risk that the surety is accepting in agreeing to guarantee the principal’s payment of claims.
The risk level is assessed by the underwriters based largely on the principal’s personal credit score. A high credit score is evidence that the principal has been fiscally responsible in the past and therefore is likely to repay the surety as required. That should result in a low premium rate. Conversely, a low credit score indicates a higher risk level which demands 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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