An Arizona Proprietary School Bond is a type of surety bond required by the Arizona State Board for Private Postsecondary Education. It's needed for owners or operators of private postsecondary educational institutions (typically for-profit institutions) operating within the state.
The purpose of this bond is to ensure that the school will operate in compliance with the rules and regulations set forth by the state and to provide financial protection for students against potential misconduct or failure of the school to fulfill its obligations. If a school engages in unlawful activities or goes out of business without providing the instruction that students have paid for, a claim can be made against this bond.
Here's a simple breakdown:
Purpose: The bond acts as a financial guarantee to protect students from fraud, misrepresentation, breach of contract, or other wrongful acts by the school.
Bond Amount: The bond amount (or penal sum) required varies and is typically based on factors like the school's tuition and fee amounts. The state will specify the required bond amount for each school.
1. Cost: The actual cost of purchasing the bond (known as the bond premium) is a small percentage of the bond amount, and it varies based on the school's financial strength, creditworthiness, and the surety provider's assessment.
2. Validity: While bonds are usually valid for one year, they often require annual renewals as long as the school remains operational.
3. Claims: If a school doesn't adhere to the state's regulations or fails to fulfill its promises to students, a claim can be made against the bond. If a claim is validated, the surety company will pay out up to the bond's full amount. However, the school is then obligated to reimburse the surety company.
Obtaining the Bond: To get this bond, a school would approach a surety bond provider or agency, undergo a review (which includes assessing financial statements, business history, and creditworthiness), and then, if approved, pay the bond premium to purchase the bond.
To stay compliant with state regulations, proprietary schools in Arizona must maintain this bond as part of their licensing or operational requirements. If you're considering starting or operating such a school in Arizona, it's a good idea to check with the Arizona State Board for Private Postsecondary Education for the most recent bond requirements and other licensure prerequisites.
WHEREAS, Principal shall submit an application to the Arizona State Board for Private
Postsecondary Education (“Board”) for a license under Arizona Revised Statutes, Title 32, Chapter 30 and
WHEREAS, a bond in this form must accompany such application,
NOW, THEREFORE, upon the granting of a license to Principal by the aforementioned Board,
Principal shall faithfully comply with all the provisions of law, Arizona and federal, required of Principal
and all such provisions as may be hereafter imposed upon Principal by law, and Principal shall refrain from
injuring or damaging any person by reason of any unlawful act, including, but not limited to, any breach of
contract, and any failure by Principal to so comply with the law or to so refrain from injuring or damaging
any person shall impose upon the Principal and surety joint and several liability to any person who suffers
loss by reason thereof.
Principal shall not cancel this bond for the period of time for which the license to Principal is
issued and that this bond shall inure to the benefit of any person who suffers loss by reason of any unlawful
act of Principal, including, but not limited to, any breach of contract by Principal. The Surety reserves the
right to cancel the bond upon sixty days written notice to Principal and the Board.
No suit may be commenced on this bond after the expiration of three years following the
commission of the act on which the suit is based except that time for purposes of claims for fraud shall be
measured as provided in A.R.S. 12-543.