School Bond

School Bond

School Bond Guide: Cost & Requirements


A school bond is a type of surety bond required by private organizations that offer educational services. Often needed by private schools, a school surety bond is part of the licensing process to ensure that the educational institutions follow all rules and regulations. The cost of a school bond varies by location and the type of school, with premiums as low as $100.

In this school bond guide, you will learn:

    • Definition and Example
    • How It Works
    • Types of School Bonds
    • How Much It Costs
    • Requirements 
    • Where to Find & How to Apply
    • Frequently Asked Questions

    Private School Bond Definition and Example

    A school bond is a type of license and permit surety bond that protects the students (and parents) against bad practices, like being scammed out of their tuition. Private entities that offer educational services, such as private schools, are typically required to obtain a bond before accepting students. 

    In this article, we’ll focus primarily on private schools but there are surety bonds required by other educational institutions, like driving schools.

    In a school bond, there are three parties involved:

      • Principal: The party that needs the bond (you)
      • Obligee: The party that requires you to obtain the bond (typically a governing agency, such as the Department of Education)
      • Surety: The company that issues the surety bond and guarantees the obligee that you comply with all regulations

      What is an example of a school bond?

      Let’s say a parent pays tuition to send their child to a private school. However, the school closed before the school year started and did not refund the parents the cost of their child’s tuition. The parents can file a claim against the bond to be reimbursed for the paid tuition. The surety reviews the claim and approves it, reimbursing the parents for the full cost of tuition.

      How Does a School Bond Work?

      Since private schools don’t receive public funding (taxpayer money) the same way public schools do, many of them rely on student tuition to remain operational. The surety bond ensures that the school delivers services, as promised, and complies with all rules and regulations. 

      Since poor fiscal management and unethical behavior is always a possibility, a private school bond offers parents some protections. The bond is especially useful in assisting parents with reimbursement should the educational institution shut down for any reason (as shown in our earlier example).

      Before purchasing a school bond, you’ll need to familiarize yourself with the following terms:

        • Amount: The highest amount a party can be reimbursed when filing a claim. The required amount varies by state and the type of school.
        • Premium: The cost of obtaining a school bond — usually priced as a percentage of the required amount.
        • Term: How long the bond lasts until it needs to be renewed.

        What happens when a claim is filed?

        When a claim is filed, the surety will investigate any assertions the claimant made about the school. If the claim is confirmed to be valid, then the surety will reimburse the claimant for any losses and damages. 

        However, the obligee — that’s you — is still financially liable for any approved claims. Therefore, the school will need to repay the surety however much they paid to settle the claim.

        Types of Private School Bonds

        In addition to private school bonds, other types of educational institutions need surety bonds. Common types of schools that require surety bonds include:

          • Driving school bonds
          • Driver violator school bonds
          • Occupational school bonds
          • Business and trade school bonds
          • Vocational or technical school bonds
          • Proprietary school bonds

          How Much Does a School Bond Cost?

          A surety bond for a private school can cost between 1% and 4% of the required bond amount. As mentioned, bond amount requirements can vary by state. Nevada, for example, requires private schools to be bonded for at least $5,000. The premium can cost anywhere from $100 and $200 (based on a 1% to 4% premium).

          The surety bond requirement can also vary by the type of school. For example, in California, you’d need a surety bond in the amount of $15,000 for a traffic violator school and $10,000 for a driver education school.

          Keep in mind that most school bonds carry terms of one year. That means you would need to pay a premium annually to renew your term.

          Requirements for a Private School Bond 

          There is no nationwide required bond amount. You will need to research your state laws to confirm what bonding requirements you’ll need to meet before opening your private school.

          When applying for the bond, the surety may enforce their own requirements, such as meeting minimum credit score or experience requirements. Higher credit scores typically lead to lower premiums.

          How Do I Get a Private School Bond?

          Obtaining a surety bond is easy when applying with Worldwide Insurance, Inc. Just fill out our initial application form and get an instant quote in minutes. With rates starting as low as 1%, we issue all types of surety bonds in all 50 states. No credit check required and no obligation.


          Private School Bond FAQs

          What is a school bond?

          A school bond is a surety bond required by a private organization that offers educational services, such as private schools, driving schools, and trade schools. The bond protects students and parents by requiring the school to meet all rules and regulations.

          How much is a private school bond?

          Premiums are typically 1% to 4% of the required bond amount. Generally, you can expect to pay between $100 and $200, based on a $5,000 surety bond. Keep in mind, however, that bond amount requirements will vary by state and the type of school.

          How long does a private school bond last?

          School bonds generally carry terms of one year and you would need to pay another premium annually to renew it.

          Can I get a bond with bad credit?

          Yes, bad credit applicants can get bonded but may face higher premiums. Worldwide Insurance, Inc. works with thousands of business owners — even those with low credit — to help them meet their bonding requirements. If you need a surety bond for your school but have bad credit, we’ll still work with you.

          What type of private school bond do I need?

          Visit our list of bonds by state to get a closer idea of your bonding requirements. To learn more about surety bonds in general, check out our free surety bond guide.