Arizona Private Postsecondary Education Bond

Arizona Private Postsecondary Education Bond

In Arizona, all private postsecondary institutions are required by the state legislature to obtain a license from the Arizona State Board for Private Postsecondary Education (Board), pursuant to the Revised Arizona State Statutes 32-3021. Part of the licensing requirements, all Arizona private postsecondary institutions must obtain an Arizona Private Postsecondary Education Bond, which acts as a financial guarantee from Jet Insurance Company to the Board displaying the capability to repay student refunds for prepaid tuition or unpaid fees to the Board.

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Arizona SARA institutions have a similar bond requirement to the SARA Council with Jet providing the same fiscal guarantee for schools providing higher learning out of state.

With Jet, our team underwrites bonds directly, without middlemen brokers or agents slowing down the bond process.

What Is the Cost for the Arizona Private Postsecondary Education Bond?

With Jet, the price for the Private Postsecondary Education School Bond is a small percentage of the bond limit set by the Board. We also factor in the financial status of the school and its ownership. The minimum required bond limit is $15,000 and at that limit rates for the bond start at $15 monthly or $150 a year.

The Arizona State Board for Private Postsecondary Education determines the bond limit is based on the annual average of the institution’s prepaid tuition. The bond is required to have a minimum $15,000 limit. An accredited institution’s surety bond must be worth 15% of gross total revenue (GTR) less than $400,000, or 10% of GTR above $400,000. If the institution is not accredited, the surety bond must be worth 20% of GTR less than $400,000, and 15% of GTR above $400,000.

The SARA Council requires the bond limit to be between $50,000 and $500,000 at a sum that is 10% of the gross tuition of online revenue for SARA students only.

What sets Jet apart from other surety companies is that we offer competitive pricing not having to pay out agent commissions or letting brokers add fees.  For larger premiums Jet offers a monthly payment plan so you can make small installments as opposed to submitting a large upfront cost.

How Does the Private Postsecondary Education Bond Filing Process Work?

Jet will take care of the filing for you! After completing the online application process we will send the original bond form directly to the Board or Council, as well as a copy to you for your own records.

An original signed surety bond must be filed at the Arizona State Board of Private Postsecondary Education, and the bond must remain in effect and on file throughout the entirety of the private institution's operation.

Should you want to send in the bond form yourself, perhaps with other paperwork, just let us know at checkout and we will get the original form to you. The mailing address for the Board and SARA can be found below. 

Arizona State Board for Private Postsecondary Education
1740 W Adams Suite 3008
Phoenix, AZ 85007

Arizona SARA Council
2323 W 14th St
Tempe, AZ 85281

What Is the Purpose of the Private Postsecondary Education Bond?

The Arizona State Board of Private Postsecondary Education and SARA Council were created to guarantee the security and education of students enrolled in private postsecondary institutions. To fulfil this obligation, the state legislature legally requires all Arizona private postsecondary institutions to attain a valid license to be financially responsible for the education of their paying students. The Private Postsecondary Education Bond ensures repayment to students, their parent(s) or guardian(s), or loan agencies of whom were financially affected by the school if prepaid education was not provided and a repayment not made accordingly.

The bond may also be used to fund the Student Tuition Recovery Fund Program, which is a fund assessed from licensed institutions that requires a minimum balance of $500,000. The fund is used to compensate students affected if a school closes down before a student has completed contracted coursework. If this fund is not maintained at $500,000 or more, assessment fees may be incurred. The surety bond in this case would be used to directly refund any students or payback money used by the Student Tuition Recovery Fund should the school not properly refund their prepaid students.

Additionally, this surety bond is a guarantee to the Board and Council that their fees will be paid by the schools. These regulatory agencies rely on their fees as an income stream to maintain their service to the public. 

The Board uses surety companies as a fiscal tool to sustain a hassle-free process that would otherwise cost the Board inconvenience and cause losses to the public if they had to litigate against a school directly.

Who is Required to Obtain the Private Postsecondary Education Bond?

As stated in Revised Arizona Statutes 32-3021, all private postsecondary universities, colleges, and career colleges offering vocational, accredited, non-accredited, and degree programs are required to obtain the Private Postsecondary Education Bond in order to maintain licensure from the Board. 

All Arizona SARA schools are also required to obtain the Arizona SARA Bond. A school is classified as a SARA school if they have agreed with the distance education offerings of out-of-state SARA-participating institutions in accord with SARA’s national policies, rather than applying the state-specific policies. The school must be located in a SARA member state, be a degree granting and accredited institution, and must meet the institutional financial responsibility requirements for SARA participation.

The bond requirement does not apply to driving schools, employee training programs, nursing assistant programs, or private instructional courses.

How Does the Application Process Work With Jet?

At Jet, the application process for the Private Postsecondary Education Bond starts with an online application wherein you need to provide some basic business information. 

One of our underwriters will review the application and may require additional information including a balance sheet, income statement, and letter from the state providing the reason for the larger amount, are all required to complete the application process.

When our quote is ready, we will send you a link to make a secured payment online. After which you will receive the bond copy and receipt.

How Does a School Avoid Claim on the Private Postsecondary Education Bond?

All Arizona schools that are considered private and postsecondary are required to abide by all of the Board’s licensing laws pursuant to Revised Arizona Statutes 32-3021. Failure to do so may result in various fines from the Board, civil action, suspension or revocation of the current license, and a possible claim on the bond.

In regards to action against the bond, paying students have the right to pursue a claim if they  have failed to receive a refund due to the school failing to offer or complete instruction and academic services related to course enrollment. This can happen if the school suffers financial hardship or refuses to repay a student. The school should repay all collected tuition if the education that was paid for was not provided. If that is done there will not be any issues with the Board or Council and potentially the bond.

The Board and Council also have a litany of fees due to them for various reasons such renewal or inspection fees. The bond guarantees these fees to the Board or Council should the school fail to make payment and continue operation.

If the claim is validated by the Board, recompensation from the school will be demanded. It is in the best interest of the private postsecondary institution to immediately refund all prepaid fees and tuition to financially affected students in order to avoid a bond claim.

What Happens If I Get a Bond Claim?

Promptly reach out to and provide all relevant information regarding your case to Jet upon receipt of a claim notice on your bond. Jet will perform an investigation of the claim details. Jet will defend our customers and maintain our obligation to uphold our legislative surety duty in regards to claims.

Should the claim be decided as valid, Jet will provide payment to those financially affected up to the maximum limit of the bond. The school is still responsible for their actions (or lack of action in paying refund and fees) and must repay the surety company for all paid claims. Failure to repay will result in difficulties in obtaining the required Private Postsecondary Education Bond and may result in a denial from the Board or Council of licensure.

Can the Private Postsecondary Education Bond Be Cancelled?

Yes, the bond can be cancelled with Jet and a refund will be sent out for any unearned premium. Just notify Jet in writing that you want to cancel the bond and we will process it immediately. For both the Arizona SARA bond and the Private Postsecondary Education Bond, the Council and Board have a 60 day grace period following their receipt of the cancellation notice from Jet before they cancel the bond. We do have to include that time frame into our refund calculation as the bond remains active at that time.

Are There Other Bonds That a Principal Needs?

The Arizona State Authorization Reciprocity Agreement (SARA) Bond is required for any SARA approved institutions who provide postsecondary distance education and programs, across state borders. SARA does not replace state authorization, and only accredited federally recognized institutions can operate under SARA.

Notary Bond Application:

X

Business Information:

Indemnity Agreement:

I, the undersigned, hereby apply for a Dishonesty Bond also known as a Business Service Bond or Janitorial Service Bond (“bond”) to the Surety Company (“SURETY”) through Jet Insurance Company (“JET”), with whom I hereby grant the authority to act on my behalf with respect to the bond and assign as my Broker of Record, and declare that the statements herein are true and correct. In consideration of the SURETY issuing, renewing or substituting said bond(s), I, individually and as the owner or officer of the bonded entity, hereby understand and agree, as follows: (i) to reimburse, hold harmless, and indemnify SURETY upon demand for all loss, liability, claim, expense, including but not limited to attorneys’ fees, expert’s fees, investigative fees and claims handling fees, and any other cost which SURETY shall pay or incur in defense, adjustment, or settlement of such claims/suits by reason of such suretyship; (ii) that an itemized statement of loss and expenses by SURETY shall be indisputable proof of my liability to SURETY; (iii) coverage is subject to a $100 deductible; (iv) the employee must be convicted before coverage will apply (v) performance and any form of dispute resolution of this agreement shall take place in the county of SURETY's office of service; and (vi) a facsimile copy or electronically signed version of this agreement shall be binding as if it were an original. This agreement shall survive any changes in, substitute to or renewal of the bond(s).

Required Effect Date of Bond Policy:

Contact Information:

Employee Dishonesty Bond Application:

Business Information:

Business Description:

Coverage Requirements:

Indemnity Agreement:

I, the undersigned, hereby apply for a Dishonesty Bond also known as a Business Service Bond or Janitorial Service Bond (“bond”) to the Surety Company (“SURETY”) through Jet Insurance Company (“JET”), with whom I hereby grant the authority to act on my behalf with respect to the bond and assign as my Broker of Record, and declare that the statements herein are true and correct. In consideration of the SURETY issuing, renewing or substituting said bond(s), I, individually and as the owner or officer of the bonded entity, hereby understand and agree, as follows: (i) to reimburse, hold harmless, and indemnify SURETY upon demand for all loss, liability, claim, expense, including but not limited to attorneys’ fees, expert’s fees, investigative fees and claims handling fees, and any other cost which SURETY shall pay or incur in defense, adjustment, or settlement of such claims/suits by reason of such suretyship; (ii) that an itemized statement of loss and expenses by SURETY shall be indisputable proof of my liability to SURETY; (iii) coverage is subject to a $100 deductible; (iv) the employee must be convicted before coverage will apply (v) performance and any form of dispute resolution of this agreement shall take place in the county of SURETY's office of service; and (vi) a facsimile copy or electronically signed version of this agreement shall be binding as if it were an original. This agreement shall survive any changes in, substitute to or renewal of the bond(s).

Required Effect Date of Bond Policy:

Contact Information:

Contract Bond Application:

X

Business Information:

Owner Information:

Job Details:

Indemnity Agreement:

I, the undersigned, hereby apply for a Dishonesty Bond also known as a Business Service Bond or Janitorial Service Bond (“bond”) to the Surety Company (“SURETY”) through Jet Insurance Company (“JET”), with whom I hereby grant the authority to act on my behalf with respect to the bond and assign as my Broker of Record, and declare that the statements herein are true and correct. In consideration of the SURETY issuing, renewing or substituting said bond(s), I, individually and as the owner or officer of the bonded entity, hereby understand and agree, as follows: (i) to reimburse, hold harmless, and indemnify SURETY upon demand for all loss, liability, claim, expense, including but not limited to attorneys’ fees, expert’s fees, investigative fees and claims handling fees, and any other cost which SURETY shall pay or incur in defense, adjustment, or settlement of such claims/suits by reason of such suretyship; (ii) that an itemized statement of loss and expenses by SURETY shall be indisputable proof of my liability to SURETY; (iii) coverage is subject to a $100 deductible; (iv) the employee must be convicted before coverage will apply (v) performance and any form of dispute resolution of this agreement shall take place in the county of SURETY's office of service; and (vi) a facsimile copy or electronically signed version of this agreement shall be binding as if it were an original. This agreement shall survive any changes in, substitute to or renewal of the bond(s).

Required Effect Date of Bond Policy:

Contact Information:

Worker's Compensation Application:

X

Business Information:

Business Description:

Coverage Requirements

Indemnity Agreement:

I, the undersigned, hereby apply for a Dishonesty Bond also known as a Business Service Bond or Janitorial Service Bond (“bond”) to the Surety Company (“SURETY”) through Jet Insurance Company (“JET”), with whom I hereby grant the authority to act on my behalf with respect to the bond and assign as my Broker of Record, and declare that the statements herein are true and correct. In consideration of the SURETY issuing, renewing or substituting said bond(s), I, individually and as the owner or officer of the bonded entity, hereby understand and agree, as follows: (i) to reimburse, hold harmless, and indemnify SURETY upon demand for all loss, liability, claim, expense, including but not limited to attorneys’ fees, expert’s fees, investigative fees and claims handling fees, and any other cost which SURETY shall pay or incur in defense, adjustment, or settlement of such claims/suits by reason of such suretyship; (ii) that an itemized statement of loss and expenses by SURETY shall be indisputable proof of my liability to SURETY; (iii) coverage is subject to a $100 deductible; (iv) the employee must be convicted before coverage will apply (v) performance and any form of dispute resolution of this agreement shall take place in the county of SURETY's office of service; and (vi) a facsimile copy or electronically signed version of this agreement shall be binding as if it were an original. This agreement shall survive any changes in, substitute to or renewal of the bond(s).

Required Effect Date of Bond Policy:

Contact Information: