(a)
(1) Each school licensed under this subchapter shall maintain a surety bond during its licensure.
(2) The surety bond shall be submitted to the Division of Higher Education on or before the expiration date of the bond.
(3) The bond shall be for the period during which the license is issued.
(4)
(A) The surety bond shall be conditioned to provide indemnification to any student or enrollee who suffers loss or damage as a result of:
(i) A violation of a provision of this subchapter or any rule of the division by the school or its officers, admissions representatives, or employees;
(ii) The failure or neglect of the school to faithfully perform all agreements, express or otherwise, with the student, enrollee, one (1) or both of the parents of the student or enrollee, or a guardian of the student or enrollee, as represented by the application for licensure and the materials submitted in support of that application; or
(iii) An admissions representative's misrepresentation in procuring the student's enrollment.
(B)
(i) A surety on that bond may be released after the surety has made a written notice of at least thirty (30) days before the release.
(ii) However, a surety may not be released from the bond unless all sureties on the bond are released.
(C)
(i) The license shall be suspended when that school is no longer covered by a surety bond meeting the required amount.
(ii) The division shall notify the school in writing at least ten (10) days prior to release of the surety or sureties that the license is suspended until another surety bond is filed in the manner and amount required under this subchapter.
(5) The bond shall be based on gross tuition, meaning the total amount collected by a school during the most recently completed twelve-month fiscal year, reduced only by the amount of refunds paid during the fiscal year, for tuition, application fees, registration fees, and those other fees deemed appropriate by rule of the division.
(6) The division shall determine the sum of each surety bond based upon the following guidelines:
(A) Except as provided in subdivisions (a)(6)(B) and (C) of this section, a school shall procure and maintain a bond equal to ten percent (10%) of the gross tuition with a minimum bond amount of five thousand dollars ($5,000) with the maximum bond amount to be determined by the division;
(B) Schools that have no gross tuition charges assessed for the previous year shall secure and maintain a surety bond in the amount of ten thousand dollars ($10,000); and
(C) Schools that have a total cost per program of three thousand dollars ($3,000) or less shall not be required to have a bond.
(7)
(A) The bond shall be a surety bond issued by a company authorized to do business in this state.
(B) The bond shall be to the state to be used for payment of a tuition refund due to a student or potential student.
(b) A surety bond is not required for licensees approved by the division on April 10, 1995, that maintain continuous licensure.
(c) A right of action shall not accrue on the surety bond to or for the use of any person or entity other than the obligee named in the bond or the heirs, executors, administrators, or successors of the obligee.