(1) Schools located within this state shall file as a part of their application for a certificate of approval evidence of a savings account, deposit, or certificate of deposit meeting the requirements of section 11-35-101, or one bond as set forth in this section covering the school and its agents. Schools located outside this state shall file evidence of a savings account, deposit, or certificate of deposit meeting the requirements of section 11-35-101, or bonds as set forth in this section covering the school's agents.
At the time application is made for a certificate of approval, the board shall requirean applicant to file with the division a surety bond in a sum as determined pursuant to subsection (3) of this section. The bond shall be executed by the applicant as principal and by a surety company authorized to do business in this state. The bond shall be conditioned to provide indemnification to any student or enrollee or to any parent or guardian of the student or enrollee determined by the board to have suffered loss of tuition or any fees as a result of any act or practice that is a violation of any minimum standard as set forth in this article 64 or any criterion established pursuant thereto by a school or its agents, to provide train-out for students enrolled in an approved school ceasing operation as provided in subsection (5) of this section, and to reimburse the department of higher education for any actual administrative and related costs associated with an approved school ceasing operation. The bond shall be continuous unless the surety is released as set forth in this section.
The amount of the bond to be submitted with an application for a certificate of approval shall be equal to a reasonable estimate of the maximum prepaid, unearned tuition and fees of the school for a period or term during the applicable school training year for which programs of instruction are offered, including, but not limited to, on a semester, quarter, monthly, or class basis; except that the period or term of greatest duration and expense shall be utilized for this computation where a school's training year consists of one or more such periods or terms. Following the initial filing of the surety bond with the division, the amount of the bond shall be recalculated annually based upon a reasonable estimate of the maximum prepaid, unearned tuition and fees received by the school for such period or term. In no case shall the amount of the bond be less than five thousand dollars.
(a) A student, enrollee, or parent or guardian of the student or enrollee claiming loss of tuition or fees may file a claim with the board if the claim results from an act or practice that violates a minimum standard or criterion established pursuant to section 23-64-112. Such claims that are filed with the board shall constitute public records and are subject to the provisions of article 72 of title 24; except that no such claims records shall be made public if the release would violate any federal privacy law.
(b) Notwithstanding the provisions of subsection (4)(a) of this section, the board shall not consider any claim that is filed more than two years after the date the student discontinues his or her training at the school.
(5) (a) In the event that a private occupational school ceases operation, the board is authorized to make demand on the surety of the school upon the demand for a refund by a student or for the implementation of a train-out for the students of the school, and is authorized to make demand on the surety to reimburse the department of higher education for actual administrative costs associated with the school ceasing operation, and the surety shall pay the claim due in a timely manner. To the extent practicable, the board shall use the amount of the bond to provide train-out for students of the private occupational school ceasing operation through a contract with another approved private occupational school, a community college, an area technical college, or any other training arrangement acceptable to the board. The train-out provided to a student replaces the original enrollment agreement or contract between the student and the private occupational school ceasing operation; except that tuition and fee payments shall be made by the student as required by the original enrollment agreement or contract.
Any student enrolled in a private occupational school ceasing operation who declinesthe train-out required to be offered pursuant to subsection (5)(a) of this section may file a claim with the board for the student's prorated share of the prepaid, unearned tuition and fees paid by the student subject to the limitations of subsection (5)(c) of this section. No subsequent payment shall be made to a student, unless proof of satisfaction of any prior debt to a financial institution is submitted in accordance with the board rules concerning the administration of this section.
If the amount of the bond is less than the total prepaid, unearned tuition and fees thathave been paid by students at the time the private occupational school ceased operation, the amount of the bond shall be prorated among the students.
(c.5) Any amount of the surety that is greater than the amount necessary to satisfy costs to provide a train-out for students pursuant to subsection (5)(a) of this section and any demand for a refund by a student pursuant to subsection (5)(b) of this section may be retained by the department of higher education as reimbursement up to the amount of any actual administrative costs incurred by the department of higher education that are associated with the school closure.
The provisions of this subsection (5) shall be applicable only to those students enrolled in the private occupational school at the time it ceases operation, and, once a school ceases operation, no new students shall be enrolled therein.
The board shall be designated as the trustee for all prepaid, unearned tuition and fees,student loans, Pell grants, and other student financial aid assistance in the event that an approved private occupational school ceases operation.
The board shall determine whether the offering of a train-out for students enrolled inan approved private occupational school ceasing operation is practicable without federal government designation of the board as trustee for student loans, Pell grants, and other student financial aid assistance pursuant to subsection (5)(e) of this section.
At the time that application is made for an agent's permit to represent a school located outside this state, the application shall be accompanied by a surety bond in the sum of fifty thousand dollars. The bond shall be executed by the applicant as principal and by a surety company authorized to do business in this state. The bond shall be conditioned to provide indemnification to any student or enrollee or his or her parent or guardian determined by the board to have suffered loss of tuition or any fees as a result of any act or practice that is a violation of any deceptive trade or sales practice as set forth in this article 64 or any criteria established pursuant thereto by the agent. Regardless of the number of years that the bond is in force, the aggregate liability of the surety thereon shall in no event exceed the penal sum of the bond. The bond shall be continuous, unless the surety is released as set forth in this section, and may be blanket in form. Any student or enrollee or his or her parent or guardian claiming loss of tuition or any fees as a result of any deceptive trade or sales practice shall file a notarized claim with the board. In no event, however, shall the board consider any such complaint filed one hundred eighty days after the date the student discontinued his or her training at the school.
Except with respect to a claim for tuition and fees made by a student enrolled in anapproved private occupational school ceasing operation, the board shall conduct a hearing for the purpose of determining any loss of tuition or fees, and, if any claim is found to be correct and due the claimant, the board shall make demand upon the principal and the surety on the bond. If the principal or surety fails or refuses to pay the claim due, the board shall commence an action on the bond in any court of competent jurisdiction; except that no such action may be filed more than six years subsequent to the date of any violation that gives rise to the right to file a claim pursuant to this section. A claim for tuition and fees made by a student enrolled in an approved private occupational school ceasing operation shall be handled in the manner provided in subsection (5) of this section.
A certificate of approval or an agent's permit shall be suspended by operation of lawwhen the school or agent is no longer covered by a surety bond as required by this section. The board shall give written notice to the school or agent, or both, at the last-known address, at least forty-five days prior to the release of the surety, to the effect that the certificate of approval or agent's permit shall be suspended by operation of law until another surety bond is filed in the same manner and like amount as the bond being released.
A surety on any bond filed under the provisions of this section shall be releasedtherefrom after the surety serves written notice thereof to the board at least sixty days prior to the release. The release shall not discharge or otherwise affect any claim filed by any student or enrollee or his or her parent or guardian for loss of tuition or any fees that occurred while the bond was in effect or that occurred under any note or contract executed during any period of time when the bond was in effect, except when another bond is filed in a like amount and provides indemnification for any such loss.
(a) The board shall allow, at a reasonable price, alternate surety methods in lieu of the bonding requirements of this section. The alternate sureties shall be conditioned to provide indemnification to any student or enrollee or to any parent or guardian of the student or enrollee for any loss of tuition or any fees as a result of any act or practice that is a violation of this article 64 and to provide train-out for students enrolled in an approved school ceasing operation as provided in subsection (5) of this section. In the event that a school covered by an alternate surety ceases operation, the board shall act in the manner provided in subsection (5) of this section.
(b) Prior to September 1, 1991, and each year thereafter, any alternate surety allowed by the board shall be required to contract for an independent financial audit. The audit shall be included in a report to the board due by January 1 of the following year. The board may disapprove an alternate surety if it deems that the surety is not able to provide students with the indemnification and train-out required by this section.
(11) For the purposes of this section, "school" and "private occupational school" shall include a for-profit private college or university, as defined in section 23-2-102 (11), in which the majority of students are enrolled in courses and programs that are occupational in nature, as defined by the board.
Source: L. 2017: Entire article added with relocations, (HB 17-1239), ch. 261, p. 1194, § 1, effective August 9. L. 2018: (2) and (5)(a) amended and (5)(c.5) added, (SB 18-177), ch. 196, p. 1289, § 2, effective August 8.
Editor's note: This section is similar to former § 12-59-115 as it existed prior to 2017.