(a)(1) At the time an application is made for authorization, or for renewal of the authorization, the commission may require the postsecondary educational institution making the application to file with the commission a good and sufficient surety bond in a penal sum in the amount of ten thousand dollars ($10,000) or another sum as provided by the commission. The bond must be executed by the applicant as principal and by a corporate surety company qualified and authorized to do business in this state.
(2)A cash surety bond in the applicable amount on deposit in this state in a bank or savings and loan association that is federally insured may be filed instead of the corporate bond, subject to approval by the commission. The cash surety bond must be payable upon demand by the commission un
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(a) (1) At the time an application is made for authorization, or for renewal of the authorization, the commission may require the postsecondary educational institution making the application to file with the commission a good and sufficient surety bond in a penal sum in the amount of ten thousand dollars ($10,000) or another sum as provided by the commission. The bond must be executed by the applicant as principal and by a corporate surety company qualified and authorized to do business in this state. (2) A cash surety bond in the applicable amount on deposit in this state in a bank or savings and loan association that is federally insured may be filed instead of the corporate bond, subject to approval by the commission. The cash surety bond must be payable upon demand by the commission under the same conditions specified in this section for corporate bonds and not subject to withdrawal without the approval of the commission. (3) The bond must be conditioned to: (A) Initially provide indemnification to a student or enrollee, or the student's or enrollee's parent or guardian, or a class thereof, determined to have suffered loss or damage as a result of an act or practice by the postsecondary educational institution that is a violation of this part, and the bonding company shall pay a final, nonappealable judgment rendered by the commission or a court of this state having jurisdiction, upon receipt of written notification of the judgment; and (B) Subsequent to the initial conditions outlined in subdivision (a)(3)(A), pay any remaining funds to the special agency account established pursuant to § 49-7-2014 in an amount to be assessed by the commission for the administrative costs associated with maintaining academic records pursuant to § 49-7-2016 , including the collection, conversion, and retention of all academic records. (4) Regardless of the number of years that the bond is in force, the aggregate liability of the surety on the bond shall not exceed the penal sum of the bond. (5) The bond must be continuous. (b) (1) The corporate surety bond required to be filed under this section must cover the period of the authorization, except when a surety is released as provided in this section. (2) A surety on a bond filed under this section may be released from the bond after the surety serves written notice of the release to the commission sixty (60) days prior to the release. The release shall not discharge or otherwise affect a claim filed by a student or enrollee, or the student's or enrollee's parent or guardian, for loss or damage resulting from an act or practice that is a violation of this part that is alleged to have occurred while the bond was in effect, or affect an institution's ceasing activities or operations during the term for which tuition has been paid while the bond was in force. (3) A cash surety bond must remain on file for one (1) year after the expiration of the period of authorization. The expiration or withdrawal of the cash bond shall not serve to diminish or nullify the rights of claimants. The claimants have the same rights as claimants have against a postsecondary educational institution that filed a corporate surety bond that was subsequently released, as described in this section. (c) Authorization is conditional, subject to revocation, by operation of law when the institution is no longer covered by a surety bond as required by this section. The commission shall cause the institution to receive at least thirty (30) days' written notice that the authorization is to become conditional, subject to revocation, by operation of law until another surety bond is filed in the same manner, and in a like amount, as the bond being terminated; however, absent exceptional circumstances, a postsecondary educational institution shall not continue to engage in activities or operations without a surety bond for more than ninety (90) days.