Maryland Higher Education Commission requires a financial guarantee if a school wants to be accredited. Schools applying for this accreditation need a letter of credit or a surety bond sufficient to protect the students’ tuition enrolled at the school. The following two-step calculation determines tuition liability in the amount required for a financial guarantee:
Multiply the sum of tuition and fees (excluding costs) by the maximum approved student enrollment. The maximum enrollment is based on the school’s projected enrollment, not exceeding the capacity of the school’s facilities, equipment, and staffing, and upon the school’s bonding capability.
The bond guarantees that the school operates as an institute of post-secondary education under the provisions of Title 11, subtitle 2, The Education Article of the Annotated Code of Maryland, which requires such schools to furnish a bond at the discretion of the Maryland Higher Education Department that requires that the school perform all agreements and contracts of the students and comply with Title 11 education article annotated code of Maryland and regulations.
The bond is called the Private Career School Bond. It is for post-secondary education schools that want accreditation in Maryland, such as career training programs and other post-secondary education programs. The bond itself is a financial guarantee.
Depending on the size of the school, the surety generally requires financials from the owners and operators, along with an overview of the school and a copy of the contract. The school would provide the surety with a profit and loss statement, balance sheet, bank statements, and their contracts with the students. The owner would provide personal financial statements, credit authorizations, bank statements, and brokerage statements.
The bond guarantees that the school will provide education as promised, and if they cannot do this, they will reimburse the students for the tuition they paid.
These bonds can be tricky, but when you work with an expert who can navigate them, they become relatively easy to obtain. My name is Neil Pedersen. Give me a call to discuss your bonding situation. 212.227.7277.
Neil Pedersen
PEDERSEN & SONS SURETY BOND AGENCY, INC.
15 Maiden Lane Suite #800
New York, NY, 10038
212-227-7277
neil@courtbondnow.com
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