What is a Michigan Proprietary School Bond?
For those desiring to establish and operate a private trade school, business school, institute, or correspondence school, they must post a surety bond under the provisions of Michigan’s Public Act 148 of 1943 as part of their licensing requirements.
The Proprietary School Bond guarantees the faithful performance of their obligations in providing complete training to its students. It protects students who have suffered losses due to the school’s inability to complete a course or program of study. The bond also serves as a financial recourse to students in the event the school closes.
The bond makes sure that the school is compliant with all applicable laws and provisions set by the State. The issuance of a license to a school means that it has met the requirements of the law at the time the license was issued.
A proprietary school is an educational institution that offers training in a particular trade or vocation that is required to be licensed by the State of Michigan. Students attending the school receive a certificate of completion instead of earning degrees.
What are the bond conditions?
- The bond must be issued by a Surety authorized to conduct business in the State of Michigan.
- The bond or rider must be payable to the State of Michigan.
- The bond must be renewed and adjusted annually on June 30, and new evidence of surety shall be filed with the Michigan Department of Licensing and Regulatory Affairs, Proprietary Schools Section under the requirements of Public Act 148 or 1943.
- The aggregate liability of the Surety does not exceed the bond amount.
Note: All private schools in Michigan must furnish surety bonds in April to have them completed by May for filing with the State.
What is the bond amount?
The bond amount is set at a minimum of $5,000. It is based on the total fees paid to the school/institution by the students who have not completed their courses.
The cost of the bond is a percentage of the bond amount, which you can get between 1% and 5%. This will serve as your bond premium and be determined by the Surety.
How do I obtain a Proprietary School Bond?
STEP 1: Apply for the bond
You need to submit a bond application to us. If you’re ready to apply now, you may do so HERE!
STEP 2: Underwriting
We will ask you for a couple of important information needed for the bond. A certified surety underwriter will carefully evaluate your credit score to gauge your bonding capacity. Do not worry; there are no intimidating financial statements required for this type of bond!
Also, you need to submit a copy of the BOND FORM, which can be obtained from the Proprietary School Section.
STEP 3: Bond execution
Once the underwriter is done with the underwriting process, we will immediately issue the bond and send it to you!
Call us at 800-333-7800 today!