Most parents take their children’s education very seriously. Education is so important that many parents purchase properties based on the proximity and reputation of the schools. Private schools are often selected because it puts a child in a safer environment, offers a deeper sense of values, and does an excellent job in preparing a child for college.
Private schools, in general, do not benefit from public funds, unlike public schools. They thrive on tuition payments where in many cases require an enormous financial commitment from parents and students.
However, private schools are not impervious to closure. For a variety of reasons, schools can unexpectedly shut down, which can prove upsetting for students and parents who have already invested their time and money as they prepare in anticipation of graduation day.
Private school bonds protect parents and students
To safeguard the interests of both parents and students, most states require private schools to issue a bond with the State Department of Education. A private school bond is categorized as a license and permit type of surety bond that provides students and their parents an outlet of financial recourse if the school suddenly closes.
Private school bonds ensure that students and parents will receive a reimbursement of their tuition payment (or at least some of it) back in case of a school shut down. The state and a surety bond company surety are there to ensure that the students receive proper indemnification.
It’s still a three-way party
Like all surety bonds, private school bonds involve three entities.
- The obligee: It is the state that requires the principal to secure a surety bond.
- The principal: It is the school requiring to reimburse the surety company for any amount paid out of the bond.
- The surety company: It is the surety bond provider that provides a financial guarantee for the surety bond.
Private schools often require upfront payment of tuition fees; this means that parents and students can suffer from thousand dollar losses if a school ceases to operate unexpectedly. These private school bonds are now proving to be more necessary than ever as private schools across the United States have shut down because of a variety of factors. These factors may include impropriety or misconduct on the part of administrators, weak fiscal management, school facility conditions, and declining enrollment among others.
Parents, students, the public, and business (school itself) benefit from private school bonds. Since it is required by most states for schools conducting operations legally in a particular area, a private school bond is a transparent way to assure prospective students about a school’s economic status and ensures that they get back their private school tuition (which takes lots of effort to earn or acquire) in the event of a school closure.
The number of private schools seeking to tap into private school bonds is expected to grow. For more information on Private School Bonds, contact Surety Bond Authority at 800-333-7800 and get a free quote.