Arkansas Private School Bond

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Arkansas Private School Bond

Surety Bond Professionals is a family owned and operated bonding agency with over 30 years of experience. With access to a broad range of surety markets, our expert agents are ready to assist with all of your Arkansas schooling bonding needs.


What Are Arkansas Private School Bonds?

Arkansas private school bonds are surety bonds that provide financial protection for students and their parents or guardians who have prepaid tuition and fees for a course of study offered by a private career school licensed and regulated by the Arkansas State Board of Private Career Education (ASBPCE). Similar bonds, known as certified institution bonds, provide the same kind of financial protection to students (and parents or guardians) who have prepaid tuition and fees for a college level course or degree program at a private school regulated by the Arkansas Higher Education Coordinating Board (AHECB). 

Both types of bonds provide a way to reimburse those who have paid tuition and fees in advance if the school violates its agreement to provide certain educational services and does not issue refunds. 

Who Needs Them?

Any private postsecondary school seeking a license in Arkansas must provide the appropriate surety bonds as a prerequisite for licensure. Failing to maintain an active bond in force at all times can result in suspension of a school’s license.

The required bond amount is 10% of the previous year’s gross tuition revenue, with a minimum of $5,000. For schools that collected no tuition or fees during the previous year, the required bond amount is $10,000.

How Do They Work?

An Arkansas private school bond or certified institution bond requires the school’s owner (the bond’s “principal”) to abide by the applicable sections of the Arkansas Code and the rules of the licensing entity (ASBPCE or AHECB—the “obligee” requiring the bond). That includes delivering the educational services for which tuition and fees have been prepaid or refunding such monies. Any Code violation that entitles students/parents/guardians to a refund or causes other financial harm can result in the injured party filing a claim against the bond.

There is a third party to the surety bond agreement—the bond’s guarantor (the “surety”). The surety guarantees the payment of valid claims by the principal.

How Are Claims Paid?

When a claim is received, the surety will investigate to determine its legitimacy, often working in conjunction with the obligee. If possible, the surety may negotiate a settlement that is acceptable to all parties. If no agreement is reached, a valid claim must be paid. 

Although the legal obligation to pay valid claims belongs to the principal alone, the surety normally pays a claim initially, on the principal’s behalf. Essentially, the surety is lending the principal the funds to cover the claim. That extension of credit creates a debt that the principal must then repay to the surety. If the principal does not repay the surety, who is indemnified against any legal liability for claims, the surety can take the principal to court to recover the funds.

How Much Do They Cost?

The annual premium for an Arkansas private school bond is the product of multiplying the required bond amount set by the obligee and the premium rate assigned by the surety through underwriting. The main underwriting goal is to assess the risk of the principal 1) incurring claims in the first place and 2) not repaying the surety for claims paid on the principal’s behalf. 

Many factors are considered in that assessment, but the principal’s creditworthiness is key. A high personal credit score is a good sign of financial responsibility and a low risk to the surety, which deserves a low premium rate. Lesser credit is a sign of higher risk and warrants a higher premium rate. 

The average well-qualified principal will pay a premium rate that’s in the neighborhood of 1% to 3%.

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Our surety bond professionals will get you the Arkansas private school bond you need at a competitive rate.