New Jersey Private Career School Bond

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New Jersey Private Career 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 New Jersey Private Career School bond needs.

What Are New Jersey Private Career School Bonds?

New Jersey private career school bonds help ensure that such schools operate in compliance with state laws and regulatory requirements. They provide financial protection for students who have enrolled and paid tuition and fees with the full expectation of receiving the services outlined in the student contract. A violation of the contract that causes a monetary loss entitles the injured party to file a claim for damages.

The worst-case scenario is that a private career school ceases operations before currently enrolled students have received the education services they paid for and does not issue tuition refunds. The bond provides a way for those students to recover tuition and fees.

Who Needs Them?

In New Jersey, private career schools are defined as for profit or not-for-profit schools that charge tuition or receive public funding for training to prepare students for further education or the workforce. To operate anywhere in the state, they must first obtain a certificate of approval from the Department of Labor and Workforce Development’s Center for Occupational Employment Information (COEI). 

To meet the approval criteria, every private career school must furnish COEI with a bond that is the greater of $20,000 or 5% of gross annual income from tuition in the previous three years. Each school must always have an active bond in force to maintain its certification.

How Do They Work?

There are three parties to a New Jersey private career school bond, each with its own responsibilities.

  • COEI is the “obligee” requiring the bond,
  • The school owner is the “principal” purchasing the bond, and
  • The bond’s guarantor is the “surety.”

The surety bond agreement is legally binding on all three parties.

How Are Claims Paid?

The principal is legally obligated to pay all valid claims against the bond, and the surety guarantees they will be paid. Because of that guarantee, the surety will pay a valid claim initially, and then be reimbursed by the surety. In making that initial payment to the claimant, the surety is extending credit to the principal, which the principal must repay or risk legal action by the surety to recover the funds.

How Much Do They Cost?

New Jersey private career school bonds are sold for an annual premium that is determined by multiplying the bond amount by the premium rate, which is set by the surety on a case-by-case basis. The primary underwriting consideration is the risk of the surety not being repaid readily by the principal. That risk is assessed largely on the basis of the principal’s personal credit score. 

A very creditworthy individual, one with a high credit score, is viewed as posing little risk of nonrepayment, and should pay a low premium rate. A lower credit score is a red flag for higher risk to the surety, and results in a higher premium rate.

The average well-qualified principal will pay a premium rate that’s in the range of one to three percent.

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