Nebraska’s LB 512 introduces some new requirements for for-profit postsecondary schools in the state. The surety bond provisions of the law take effect on September 1, 2017, though other sections of the bill had an immediate effective date of May 23, 2017.
For-profit postsecondary schools offer higher education opportunities following high school. LB 512 establishes the Guaranty Recovery Cash Fund, which is a form of security for students at for-profit postsecondary schools. The Fund provides students a way to reimburse students for any tuition or fees paid and for�the cost of obtaining records if the institution were to close. The Fund is subsidized by an annual fee for postsecondary schools, in the amount of one-tenth of one percent of the previous year’s gross tuition revenue. The fee is assessed until the�Fund reaches its minimum level of $250,000 (the Fund has a maximum level of $500,000). If the Fund dips below the minimum level, the Commission for Postsecondary Education may resume collecting the fee.
Nebraska postsecondary schools may be required to post a surety bond until the Fund is at the minimum level. During the school’s first year of operation, they will not be assessed the Fund fee. After the first year, the Fund fee is assessed annually for four years or until the minimum Fund level has been reached, whichever comes last.
When postsecondary schools request an initial recurrent authorization to operate is when the Commission requires the school to post the surety bond to serve much the same function as the Fund serves. The bond can reimburse students for tuition and other educational expenses should the school close, added security until the fund reaches its minimum level or until the school has been in operation for five years or more. Surety bonds for Nebraska postsecondary schools give for-profit institutions’ students reassurance in the event of the school’s closing.
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