Senate Bill No. 114–Committee on Human
Resources and Facilities

 

CHAPTER..........

 

AN ACT relating to postsecondary education; authorizing the commission on postsecondary education to establish the amount of the bond required for certain postsecondary educational institutions; expanding the conditions under which a bond is required; revising other provisions governing the bonding requirements of postsecondary educational institutions; and providing other matters properly relating thereto.

 

THE PEOPLE OF THE STATE OF NEVADA, REPRESENTED IN

SENATE AND ASSEMBLY, DO ENACT AS FOLLOWS:

 

   Section 1.  NRS 394.480 is hereby amended to read as follows:

   394.480  1.  [Each postsecondary] Notwithstanding the provisions of

 NRS 100.065 to the contrary, each:

   (a) Postsecondary educational institution initially licensed on or after

 July 1, 1995,[each postsecondary] shall file with the administrator a

 surety bond in the amount of $10,000 or in a greater amount determined

 by the commission for the period of the initial license to operate,

 including any provisional period, or for a period that the commission

 determines is appropriate.

   (b) Postsecondary educational institution or other entity not licensed in

 this state which is authorized to employ one or more agents in this state,

 [and each licensed] shall file with the administrator a surety bond in the

 amount of $10,000 or in a greater amount determined by the

 commission for the period of the agent’s permit or for a period that the

 commission determines is appropriate.

   (c) Licensed postsecondary educational institution [which is adding a

 facility at a new location] that poses a financial risk to the students who

 are enrolled in the institution, as determined by the commission upon

 application for renewal of a license, shall file with the administrator a

 surety bond in the amount of $10,000[. Except when a surety is released,

 the surety bond must cover:

   (a) The period of the initial license to operate, including any provisional

 period;

   (b) The period of the agent’s permit; or

   (c) A] or in a greater amount determined by the commission for the

 period of the renewal or for a period that the commission determines is

 appropriate.

   (d) Licensed postsecondary educational institution that files for a

 change of ownership, shall file with the administrator a surety bond in

 the amount of $10,000 or in a greater amount determined by the

 commission for the period ending 2 years after the [completion of the

 facility at the new location,

as appropriate.

   2.  A] approval of the change of ownership or for a period that the

 commission determines is appropriate.

The commission may at any time require a postsecondary educational

 institution to file a new or supplementary bond in an amount and for a

 period determined appropriate by the commission if the commission

 determines that the institution poses a financial risk to the students who

are enrolled in the institution or that the current bond filed by the

institution is insufficient to cover all claims, accrued or contingent,

 against the institution.

   2.  Notwithstanding the provisions of NRS 100.065 to the contrary, a

 licensed postsecondary educational institution shall file with the

 administrator a surety bond in the amount of $100,000 or 25 percent of the

 annual income of the institution received from tuition as reported in its

 annual report to the commission, whichever is greater, if:

   (a) The institution participates in a program of student assistance

 pursuant to the provisions of [Subchapter IV of Chapter 28 of Title 20 of

 the United States Code (]20 U.S.C. §§ 1070 et seq. ; [);] and

   (b) In any year, the default rate of the institution published by the

 Secretary of Education pursuant to those provisions exceeds the maximum

 allowable default rate prescribed by federal law or by the Secretary of

 Education pursuant to federal law.

Except when a surety is released, the bond must cover a period ending 2

 years after the date on which the default rate of the institution is published

 as exceeding the maximum allowable rate.

   3.  The bond required of a postsecondary educational institution

 pursuant to subsections 1 and 2 must be executed by the entity that owns

 the institution [or other entity] as principal , [and] by a surety company as

 surety[.] and by a licensed insurance agent residing in this state. The

 bond must be payable to the State of Nevada and must be conditioned to

 provide indemnification to any student, enrollee or his parent or guardian,

 determined by the commission to have suffered damage as a result of any

 act by the postsecondary educational institution that is a violation of NRS

 394.383 to 394.560, inclusive. The bonding company shall provide

 indemnification upon receipt of written notice of the determination by the

 commission. The bond may be continuous, but regardless of the duration

 of the bond the aggregate liability of the surety does not exceed the penal

 sum of the bond.

   4.  A surety on any bond filed pursuant to this section may be released

 after the surety gives 30 days’ written notice to the administrator, but the

 release does not discharge or otherwise affect any claim filed by a student,

 enrollee or his parent or guardian for damage resulting from any act of the

 postsecondary educational institution or agent alleged to have occurred

 while the bond was in effect, or for an institution’s ceasing operations

 during the term for which tuition had been paid while the bond was in

 force.

   5.  A license or an agent’s permit is suspended by operation of law

 when the institution or agent is no longer covered by a surety bond as

 required by this section. The administrator shall give the institution or

 agent, or both, at least 20 days’ written notice before the release of the

 surety, to the effect that the license or permit will be suspended by

 operation of law until another surety bond is filed in the same manner and

 amount as the bond being terminated.

   6.  If any student is entitled to a refund from an institution pursuant to

 any provision of NRS 394.383 to 394.560, inclusive, the surety shall

 provide indemnification.

   Sec. 2.  This act becomes effective upon passage and approval.

 

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