Senate Bill No. 476

Senate Bill No. 476-Committee on Human Resources and Facilities

CHAPTER

405

AN ACT relating to private education; revising provisions governing surety bonds required of certain private postsecondary educational institutions; and providing other matters properly relating thereto.

[Approved July 16, 1997]

THE PEOPLE OF THE STATE OF NEVADA, REPRESENTED IN SENATE AND ASSEMBLY, DO ENACT AS FOLLOWS:

Section 1. NRS 394.443 is hereby amended to read as follows:
394.443A postsecondary educational institution shall:
1. Post in a conspicuous place a notice supplied by the administrator stating that grievances may be submitted to the administrator for resolution.
2. Issue a receipt to all students, and retain a copy, for all money paid to the institution.
3. Submit an annual report to the commission on forms it supplies. The report must include, without limitation, the annual income received by the institution from tuition.
Sec. 2. NRS 394.480 is hereby amended to read as follows:
394.4801. Each postsecondary educational institution initially licensed on or after July 1, 1995, [and] each 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 postsecondary educational institution which is adding a facility at a new location 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 period ending 2 years after the completion of the facility at the new location,
as appropriate.
2. 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 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 institution or other entity as principal and by a surety company as surety. 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.
[2. Except when a surety is released, the surety bond must cover the period of the initial license to operate, including any provisional period, or the agent's permit, as appropriate.
3.] 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, [nor] or for an institution's ceasing operations during the term for which tuition had been paid while the bond was in force.
[4.] 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.
[5.] 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.
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