Section 115D-95 - [Effective 7/1/2025] Bonds required(a) Requirement. - An applicant for a license must comply with the bond requirements in this section. The bond covers the potential loss by students of the school of prepaid tuition and other payments made by them to a school licensed under this Article by reason of the school ceasing to operate for any reason, including the suspension, revocation, or nonrenewal of a school's license, bankruptcy, or foreclosure.(b) Amount. - An applicant for a license must file a bond with the North Carolina State Board of Community Colleges executed by the applicant as a principal and by a bonding company authorized to do business in this State. The bond must be payable to the State Board of Community Colleges, must be conditioned on fulfillment of the school's obligations, and must remain in effect until cancelled by the bonding company. The bonding company may cancel the bond upon 30 days' notice to the State Board of Community Colleges. The application must set out calculations made by the applicant to determine the amount of bond required with the application. The required amount is determined as follows:
(1) Initial licensure. - For an applicant for initial licensure of a school, the bond amount is the amount determined by the State Board that is adequate to provide indemnification to any student, or the student's parent or guardian who has suffered a loss of tuition, fees, or any other instructional-related expenses paid to the school. A bond amount shall be at least twenty-five thousand dollars ($25,000).(2) Renewal of licensure. - For an applicant for renewal of licensure of a school, the bond shall be in an amount equal to the greatest amount of unearned paid tuition in the school's possession at any time during the prior fiscal year.(2a) Evaluations. - Bond amounts shall be evaluated as follows:a. For a school that has been licensed for one year, but less than six years, the bond amount shall be evaluated by the school quarterly and reported to the State Board or its representative. For a school that has been licensed for six years or more, if the State Board deems an evaluation necessary, the State Board may require the bond amount to be evaluated by the school quarterly and reported to the State Board or its representative.b. A quarterly evaluation requiring an increase of five percent (5%) or more in the amount of the bond held by the school shall require an immediate increase in the bond amount.c. Bond amounts shall be evaluated pursuant to this subdivision and the rules of the State Board of Community Colleges and State Board of Proprietary Schools at the time of the school's annual license renewal and increased if necessary regardless of the amount of the change. (c) An applicant that is unable to secure a bond may seek a waiver of the guaranty bond from the State Board of Community Colleges and approval of one of the guaranty bond alternatives set forth in this subsection. With the approval of the State Board, an applicant may obtain in lieu of a bond: (1) An assignment of a savings account in an amount equal to the bond required (i) which is in a form acceptable to the State Board of Community Colleges; (ii) which is executed by the applicant; and (iii) which is executed by a state or federal savings and loan association, state bank, or national bank, that is doing business in North Carolina and whose accounts are insured by a federal depositors corporation; and (iv) for which access to the account in favor of the State of North Carolina is subject to the same conditions as for a bond in subsection (b) of this section.(2) A certificate of deposit (i) which is executed by a state or federal savings and loan association, state bank, or national bank, which is doing business in North Carolina and whose accounts are insured by a federal depositors corporation; and (ii) which is either payable to the State of North Carolina, unrestrictively endorsed to the State Board of Community Colleges; in the case of a negotiable certificate of deposit, is unrestrictively endorsed to the State Board of Community Colleges; or in the case of a nonnegotiable certificate of deposit, is assigned to the State Board of Community Colleges in a form satisfactory to the State Board; and (iii) for which access to the certificate of deposit in favor of the State of North Carolina is subject to the same conditions as for a bond in subsection (b) of this section.N.C. Gen. Stat. § 115D-95
Amended by 2024 N.C. Sess. Laws 57,s. 3J.18-c, eff. 7/1/2025, applicable to licenses issued or renewed on or after that date.Amended by 2011 N.C. Sess. Laws 308, s. 8, eff. 1/1/2012.Amended by 2009 N.C. Sess. Laws 562, s. 2, eff. 7/1/2010.1955, c. 1372, art. 30, s. 5; 1957, c. 1000; 1961 , c. 1175, s. 9; 1981 , c. 423, s. 1; 1987 , c. 442, ss. 1, 2; 1989 (Reg. Sess., 1990), c. 824, s. 1.This section is set out more than once due to postponed, multiple, or conflicting amendments.