(a) At the time application is made for authorization to operate, or for renewal of an authorization to operate the commission may require the postsecondary educational institution to file a surety bond in the amount determined by the commission. The amount shall be determined by the number of students the institution seeks to enroll. The amount of the surety bond shall be reexamined by the commission upon each renewal of the authorization to operate to determine if a larger or smaller bond would be appropriate to ensure adequate protection for the students or enrollees, or their parents or guardians, or classes thereof. The bond shall be executed by the applicant as principal and by a surety company qualified and authorized to do business in this state and shall be conditioned to provide indemnification to any student or enrollee, or the student's or enrollee's parent or guardian, or class thereof, determined to have suffered loss or damage as a result of an act or practice which is a violation of this chapter by the postsecondary educational institution and that the bonding company shall pay a final nonappealable order of the commission or judgment of a court of this state having jurisdiction, upon receipt of written notification of the order or judgment. The aggregate liability of the surety for the bond of the institution or agent involved in the order or judgment may not, in any event, exceed the amount of the bond.

(b) An application for an agent's permit shall be accompanied by a surety bond in the amount determined by the commission to be necessary for the protection of the students or enrollees, or their parents or guardians, or classes of these, or to reflect an institution's volume of business in the state. The bond shall be executed by the applicant as principal and by a surety company qualified and authorized to do business in this state. The bond shall be conditioned to provide indemnification to any student or enrollee or the student's or enrollee's parents or guardian, or class of these, determined to have suffered loss or damage as a result of an act or practice which is a violation of this chapter by the agent.

(c) The surety bond to be filed under this section shall cover the period of the authorization to operate or the agent's permit, as appropriate, except when a surety is released as provided in this subsection. A surety on a bond filed under this section may be released from that bond after the surety serves written notice of the release to the commission and to the bonded agent or institution 45 days before the release. However, the release does not discharge or otherwise affect a claim filed by a student or enrollee, or a parent or guardian, or class thereof, before or after the release for loss or damage resulting from an act or practice which is a violation of this chapter alleged to have occurred while the bond was in effect or for an institution's ceasing operations during the term for which tuition has been paid while the bond was in force.

(d) Authorization for an institution to operate and an agent's permit shall be suspended by operation of law when the institution or agent is no longer covered by a surety bond as required by this section. However, the commission shall give the institution or agent, or both, at least 30 days written notice before the release of the surety, to the effect that the authorization or permit shall be suspended by operation of law until another surety bond is filed in the same manner as, and in a like amount to, the bond being terminated.

(e) In lieu of the surety bond required in (a) and (b) of this section, the applicant may file with the commission a cash deposit or other negotiable security, acceptable to the commission, in the amount specified for bonds.