(a)

(1) At the time application is made for authorization to operate, or for renewal of the authorization, the commission may require the postsecondary educational institution making the application to file with the commission a good and sufficient surety bond in a penal sum in the amount of ten thousand dollars ($10,000) for in-state institutions and twenty thousand dollars ($20,000) for out-of-state postsecondary educational institutions that provide all or part of their instruction in this state, including out-of-state institutions that begin operation of branch campuses in this state after July 1, 1989, or such other sum as may be provided by the commission. Institutions providing primarily religious instruction or not organized as private postsecondary educational institutions shall maintain a ten thousand dollar ($10,000) institutional surety bond. The bond shall be executed by the applicant as principal and by a surety company qualified and authorized to do business in this state.

(2) A cash surety bond in the amount of ten thousand dollars ($10,000) or twenty thousand dollars ($20,000), as applicable, on deposit in this state in a bank or savings and loan association that is federally insured may be filed instead of the corporate bond, subject to approval by the commission. This cash surety bond shall be payable upon demand by the commission under the same conditions specified in this section for corporate bonds and not subject to withdrawal without the approval of the commission.

(3) The bond shall be conditioned to:

(A) Initially provide indemnification to any student or enrollee or the student's or enrollee's parents or guardian, or class thereof, determined to have suffered loss or damage as a result of any act or practice that is a violation of this part by the postsecondary educational institution, and that the bonding company shall pay any final, nonappealable judgment rendered by the commission or any court of this state having jurisdiction, upon receipt of written notification of the judgment; and

(B) Pay, from any remaining funds to the special agency account established pursuant to § 49-7-2014, an amount to be assessed by the commission for the administrative costs associated with maintaining academic records pursuant to § 49-7-2016, including the collection, conversion, and retention of all academic records.

(4) Regardless of the number of years that the bond is in force, the aggregate liability of the surety on the bond shall in no event exceed the penal sum of the bond.

(5) The bond may be continuous.

(b)

(1) An application for each agent's permit for an out-of-state institution shall be accompanied by a good and sufficient surety bond in the penal sum of five thousand dollars ($5,000) for each agent. 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 may be in blanket form to cover more than one (1) agent for a postsecondary educational institution, but it shall cover each agent for the institution in a penal sum of five thousand dollars ($5,000), or other sum that may be provided by the commission.

(2) A cash surety bond in the amount of five thousand dollars ($5,000) for each agent of an out-of-state institution on deposit in this state in a bank or savings and loan association that is federally insured may be filed instead of the corporate bond, subject to approval by the commission. This bond shall be payable upon demand by the commission under the same conditions specified in this section for corporate bonds and not subject to withdrawal without the approval of the commission.

(3) The bond shall be conditioned to provide indemnification to any student, enrollee, or the student's or enrollee's parents or guardian, or class thereof, determined to have suffered loss or damage as a result of any act or practice that is a violation of this part by the agent, and that the bonding company shall pay any final, nonappealable judgment rendered by the commission or any court of this state having jurisdiction, upon receipt of written notification of the judgment.

(4) Regardless of the number of years that the bond is in force, the aggregate liability of the surety on the bond shall in no event exceed the penal sum of the bond.

(5) The bond may be continuous.

(c)

(1) The corporate 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 shall be released as provided in this section.

(2) A surety on any bond filed under this section may be released from the bond after the surety serves written notice of the release to the commission sixty (60) days prior to the release. The release shall not discharge or otherwise affect any claim theretofore or thereafter filed by a student or enrollee or the student's or enrollee's parents or guardian for loss or damage resulting from any act or practice that is a violation of this part alleged to have occurred while the bond was in effect, nor for an institution's ceasing operations during the term for which tuition has been paid while the bond was in force.

(3) A cash surety bond shall remain on file for one (1) year after the expiration of the period of authorization to operate or the agent's permit, as appropriate. The expiration or withdrawal of the cash bond shall not serve to diminish or nullify the rights of claimants. The claimants shall have the same rights as claimants have against a postsecondary educational institution or agent that filed a corporate bond that was subsequently released, as described in this section.

(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. The commission shall cause the institution or agent, or both, to receive at least thirty (30) days' written notice prior to 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 and like amount as the bond being terminated.