OAR 583-030-0056
Bond and Letter of Credit Amounts; Amount Reductions
(1)
Unless otherwise provided in sections (2) or (3), or as provided in OAR 583-030-0035 (Standards for Schools Offering Degree Programs In or From Oregon)(17)(c), a surety bond shall be in an amount, equal to the rolling annual average of prepaid tuition.(a)
For a school that has operated in Oregon for one year or more, the rolling annual average of prepaid tuition is defined as half of the average of unearned tuition at the start of each term when tuition is due. Schools shall average the unearned tuition at the beginning of each semester or quarter for the prior year for which academic credit hours were awarded and/or authorized, and divide by two. At the discretion of the Commission the tuition income of non-Oregon based enrolled students may be part of the calculation of the rolling average. “Unearned tuition” is as is described in OAR 583-030-0035 (Standards for Schools Offering Degree Programs In or From Oregon)(18)(a).(b)
For a school that has operated in Oregon for less than one year, the rolling annual average of prepaid tuition will be a reasonable amount established at the director’s discretion based on the school’s financial projections and estimate of the rolling average of Oregon enrollment and tuition income during the first year of operation, or $25,000 whichever is greater. At the discretion of the Commission, the tuition income of non-Oregon based enrolled students may be part of the calculation of the rolling average.(c)
For a non-Oregon publicly owned school, the rolling annual average of prepaid tuition is the gross tuition income received from all Oregon enrolled students from the previous year divided by four, or $25,000 whichever is less. At the discretion of the Commission, the tuition income of non-Oregon based enrolled students may be part of the calculation of the rolling average.(2)
Notwithstanding section (1), a school may obtain a bond or letter of credit in an amount less than its rolling annual average of prepaid tuition upon the approval of the Commission. Eligibility for a reduced bond or letter of credit is as follows:(a)
A school may receive a reduction in the amount of its bond or letter of credit up to 50 percent of its rolling annual average of prepaid tuition if it demonstrates to the Commission’s satisfaction that it:(A)
Has received a United States Department of Education, Federal Financial Aid, financial responsibility composite score of 1.5 or greater for the last two consecutive years;(B)
Has not been sanctioned in the last two years, is not at risk, probation, suspension or revocation by the Commission or its institutional accreditor;(C)
Is not under investigation by the United States Department of Education or any other federal agency for a violation that could result in loss of Title IV aid privileges and does not otherwise have any restrictions or warning pertaining to its eligibility for federal programs;(D)
Is not under review for potential probation, suspension or revocation of its operational or degree-granting authority by any state; or(E)
It has an Oregon campus that does not participate in Federal Financial Aid, and meets the requirements set forth above in OAR 583-030-0054 (Cancellation of Bond or Letter of Credit by Surety or Institution)(2)(a)(A) through OAR 583-030-0054 (Cancellation of Bond or Letter of Credit by Surety or Institution)(2)(a)(D). The school has established a stable operation for the last two years, and demonstrates in its financial planning and audited financial statements that it has dedicated cash reserves for refunds, and demonstrates the capacity to refund unearned tuition.(b)
A school may receive a reduction in the amount of its bond or letter of credit up to 75 percent of its rolling annual average of prepaid tuition if it demonstrates to the Commission’s satisfaction that it:(A)
Has received a United States Department of Education, Federal Financial Aid, financial responsibility composite score of 1.5 or greater for the last five consecutive years;(B)
Has not been sanctioned in the last five years, is not at risk, probation, suspension or revocation by the Commission or its institutional accreditor;(C)
Is not under investigation by the United States Department of Education or any other federal agency for a violation that could result in loss of Title IV aid privileges and does not otherwise have any restrictions or warning pertaining to its eligibility for federal programs;(D)
Is not under review for potential probation, suspension or revocation of its operational or degree-granting authority by any state; or(E)
It has an Oregon campus that does not participate in Federal Financial Aid, and meets the requirements set forth above in OAR 583-030-0054 (Cancellation of Bond or Letter of Credit by Surety or Institution)(2)(b)(A) through OAR 583-030-0054 (Cancellation of Bond or Letter of Credit by Surety or Institution)(2)(b)(D). The school has established a stable operation for the last five years, and demonstrates in its financial planning and audited financial statements that it has dedicated cash reserves for refunds, and demonstrates the capacity to refund unearned tuition.(3)
Publically owned institutions located outside of this state are required to issue a letter of credit or surety bond. The letter of credit can be issued by the authorizing agency in the state where the school is located, guaranteeing that the state of origin shall provide any refunds or other financial compensation required by Oregon law in the event that the institution cannot or declines to do so.(4)
Commencing 2016, a school approved by the Commission to confer any academic degree under ORS 348.606 (Prohibition on conferring or offering of degree before approval obtained) must obtain a surety bond or letter of credit on an annual basis on or before September 1. However for the school year 2015-2016, the documents shall be provided within 90 days of the date of the promulgation of these rules.
Source:
Rule 583-030-0056 — Bond and Letter of Credit Amounts; Amount Reductions, https://secure.sos.state.or.us/oard/view.action?ruleNumber=583-030-0056.