Under Iowa Code Section 714.18, every person, firm, association, or corporation that maintains or conducts in Iowa any course of instruction via classroom instruction, correspondence or distance education, or that solicits in Iowa the sale of such a course, must file evidence of financial responsibility with the Iowa College Student Aid Commission (the Commission). This requirement is not exclusive to postsecondary education institutions.
Postsecondary Educational Institutions
The requirements of Iowa Code Section 714.18 apply to all Iowa-based and out-of-state for-profit postsecondary educational institutions. These requirements also apply to certain Iowa-based non-profit institutions and, with rare exception, all out-of-state non-profit postsecondary educational institutions that offer courses of instruction in Iowa. An out-of-state postsecondary educational institution that offers a course of instruction via distance education in Iowa and that is not required to register in Iowa for that purpose must nevertheless file evidence of financial responsibility with the Commission or substantiate its qualification for an exemption (see below for more information about exemptions).
Other Instructional Schools
Iowa Code Section 714.18 also applies to other instructional schools that offer courses which may not be restricted to postsecondary students and that do not result in postsecondary educational credentials. These schools and courses include, but are not limited to, those that offer driver training, real estate licensure or continuing education, taxidermy training, and computer software training.
Financial Responsibility Application Process and Required Documentation
A postsecondary educational institution or instructional school that must file evidence of financial responsibility must complete an application that the Commission supplies for this purpose. A separate application is provided for driver education schools. The Commission accepts a completed application in any one of the following ways: via U.S. Mail, fax, or electronic transmission as an imaged or PDF attachment to an e-mail. It is not necessary to send the Commission a completed application to file evidence of financial responsibility in both paper and electronic format.
A completed financial responsibility application must be accompanied by all of the following:
- Documentation of a continuous corporate surety bond payable to the State of Iowa in the amount of $50,000. The application includes bond language that a school's bonding agent should use to document the bond.
- A school that is renewing its financial responsibility application and that previously filed documentation of the requisite bond with the Commission is not required to submit another copy of the bond with its renewal application. Instead, the school may submit documentation that the bond remains in effect, such as a receipt for payment of an annual premium that extends the bond's coverage. A school may also request that its bonding agent confirm that the bond is current by submitting a letter or e-mail to the Commission's Postsecondary Registration Administrator.
- A copy of any catalogue, prospectus, brochure, or other advertising materials intended for distribution in Iowa. This material must state the cost of the course(s) offered and the schedule of refunds for portions of the course(s) not completed or state that no refund is provided. A for-profit postsecondary educational institution with at least one program of more than 4 months in length that leads to a degree, diploma, or license must adopt a tuition refund policy that complies with Iowa Code Section 714.23 (see below for additional information about the Iowa tuition refund policy) and disclose its complaint policy in its catalogue or other materials that are intended for distribution in Iowa.
A cosmetology or barbering school must produce all of the following:
- Documentation of a continuous corporate surety bond in favor of the State of Iowa in the amount of $50,000 or ten percent of the total annual tuition the school collects, whichever is less.
- A school that wishes to file a bond based on a percentage of total annual tuition must provide the Commission with a notarized statement attesting to the total amount of tuition the school collected in the preceding 12-month period.
- The bond amount will be reduced by the amount of a performance bond the United State government requires the school to file pursuant to federal law.
- The Commission may accept a letter of credit from a cosmetology or barbering school in lieu of a bond, and for the amount of the bond that would otherwise have been required.
- Contact information for the Iowa resident agent the school designated at the time it filed with the Iowa Secretary of State for the purpose of transacting business in Iowa.
- A copy of any catalogue, prospectus, brochure, or other advertising materials intended for distribution in Iowa. This material must state the cost of the course offered and the schedule of refunds for portions of the course not completed or state that no refund is provided. A for-profit postsecondary educational institution with at least one program of more than 4 months in length that leads to a degree, diploma, or license must adopt a tuition refund policy that complies with Iowa Code Section 714.23 and disclose its complaint policy in its catalogue or other materials that are intended for distribution in Iowa.
Financial Responsibility Exemptions
A school that would otherwise be required to file evidence of financial responsibility and believes that it qualifies for an exemption under Iowa Code Chapters 714.19 should apply to the Commission for acknowledgement of the claimed exemption. The Commission accepts a completed application to claim an exemption in any one of the following ways: via U.S. Mail, fax, or electronic transmission as an imaged or PDF attachment to an e-mail. See contact information for the Commission's postsecondary registration administrator below. It is not necessary to send the Commission a completed exemption application in both paper and electronic format.
Note: A postsecondary education institution that qualifies for an exemption from the financial responsibility provisions of Iowa Code may nevertheless be required to register in Iowa to offer a course of instruction via classroom instruction or distance education in Iowa. The registration provisions of Iowa Code Chapter 261B and financial responsibility provisions of Iowa Code Section 714.18 and 714.19 operate independently.