Who must file evidence of financial responsibility?
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 Iowa College Aid and reapply to demonstrate continuing compliance, at minimum, every two years.
These requirements include schools and education providers located in Iowa and out-of-state that offer courses and programs via in-person or distance education instructional methods.
Postsecondary institutions that must file evidence of financial responsibility include, but are not limited to, nonpublic colleges, universities, and other types of schools and education providers.
The following entities must file the Financial Responsibility application found below on this page:
- Real estate and appraisal schools
- Schools offering solely continuing education
- Out-of-state schools offering only distance education (that do not trigger Iowa’s registration laws under Iowa Code Chapter 261B)
- Personal vehicle driving education schools
The following entities should NOT fill out the Financial Responsibility application as the financial responsibility questions are embedded in the Registration and Exemption from Registration applications:
- Private non-degree granting allied health schools
- Cosmetology, barbering, and massage therapy schools
- Other non-degree granting vocational schools
- Schools of religious study
- Non-public degree granting, accredited schools
What is evidence of financial responsibility?
- A $50,000 continuous corporate surety bond or letter of credit issued by a state or federally chartered bank or credit union;
Note: If your school believes it qualifies for a bond or letter of credit option in an amount less than $50,000, please email stateauthorization@iowa.gov for an application and instructions. - Disclosure to prospective and current students of course or program costs; and
- Disclosure to prospective and current students of the school’s refund policy for students who never begin attendance or withdraw before course or program completion. Note: A for-profit school that offers a postsecondary educational program that leads to a recognized educational credential must adopt a Tuition Refund Policy that complies with Iowa Code Section 714.18 or 714.23, as applicable.
What must a school do to file evidence of financial responsibility?
Obtain or Renew a Continuous Corporate Surety Bond
The school must obtain or renew a continuous corporate surety bond or letter of credit payable to the State of Iowa c/o the Iowa College Student Aid Commission in the amount of $50,000. The obligee’s address is Iowa College Student Aid Commission, 475 SW 5th Street, Ste. D, Des Moines, Iowa 50309-4608. Sample bond verbiage for new bonds can be found here. Iowa College Aid will accept an electronic copy of the bond.
Renewal applicants - A school must submit documentation substantiating that the school’s bond remains current. This documentation could be, for example, a Continuation Certificate that some insurers issue or an annual premium payment receipt that extends the bond's coverage through the present day. The bond number and term date must be referenced in this documentation.
Note: Only an authorized representative or designee of the insurer may sign the bond or continuation certificate.
Complete and Submit an Application
A school must complete and submit Iowa College Aid's Financial Responsibility Application or Driver’s Education Schools Application, as applicable. The person completing the application will first need to create an account through NIC to access an application. Instructions are found here.
Financial Responsibility Application
Driver’s Education Schools Application
Iowa’s personal vehicle driving education schools must complete an annual application.
What requirements may apply in addition to financial responsibility?
A for-profit school may be required to adopt the Tuition Refund Policy under Iowa Code Section 714.23.
In addition, for-profit schools that do not participate in the Federal Student Aid Programs may be required to provide Disclosures under Iowa Code Section 714.25.
Which schools qualify for a financial responsibility exemption?
Public colleges and universities, schools that do not charge for their courses, and certain other limited types of education providers may qualify for a Financial Responsibility Exemption. under Iowa Code Section 714.19.
Questions?
Contact the Postsecondary Authorization Team.