Note: Iowa House File 644 went into effect on July 1, 2021. These house file changes affect Iowa Code Sections 714.18, 714.23, and 714.25. However, the Iowa Legislature’s website will not reflect these changes until later this year.
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.
Entities that must file evidence of financial responsibility are colleges, universities, and other types of schools and education providers including but not limited to:
- Driver's education schools
- Real estate and appraisal schools
- Private non-degree granting allied health schools
- Cosmetology, barbering, and massage therapy schools
- Other non-degree granting vocational schools
- Schools of religious study
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 firstname.lastname@example.org 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 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 must be referenced in this documentation.
Complete and Submit an Application
A school must complete and submit Iowa College Aid's Financial Responsibility Application.
Examples of these schools include but are not limited to:
- 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)
Note: Schools that must be authorized under Iowa’s Registration (Iowa Code Chapter 261B) or Exemption from Registration (Iowa Code Section 261B.11(2)) laws will find their financial responsibility questions embedded in those applications.
What requirements may apply in addition to financial responsibility?
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 an exemption from filing evidence of financial responsibility.
Who do I contact?
For further information, contact the Postsecondary Authorization Team.