Private Schools and Bonds

Students preparing for a post-secondary education or career path have a lengthy checklist to pore over before making a big-time decision.

The talk about finances and future paths makes for an exciting yet nerve-wracking time. Amid the excitement, students and parents alike sometimes forget to dig just a little bit deeper into the background and financial standing of a potential school.

And that can wind up costing them thousands in lost tuition dollars.

In the last few months alone, several private vocational and technical schools have closed suddenly, taking millions in pre-paid tuition costs with them. Most states have minimal safeguards in place, but the reality is that most consumers will struggle to recover all of their money.

The abrupt closure of schools shows why it's incredibly important for students and parents to know the financial background of a potential school and what safeguards, if any, are in place in the unlikely event it ultimately shutters. 

The Lessons

Recent examples illustrate why it's important for prospective students to do serious homework on the schools they're considering.

Do some digging and Internet searches. Check court records and see what, if anything, the Better Business Bureau has on file.

Students can also contact their state Department of Education or Attorney General's office to learn more about their prospective schools. Make sure the institution is properly licensed and adequately bonded. Ask administrators about their financial standing and what safeguards are in place in the unlikely event the unthinkable happens.

Most importantly, students and parents should go with their instincts. If a school or administrator is less than forthcoming or triggers unease, it's probably time to consider another option.

Chris Birk, a principal at SuretyBonds.com, is a former newspaper and magazine writer and college professor. His work has appeared in more than two dozen newspapers and magazines, including the Chicago Sun-Times, the St. Louis Post-Dispatch and Insurance Journal.