KRS 165A.360: License -- Bond or other collateral -- Suspension or renewal --

Transferability -- Voidable student contracts.

(1) (a) No person shall maintain or operate a proprietary school located and doing

business within this state until the school has b een issued a license by the

commission pursuant to the provisions of KRS 165A.310 to 165A.410.

(b) No person shall maintain or operate a proprietary school located without this

state and do business within this state until the school has been issued a

license by the commission pursuant to the provisions of KRS 165A.310 to

165A.410.

(c) No license shall be issued by the commission to any proprietary school which

denies enrollment to any pupil on account of race, color, or creed. The

Kentucky Commission on Hu man Rights shall have the power to investigate

discriminatory practices of any proprietary school and shall report to the

commission. Upon receipt of a report that a school is engaging in

discriminatory practices, the commission shall deny or suspend the l icense of

the school in accordance with the provisions of this section and after notice

and public hearing as required herein.

(2) No proprietary school shall be issued a license unless it applies, through its officers

or an owner, upon forms provided by t he commission, and unless the application is

accompanied by a fee as established by the commission and a good and sufficient

surety bond or other collateral in a form approved by the commission, in a penal

sum of not less than twenty thousand dollars ($20,000).

(3) (a) The surety bond or other collateral shall be conditioned by the commission to

recover all necessary administrative costs, including but not limited to costs:

1. For the acquisition, permanent filing, and maintenance of student

records of the school;

2. To provide indemnification to any student or enrollee or his parent or

guardian suffering loss or damage as a result of any fraud or

misrepresentation used in procuring his enrollment or as a result of any

fraud or misrepresentation as represent ed by the application for the

license; or

3. As a result of the student being unable to complete the course or courses

because the school ceased operations.

Such indemnification shall, in no case, exceed the advanced tuition paid or to

be paid by the stud ent or students or any parent or guardian and regardless of

the number of years that a school's bond is in force, the aggregate liability of

the surety bond shall, in no event, exceed the penal sum of the bond. The

surety bond or other collateral may be continuous.

(b) 1. Any claimant may file with the commission a duly verified claim against

a proprietary school.

2. The commission shall consider claims in a timely manner after ten (10)

days' written notice by certified mail, return receipt requested, to the

school cited in the claim, giving the time and place of the hearing.

3. If the claim is found to be correct and due to the claimant, and if the

commission cannot effect a settlement by persuasion and conciliation,

the commission shall make a demand upon the principal on the bond or

other collateral and the surety thereon, and if not paid may bring an

action on such bond in Franklin Circuit Court.

(4) A surety on the bond or other collateral may be released after the surety has made a

written notice to the commission at least thirty (30) days prior to the release.

(5) The surety bond or other collateral shall cover th e period of the license, except

when the surety shall be released in the manner as provided by this section.

(6) (a) The license shall be suspended by operation of law when the proprietary

school is no longer covered by a surety bond or other collateral as required by

this section; but the commission shall cause the proprietary school to receive

at least ten (10) days' written notice prior to the release of the surety to the

effect that the approval shall be suspended by operation of law until another

surety bond or other collateral is filed in the same manner and like amount as

required for the initial surety bond.

(b) The license shall be suspended by operation of law at any time any certified

proprietary school denies enrollment to any pupil, on account of race, color, or

creed.

(7) The application for a license shall be accompanied by such supporting documents as

the commission may require. The application and accompanying data shall be

certified as true and correct in content and policy by the chief exec utive officer of

the proprietary school.

(8) A license shall be valid for a period of one (1) school year. A license may be

renewed in the same manner and under the conditions prescribed by the

commission.

(9) Licenses are transferable to another owner. If a change of ownership occurs, the

new owner shall, within ten (10) days, reexecute and affirm the application for

license and the information therein, governing the license in effect at the time of

sale. The commission may establish a reasonable fee for t he recording and

processing of such changes.

(10) The bonding or other collateral requirements herein set forth may be reduced at the

sole discretion of the commission upon a showing by the proprietary school that

they are excessive in the case of any particular proprietary school.

(11) (a) Contracts by and between a proprietary school operating or doing business

within this state and a student are voidable at the option of the student unless

the school has been previously issued a license by the commission.

(b) No proprietary school operating or doing business within this state shall be

entitled to any money collected from students, in whatever manner collected,

unless the school has been previously issued a license by the commission.

(c) Contracts by and b etween a proprietary school operating or doing business

within this state which are entered into prior to the issuance of a license by the

commission, shall be voidable at the option of the student notwithstanding any

subsequent issuance of a license to the school by the commission.

(d) Restitution of any money paid by a student under a contract voided pursuant

to this section, may be obtained through action brought by the student in either

District Court or Circuit Court in the county of the student's resi dence or other

appropriate court, at the option of the student.