Before considering the initial approval of a public institution granting baccalaureate or higher degrees, the Commission shall receive assurance from the institution's governing board that it will support adequate funding for capital and operating costs of the institution. Private Institutions Granting Baccalaureate or Higher Degrees. For a private institution granting baccalaureate or higher degrees, the governing board, or the incorporators if the board has not yet been selected, shall provide a surety bond or letter of credit issued by a surety company or banking institution authorized to transact business in Maryland with a credit rating satisfactory to the Commission in an amount: Adequate to provide refunds for students for current tuition and fee liability and to cover the administrative cost associated with the instrument claim; but Not less than $500,000. The surety bond or letter of credit shall be in place for 6 years. If, during the term of the guarantee, the institution's current tuition and fee liability exceeds the level of the initial guarantee, the required level may be adjusted at the discretion of the Secretary. Private Associate Degree-Granting Institutions. For a private associate degree-granting institution, the governing board, or the incorporators if the board has not yet been selected, shall provide a surety bond or letter of credit issued by a surety company or banking institution authorized to transact business in Maryland with a credit rating satisfactory to the Commission in an amount: Adequate to provide refunds to students for current tuition and fee liability and to cover the administrative cost associated with the instrument claim; but Not less than $300,000. The surety bond or letter of credit shall be in place for 4 years. If, during the term of the guarantee, the institution's current tuition and fee liability exceeds the level of the initial guarantee, the required level may be adjusted at the discretion of the Secretary. If an institution intends to cease or ceases operations, the institution shall use the balance of the financial guarantee with the approval of the Secretary or the Secretary's designee in order to: Conduct an orderly closure of the institution; and Refund tuition monies owed to students.