With fall open houses and visits from prospective students well under way, it is time for schools to plan ahead and take a fresh look at their enrollment contracts. A well-drafted enrollment contract not only confirms the tuition obligation; it will clearly define the relationship between school and family, and provide strong enforcement tools. Before you start your school's contract review for the 2020-2021 school year, consider these top tips and common trouble spots:
Electronic Contracts and Signatures
Obtaining signatures on paper contracts places a large administrative burden on schools. If you haven't already, consider taking the enrollment contract online. There are plenty of benefits to doing so, not the least of which is reducing time spent tracking down paper agreements. If your school has already taken its contract online or is considering doing so, it is important to implement the following practices to ensure your agreement is binding and enforceable:
Standards of Conduct
An enrollment contract should provide the school with the ability to remove a student for failure to follow school policies. In addition, an enrollment contract can and should include clear guardrails for families regarding school policies and standards of conduct that can help a school navigate challenging situations that may arise throughout the school year. An enrollment contract should not only refer to the parent handbook; it should also state that the school reserves the right to remove a student based on the conduct of a parent or other adult. Similarly, contract language may hold parents or guardians responsible for certain financial obligations if the school must get involved in a divorce or custody dispute.
Parent Signatures
Enrollment contracts can be tricky when dealing with parents or guardians who are divorced, separated, or out of the picture. Who is authorized to sign? Must the school obtain the signatures of both parents or guardians? What if only one parent is financially responsible for the tuition?
Whenever possible, ensure that both parents or guardians sign the enrollment contract. Obtaining both signatures will ensure that each parent or guardian understands that they are responsible for tuition payments. Additionally, if your school incorporates non-financial terms into the enrollment contract (e.g., provisions regarding student and parent conduct), obtaining both parents' signatures ensures their commitment to comply with those additional provisions. Alternative signature provisions may be necessary to address situations where only one parent (or grandparent) is financially responsible, but both are agreeing to all remaining provisions.
Perpetual Enrollment Contracts
Generally, an enrollment contract for one school year should clearly define the start and end date of the contract, which corresponds with the school year and grade level of the student. Some schools, however, have considered moving to a perpetual (or evergreen) enrollment contract, which allows students to be automatically re-enrolled for the following school year unless their parents notify the school of their decision not to return. Although the benefits of a perpetual contract can be appealing, and may even help schools with student retention and planning for the coming year, such contracts should be carefully drafted to avoid potential pitfalls. For example, you will need to consider such circumstances as the following: families seeking to withdraw after yearly tuition is announced, accurately reflecting changes in school policy from year to year, and terminating an enrollment contract for a family that may not be invited to return.
The Truth in Lending Act
Often overlooked is the potential applicability of the Truth in Lending Act to a school's enrollment contract. Generally speaking, when a school charges a finance charge or permits a tuition payment plan of five payments or more, the school will need to provide a Truth in Lending Act disclosure to parents at the time they are completing the enrollment contract. It is important to review your school's contract to determine whether such disclosure is required.
Withdrawal and Cancellation
Clear language regarding the school's ability to enforce the financial obligation in the event of a student's withdrawal or dismissal prior to the end of the contract term is a key component of the enrollment contract. On this point, some courts have even waded into the discussion, establishing further parameters for when the court will (and will not) enforce a parent's obligation to pay tuition after cancellation or withdrawal. Schools should carefully draft these provisions to be compliant with state law, but also clearly and unambiguously outline the circumstances under which they will refund the deposit, refund tuition paid, and/or consider any waiver of the continuing tuition obligation.
