When a Family Wants to Be Released from an Enrollment Agreement

This article is not legal advice. It offers school leaders thought-provoking information based on experience, general knowledge of business contracts, and the practical realities of running an independent school. Contract law, consumer-protection law, court procedure, and collection law vary considerably from state to state. Every school should have its enrollment agreement and collection practices reviewed by an attorney licensed in the state where it operates.

Every school leader eventually receives the call.

“We’ve decided not to enroll after all.” “We’re moving.” “My husband lost his job.” “Our child was accepted somewhere else.” “We didn’t get enough financial aid.” “The school isn’t working for our child.” “We simply can’t afford the tuition.”

Sometimes the family calls months before the school year opens. Sometimes the call comes in August, after teachers have been hired, classrooms set up, budgets approved, and other applicants turned away. Sometimes the child has already attended for several months.

The parents may see this as canceling a service they no longer need. The school sees something very different: a binding financial commitment it has already relied on.

What should the school do?

The legal answer starts with the enrollment agreement and the law of the state where the school operates. But the wisest answer also weighs fairness, compassion, consistency, collectability, community relationships, and public perception. A school may have a legal right to collect an entire year’s tuition and still decide that exercising it would be unwise. Another school may feel genuine sympathy for a family and still conclude that releasing them without consequence would be unfair to every family that honored the same commitment.

There is often no easy answer.

An enrollment agreement is a real contract

Parents don’t always think of an enrollment agreement the way they think about a mortgage, a car lease, or a business contract. Enrollment forms are often completed online alongside health forms, emergency contacts, permission slips, and requests for records. Parents click through quickly, assuming they’re handling routine paperwork.

But an enrollment agreement is ordinarily meant to be binding. The family promises to pay tuition; in return, the school accepts the child, reserves a place, and makes financial and operational commitments in reliance on that promise. A child never actually attending doesn’t necessarily void the contract. A family may still owe tuition if it withdrew after the cancellation deadline, even if the school never taught the child a single day.

That can surprise parents, but the school’s obligations don’t begin on the first day of class. Long before children arrive, the school has hired teachers, signed employment agreements, awarded financial aid, purchased materials, set up classrooms, and decided how many additional applicants it can accept — all based on the enrollment commitments already in hand. If three children withdraw from a classroom in August, the school can’t simply cut the teacher’s salary by three-twentieths. It may have turned away qualified applicants months earlier, applicants who have since enrolled elsewhere and are no longer available to fill the vacancy.

This is why independent-school enrollment agreements commonly set a date after which the family becomes responsible for all, or a substantial share, of the year’s tuition.

What the Barrie School case actually decided

There’s an important Maryland case involving the Barrie School, the Montessori school my mother founded in 1932 and that I later led for many years.

In Barrie School v. Patch, a family signed a re-enrollment agreement for the 2004–2005 school year. The agreement let the parents cancel before May 31 and lose only their deposit; withdrawing after that date made them responsible for the full year’s tuition. The parents notified Barrie of their withdrawal on July 14 — 44 days after the deadline. Their daughter never attended, and the family refused to pay the remaining balance.

Barrie sued. What happened next is more complicated, and more instructive, than simply saying the school won.

The District Court found the enrollment agreement valid and the full-year tuition provision a legitimate liquidated-damages clause rather than an unlawful penalty. Even so, it ruled against Barrie because the school hadn’t tried to mitigate its damages by finding another student. The Circuit Court affirmed, noting that Barrie’s overall enrollment had met or exceeded its budget projections — from the lower courts’ view, the school hadn’t shown a loss equal to the tuition it was demanding.

Maryland’s highest court reversed. The Court of Appeals — now the Supreme Court of Maryland — held that when an agreement contains a valid liquidated-damages clause, the non-breaching party has no separate duty to mitigate. The whole point of agreeing to liquidated damages in advance is to avoid litigating the precise financial effect of a breach after the fact. Barrie didn’t have to prove it tried to fill that specific place or calculate its exact loss.

The decision wasn’t unanimous. Chief Judge Robert Bell dissented, pointing to Barrie’s enrollment having met or exceeded projections. In his view, there was no persuasive evidence the withdrawal cost Barrie a full year’s tuition, and requiring the family to pay it risked handing the school a windfall rather than compensating an actual loss.

The school won, and the ruling established an important Maryland rule: a valid liquidated-damages clause can eliminate the ordinary duty to mitigate. But the lower-court reasoning and the dissent shouldn’t be dismissed. They capture a concern many parents, judges, and school leaders share — should a school collect a second full tuition payment once it has already replaced the student or otherwise met its enrollment and revenue goals?

The legal answer in Maryland, under this particular agreement, favored the school. Other states may apply different rules, and a different agreement could produce a different outcome. The full decision is available through Justia’s case law archive.

The Sandy Spring Friends School case

A more recent Maryland dispute shows the other side of this issue.

A mother applied to Sandy Spring Friends School for her preschool-aged daughter, expecting she would need financial assistance for her child to attend. The child was accepted, and the mother signed the enrollment agreement electronically. According to reporting on the case, she never received the assistance she believed she needed, her child never attended, and she hadn’t paid the enrollment deposit. She apparently believed enrollment was incomplete, or that she could withdraw because she couldn’t afford tuition without aid.

The school took a different position: the electronically signed agreement was binding, and the mother had missed the contractual withdrawal deadline. It sought roughly $21,300 in tuition and fees; with interest and attorney’s fees, the total approached $27,000.

The trial judge agreed with the school. The child never attending didn’t, by itself, release the mother from the agreement, and the court entered judgment on the signed contract.

That’s legally significant, but worth being precise about — a trial-court judgment isn’t a binding precedent for other courts. What it does show is that a court may enforce an enrollment agreement even when the child never attends and the parent says she couldn’t proceed without aid.

The legal win didn’t end the matter. After the Washington Post reported on the case, the school’s new head waived the debt, apologized to the mother, and said the school would review its admissions-contract procedures and business-office practices, describing the prior approach as inconsistent with the school’s values.

Two very different outcomes from one dispute: the school prevailed in court, then chose not to collect once the case became a public and institutional-values issue. The Post’s account offers a detailed look at this case and similar tuition disputes.

The lessons worth taking from both cases:

A signed enrollment agreement may be enforceable even if the child never attends.
A parent’s expectation of financial aid may not create a legal contingency unless the agreement or related communications say so clearly.
An unpaid deposit may not invalidate an otherwise binding electronic agreement.
Winning a judgment doesn’t eliminate a school’s reputational, relational, or ethical concerns.
A trial-court win resolves one dispute; it doesn’t set a rule for the next one.

The Sandy Spring case is a reminder that “can we collect?” is only one of several questions a school needs to ask.

Begin by finding out what happened

When a family asks to be released, I wouldn’t start with a collection notice or the harshest paragraph in the agreement. I’d start with a conversation.

Why is the family withdrawing? When did they first know their plans might change? What did they understand when they signed? Did someone at the school say something that isn’t reflected in the written agreement? Is this an unavoidable hardship, a misunderstanding, or simply a change of preference?

There’s a real difference between a military family with unexpected transfer orders and a family that signed agreements with several schools while it postponed a decision. A difference between the death of a parent and a decision to attend a competing school. A difference between a child who developed a serious medical condition and a family that found a cheaper alternative. And a difference between a child who never set foot in the building and a child who occupied a place for six months while the family ran up an unpaid balance.

These distinctions may or may not change the family’s strict legal liability. They should shape how the school evaluates the request.

Establish a review process

Every school should handle release requests through a consistent internal process, including:

A written request from the family explaining the circumstances and the relief sought.
A review of the signed agreement, payment history, financial-aid award, admissions correspondence, withdrawal date, and other relevant records.
Confirmation of what the family was actually told before signing.
An honest look at whether the school met its own obligations.
A calculation of the amount contractually due.
A realistic assessment of the school’s actual financial loss.
Consideration of whether the place can still be filled.
A written decision from the person or committee authorized to make exceptions.

The head of school shouldn’t make one decision because a family is influential, another because a parent is threatening, and a third because the business manager happens to feel sympathetic. And the collection agency or attorney shouldn’t be the one setting policy — they can advise and carry out instructions, but the school’s leadership has to decide what’s consistent with its contract, its finances, its values, and its own past practice.

Create an exceptions policy before the crisis

A strong enrollment agreement doesn’t prevent a school from exercising compassion. It gives the school a secure legal footing from which to exercise judgment.

A full or substantial release may be appropriate when:

The school can’t provide the program or placement it promised.
Enrollment was expressly contingent on a specified amount of financial assistance that wasn’t awarded.
The school determines, before attendance begins, that it can’t appropriately serve the child.
The school made a material misrepresentation that influenced the family’s decision to enroll.

A partial release or negotiated settlement may be appropriate when:

The family must relocate beyond a reasonable commuting distance.
A parent dies, becomes seriously ill, or faces an unexpected financial catastrophe.
The child develops a medical or psychological condition that makes continued attendance impracticable.
The place is filled by another full-tuition student.
The family gives reasonable notice, even though the contractual deadline has passed.

More rigorous enforcement may be appropriate when:

The family simply prefers another school.
The parents knowingly missed a clearly disclosed deadline.
The school turned away other applicants in reliance on the enrollment.
The child attended for part of the year and the account is delinquent.
The family concealed material information during admission.
The family used the agreement to hold a place while waiting on another school’s decision.

These aren’t universal legal rules — they’re examples of the distinctions a thoughtful school might weigh.

Tuition refund insurance: what it does and doesn’t cover

One tool that sits upstream of most of these disputes is tuition refund insurance — sometimes called tuition protection or a tuition refund plan. Rather than fighting over whether a withdrawal was sympathetic enough to warrant a discretionary exception, the school and family both rely on a third-party insurer to make that determination against fixed, pre-agreed criteria.

The best-known program in independent education is the Dewar Tuition Refund Plan, offered by A.W.G. Dewar, Inc., a firm that has provided this kind of coverage since 1930 and is used by well over a thousand schools and colleges across North America. Other insurers offer comparable products, and a school evaluating this option should get quotes from more than one carrier, but Dewar’s plan is a useful model for understanding how the category works generally.

The basic mechanics are fairly consistent across providers:

Coverage must be purchased before the covered period begins — typically before the first day of class or the start of the term. A family cannot buy the policy after a withdrawal is already likely, which prevents the coverage from being used as a last-minute escape hatch.
The policy insures a defined dollar amount of tuition and, often, certain required fees, for a defined period. It does not automatically cover every charge the family pays the school — room, board, and discretionary fees are frequently excluded unless specifically added.
Claims are almost always tied to a covered reason, not a change of mind. The core triggering event is a withdrawal compelled by illness, injury, or a mental health condition, certified by a licensed physician or other qualified professional, that makes it impossible for the student to continue attending for the balance of the covered term.
Refunds are typically partial, not full replacement of the tuition obligation, and the percentage varies by the plan the school or family selects — commonly in the range of 60 to 100 percent of the insured tuition, prorated or fixed depending on the policy, and reduced by whatever refund or credit the school itself already provides under its own withdrawal schedule.
There is usually a claims window. Providers commonly require that a claim be reported within a set number of days of the qualifying event — often around 30 days — with supporting medical documentation.
Reasons families most often assume are covered, but usually are not, include: a change of school preference, academic dismissal, disciplinary dismissal, general financial hardship, dissatisfaction with the program, or a parent’s decision that the fit isn’t right. These are precisely the categories that generate the enrollment disputes discussed earlier in this article, and tuition refund insurance is not designed to resolve them.

Because of that gap, tuition refund insurance is best understood as a tool for one specific category of hardship — medical and psychological withdrawal — not as a general release valve for every family that wants out of a contract. It can still be extremely valuable within that category. It gives the school a neutral third party to point to, takes some of the burden of playing insurer off the business office, and gives anxious families real reassurance before they sign.

Some practical points for a school considering it:

Decide whether the school pays the premium as a standard part of enrollment, whether it is passed through to families as an optional add-on, or whether it is required for families on certain payment plans. Some schools require it for any family using an extended monthly payment plan, since the school is effectively extending credit over the year.
Understand exactly what the plan insures — the full contracted tuition, or only the balance still outstanding at the time of withdrawal. These produce very different outcomes.
Read the exclusions closely, particularly around pre-existing conditions, and understand how the insurer treats withdrawals that occur very early versus very late in the term.
Make sure the enrollment agreement and the insurance program tell a consistent story. If the enrollment agreement says the family owes full tuition regardless of circumstances, but the marketing for the tuition refund plan implies broad protection, families will reasonably feel misled when a claim is denied.
Recognize that insurance addresses risk to the family’s payment obligation to the school; it does not change whether the school itself has any duty to refund tuition it has already collected. Those are two different financial relationships that happen to intersect at the same event.

Self-insuring against withdrawal risk

Some schools, particularly larger or well-endowed ones, ask whether they should skip third-party insurance altogether and self-insure — setting aside their own reserve fund to absorb the financial impact of withdrawals, rather than paying annual premiums to a carrier like Dewar.

This can work, but it is a real financial commitment, not simply a decision to do nothing.

The case for self-insuring:

The school keeps the premium dollars that would otherwise go to a third-party insurer, and over a run of years with few claims, that can be meaningfully cheaper than buying coverage.
The school sets its own criteria for granting a partial or full release, rather than being bound by an insurer’s list of covered reasons. This lets the school extend compassion in situations — such as a job loss, a difficult divorce, or a family in genuine distress — that commercial tuition refund insurance would never cover.
There is no claims-adjustment process or waiting period. The school’s own leadership decides.
Reserve funds not used in a given year remain the school’s asset, rather than being paid out as a premium, regardless of whether any claim occurs.

The case against it:

A single school, even a large one, is a very small risk pool. An insurance company spreads the cost of unlucky years across thousands of policyholders; a school self-insuring is exposed to its own bad luck in full. A cluster of medical withdrawals in one year, or an economic downturn that triggers several hardship requests at once, can hit a reserve fund hard in exactly the year the school can least afford it.
Building an adequate reserve takes years of discipline. A school that starts self-insuring without first accumulating a meaningful reserve is not actually self-insuring — it is simply absorbing losses out of current operating funds, which is a different and riskier thing.
The reserve needs real governance: a target funding level based on some reasonable estimate of expected claims, a policy for when and how it can be drawn down, and board-level oversight, or it tends to quietly disappear into general operations during a tight budget year.
Without a named third-party insurer, the school itself becomes the entity making case-by-case medical and financial judgment calls about families in crisis. That can strain relationships and staff time, and it removes the useful distance a commercial insurer provides between the school’s admissions relationship with a family and a claims decision that might disappoint them.
Self-insurance does not come with the marketing value of being able to tell prospective families, up front, that a recognized tuition protection plan is available — which some families specifically look for when comparing schools, particularly at higher tuition levels.

In practice, many schools land on a hybrid: they offer or require a commercial tuition refund plan to cover the medically driven withdrawals it is built for, while separately maintaining a modest discretionary reserve, governed by the exceptions policy described earlier in this article, to handle the harder, more subjective cases that no insurance policy was ever going to cover. That combination lets the school point families to objective, third-party-administered coverage for the most sympathetic and predictable category of loss, while preserving its own judgment and resources for the situations that call for genuine discretion.

What does the school actually want?

When disputes arise, schools sometimes move toward litigation before deciding what outcome they actually want. The full balance? A reasonable contribution toward the loss? A quick settlement? An orderly payment plan? A clean, confidential end to the relationship?

The answer matters, and there’s usually room to negotiate:

Retention of the enrollment deposit.
Payment of one, two, or three months’ tuition.
Tuition until the place is filled.
A percentage of the remaining balance.
A reduced lump-sum payment.
A longer payment plan.
Release based on documented hardship.
Payment of the school’s actual, unrecoverable costs.

A negotiated settlement isn’t an admission that the agreement was invalid — it’s a business decision that acknowledges the uncertainty, expense, and emotional cost of enforcement. Any settlement should be in writing, reviewed by counsel, and clear about the amount owed, the payment schedule, the withdrawal date, and the claims being released. It should also state plainly that this is a negotiated exception, not a change to the school’s general enrollment policy.

Small-claims court and civil litigation

If negotiation fails, litigation may be the next step. Small-claims court can work well when the amount falls within the state’s jurisdictional limit and the facts are straightforward. The school will generally need to present the signed agreement, evidence the student was accepted, the applicable tuition and fees, the cancellation deadline, the family’s withdrawal notice, a payment history, an accurate balance calculation, and evidence the school fulfilled its own obligations. Procedures and dollar limits vary by state, and many annual tuition balances exceed small-claims limits entirely.

Even a win isn’t a check. The family may lack collectible assets, and enforcing a judgment can require further proceedings involving wages, bank accounts, or property. The school should weigh filing fees, attorney’s fees, staff time, possible counterclaims, and the real odds of recovering the money — and remember that litigation becomes part of the public record, so allegations that were once private can end up in court filings, news coverage, and social media.

Collection agencies and attorneys

A school may hand the account to an attorney or collection agency rather than handling it internally. Choose carefully. Tuition collection touches families, children, former students, and the wider school community — an agency built for aggressive commercial debt collection can do real damage to a school’s reputation.

Third-party collectors are subject to the federal Fair Debt Collection Practices Act and related state and federal rules; some states extend protections further or regulate creditors collecting their own debts. The Consumer Financial Protection Bureau offers a useful general overview of what’s permitted.

The school should insist on:

Professional, respectful communications.
Accurate account information.
No contact with unrelated parents or community members.
No threats the collector isn’t legally entitled or prepared to carry out.
School approval before any litigation.
Prompt referral back to the school if the family raises a credible dispute.
Full compliance with federal and state requirements.

The school remains responsible for the decision to pursue a family, even when someone else is making the calls.

Winning in court and losing in the community

Barrie and Sandy Spring illustrate two different kinds of risk. Barrie lost twice before prevailing in Maryland’s highest court — a path that took time, expense, and persistence through the appellate process. Sandy Spring won at trial, then waived the judgment once the case drew public attention.

Before pursuing enforcement, a school should ask:

How strong is the agreement under our state’s law?
Was the cancellation deadline displayed clearly?
Did the family understand the obligation covered the full year?
Did the school say anything inconsistent with the written agreement?
Was enrollment contingent on aid, testing, placement, or another event?
Did the school accept the student and reserve a genuine place?
Has the school met its own responsibilities?
Has the student’s place already been filled?
Is the school seeking a reasonable estimate of its loss, or a windfall?
Is the amount realistically collectible?
Have comparable families been treated the same way?
How would the facts look if reported accurately in the local paper?
Can the school explain its decision without violating the family’s privacy?

A parent’s threat of bad publicity shouldn’t dictate school policy. But no school should ignore how its actions will look to reasonable people, either. A court decides whether the school has a legal right. It doesn’t decide whether exercising that right is the wisest institutional choice.

What belongs in a modern enrollment agreement

An older agreement — even one built on solid traditional protections like a full-year commitment, a withdrawal deadline, joint financial responsibility, collection costs, and incorporation of the parent handbook — shouldn’t be reused without real revision by qualified local counsel. A modern agreement should address the following clearly.

Identify the parties. Use the school’s exact legal name. Name the student and everyone agreeing to be financially responsible. If both parents are meant to be liable, both should sign — don’t assume a parent who didn’t sign can be held responsible later.

Define the enrollment period. Spell out the school year, program, campus, grade or classroom level, tuition, required fees, deposit, and payment plan.

State when the agreement becomes binding. Is it binding when the parent signs? When the school accepts? When the deposit is paid? Only when all three happen? The agreement, enrollment portal, acceptance letter, and confirmation emails need to give the same answer — the Sandy Spring dispute shows exactly how much damage ambiguity here can cause.

Make the cancellation deadline unmistakable. Don’t bury it in dense legal language. Display it prominently, and consider requiring parents to initial both the deadline and its financial consequence.

Explain the full-year obligation. Say plainly why the family may remain responsible after withdrawal — that the school commits to staffing, aid, budgets, and classroom composition in reliance on enrollment, and may not be able to find a replacement after the deadline passes.

Use the correct legal theory. State clearly whether the remaining tuition is an unconditional payment obligation, liquidated damages, or another remedy — these aren’t interchangeable, and the wording should match the law of the school’s state. If relying on liquidated damages, the amount should reflect a reasonable estimate of loss anticipated at signing, not a punishment for leaving.

Address financial aid explicitly. If enrollment is binding regardless of the aid award, say so before the family signs. If it’s contingent on a specific amount of assistance, name that amount or build in a short withdrawal window after the award is communicated. No family should discover after signing that it expected a financial-aid contingency the school never intended to offer.

Address withdrawal and dismissal separately. Explain what happens when the family withdraws voluntarily, when the school determines it can’t serve the student, when a student is dismissed for misconduct, when the school asks a family to leave, or when health and safety concerns end attendance. A clause letting the school end services while automatically demanding all remaining tuition can be hard to defend, legally or publicly, especially if the school initiated the separation.

State the relationship between the enrollment agreement and any tuition refund plan. If the school offers or requires coverage such as the Dewar Tuition Refund Plan, or maintains its own self-insured reserve, say so, and be explicit that the insurance program governs claims for medically triggered withdrawals while the enrollment agreement itself governs the family’s baseline financial obligation. Don’t let the two documents imply different things about what a family can expect.

Use reasonable collection provisions. Interest, late fees, and attorney’s fees should comply with state law and bear a reasonable relationship to what the school actually incurs. An automatic 33 percent attorney’s fee, regardless of actual cost, deserves careful legal review.

Establish a dispute process. Identify who receives a release request, how notice may be delivered, the opportunity for internal review, governing law, where a proceeding must be filed, and whether mediation, arbitration, or court will be used. Arbitration isn’t automatically faster or cheaper — understand the tradeoffs before including it.

Be cautious about incorporating the handbook. Requiring compliance with the parent handbook is fine, but the school shouldn’t assume it can rewrite the financial contract by editing the handbook after the agreement is signed. Important financial terms belong in the agreement itself.

Permit reliable electronic notice. Requiring only certified mail is outdated. Allow notice via a designated email address or the enrollment portal to create a reliable delivery record.

Reconsider questionable remedies. Provisions claiming a lien on a student’s property or records deserve careful review — state law may regulate access to and transfer of school records, and using a child’s records as leverage in a financial dispute is rarely wise even where technically lawful. Language granting the school “sole and exclusive discretion” should be reconciled with applicable discrimination, disability, licensing, and consumer-protection law.

Preserve discretion without promising inconsistency. The agreement can authorize exceptions without requiring the same exception every time — but the school should still apply reasonably consistent standards and document why an exception was made.

A strong contract should prevent surprises

The goal isn’t the most intimidating agreement possible. It’s an agreement families can actually understand, that reflects how the school really operates, protects its legitimate financial interests, anticipates predictable disagreements, and can be defended legally, ethically, and publicly. The strongest agreement isn’t the one with the harshest language — it’s the one that produces the fewest legitimate surprises.

Before a parent signs, the school should be able to say plainly: “You’re reserving one of a limited number of places. After this date, we’ll make staffing and budget decisions in reliance on your commitment. If you later decide not to attend, you may still be responsible for the year’s tuition. Please don’t sign until you understand and accept that obligation.”

That conversation may protect the school better than another page of fine print.

When should the school stand firm?

There will be times when enforcement is justified. A school can’t build a responsible budget if enrollment commitments are treated as casual reservations — releasing every family that changes its mind shifts the burden onto the families who stayed, which can shrink resources for children, depress teacher pay, and threaten the school’s stability.

But standing firm doesn’t always mean demanding every possible dollar. Sometimes it means a reasonable contribution toward the loss created. Sometimes it means keeping the deposit. Sometimes it means collecting tuition until the place is filled. Sometimes it means enforcing the agreement in full. And sometimes the wisest move is releasing the family.

The decision shouldn’t come from anger, fear, favoritism, or a wish to make an example of someone. It should come from a careful look at the agreement, the circumstances, the school’s actual interests, its past decisions, and the likely consequences.

A school is both a mission-driven community and a financially responsible organization. Ignoring contracts is irresponsible. Treating every withdrawal as merely a collection opportunity is just as shortsighted. The real work is knowing when to enforce, when to negotiate, and when letting go genuinely serves the school best.

I’ll explore this issue in more depth — enrollment-agreement language, financial-aid contingencies, exceptions policies, tuition refund insurance, negotiated settlements, collections, small-claims court, and public-relations considerations — during our webinar on Thursday, July 23, at 1:00 p.m. Eastern Time.

A final note: none of the above is legal advice, and the description of tuition refund insurance programs above is general and illustrative rather than a summary of any specific policy. Every insurer’s terms differ, and every school’s situation is different. This is a framework for thinking through a hard problem, not a substitute for review by an attorney licensed in your state, and for insurance specifics, a conversation with a qualified insurance broker or the carrier directly.