Does College Owe You A Refund?

It’s (mostly) a joke when it’s suggested that a person who says something particularly dumb should call their law school and demand a refund. But for Mark Shaffer, it’s a cause of action.

When my daughter was deciding where to go to college, we were persuaded by George Washington University’s promises of an extraordinary on-campus experience. The school’s recruiting materials tout a dazzling array of opportunities — to engage one-on-one with renowned faculty, join more than 450 clubs and organizations, or explore passions in high-tech labs, vast libraries and state-of-the-art study spaces. The university promises that living at the school opens the door to “world-class” internships, lifelong friendships with neighbors and roommates, and the chance to “become a part of the nation’s capital and make a difference in it every day.” In exchange, GWU expects around $30,000 per semester.

There are two components to the college experience. One is the education. The other is the experience. Whether the claim that his daughter was induced by George Washington University’s college porn seems like a bit of post hoc rationalization. All schools sell themselves as making whites whiter. Puffery isn’t a new concept, and, let’s be real, nobody is so naive as to believe all the hype.

Yet, Shaffer has a very real point as to both: part of what you pay for is the college experience. More importantly, you’re mostly paying for a good education, and despite the efforts to put lipstick on distance learning, it’s not remotely as good as classroom learning.

As college campuses across the country have shut down to slow the spread of the novel coronavirus, most schools, including GWU, have offered only online classes since mid-March. The reason for the shift is not the schools’ fault. But this remote education is nowhere near the caliber of the on-campus experience students were promised. For this reason, I and other GWU parents have requested a partial refund of this semester’s tuition and fees.

Here’s where it gets sticky, given that the law of contract gives rise to a reasonable view that GWU (and, to be fair, every other college) has failed to provide its end of the bargain, an in-person education and educational experience. Of course, they didn’t breach the contract because they’re dishonorable, but for a damn good reason.

Consider the flip side, would Shaffer have wanted, even allowed, his daughter to remain on campus to “enjoy” the benefit of her bargain for an full-blown in-person education? Would his daughter getting infected, ill, maybe worse, in order to GWU to fulfill its obligations under the contract have been the more honorable path to take?

Is the COVID pandemic a force majeure? If so, it would relieve both parties from their contract, meaning that while the college would be freed from its agreement to provide a quality education, Shaffer would similarly be relieved of his duty to pay for an education that wasn’t received.

But the colleges don’t admit that online education is anything but glorious.

The university, for its part, maintains that, because they “continue to deliver quality education, the tuition charged remains the same regardless of format.” As I hope to prove through my case, this is demonstrably false. Many professors are completely new to online teaching, thrust into this challenging format with no preparation. Students’ conversations with teachers are necessarily limited; peer interaction is difficult; study groups are unwieldy. Many of the resources in campus libraries are not available online. Art classes, music classes and all group-discussion classes are of diminished quality. Laboratory work is impossible.

Few outside the campus marketing department would seriously question this. Even if it’s argued that it hasn’t been as bad as it could have been, and profs are trying their best to deliver a decent education, it’s not the same. Or more to the point, it’s not the education agreed upon.

But what about the burden to colleges? Wells College in Aurora, New York, is on the verge of bankruptcy. Colleges have profs to pay and a gaggle of administrators with payments due on their Teslas. They need to keep the revenues flowing to avoid tapping the endowment, even to the point of seeking immunity from liability so they can reopen in the fall and bring students back to their dorm petri dishes. Nobody sends their child to college to die of disease, but then people aren’t going to be as thrilled to pay the outrageous tuition otherwise. Plus room and board are profit centers for colleges.

Of course, GWU and other universities have suffered economically as a result of the coronavirus. But they can hardly claim poverty. GWU has a $1.8 billion endowmentIt is one of the largest landowners in the District of Columbia, with real estate assets in the hundreds of millions of dollars. GWU lists its total assets as exceeding $4.7 billion. The university can certainly afford a partial refund of the tuition money that every parent and student paid for the 2020 spring semester.

Not every college relies almost entirely on current revenue for its continued existence, and many have some big bucks squirreled away in investments to generate capital gains for a new building, that high-priced academic, even a rainy day. But is this pandemic that proverbial rainy day?

Perhaps even more important than the accounting is the principle at stake. I work at a construction company. We are trying hard to hold on to our employees even though the covid-19 crisis has slashed our revenue. But we are not expecting our clients to float us by paying for promised services and products that we now cannot deliver. If we built only half a project but still demanded full payment, we’d be sued — as we should be. Instead, we are doing what we can to meet customers’ needs, and, when we cannot, we are providing discounts and refunds. This is the law; this is how business is supposed to be done.

Is a college education the same as putting up a building? Quantifying the value of in-person v. online education isn’t easy, particularly when it wasn’t because one party to the contract deliberately breaching its obligations because it was being a scoundrel, but doing what was best for its students. Then again, breach of contract isn’t about a moral failing, but a business transaction. The reason for the breach may be entirely reasonable, even laudable, but a breach is still a breach. It’s just a matter of who gets to keep the money.

40 thoughts on “Does College Owe You A Refund?

  1. Grant

    Force majeure only works if you remember to include the clause in your contract.

    E.g. “Only if the force majeure clause specifically includes the event that actually prevents a party’s performance will that party be excused.” Kel Kim Corp. v. Cent. Mkts., Inc., 70 N.Y.2d 900, 902 (1987) (being unable to insure was not delineated in the force majeure clause, so it did not apply).

    I say this because Rutgers, the big school where I am from, has a 3rd party force majeure policy for its contracts, but no student force majeure clause. Oops!

    Reply
  2. Scott Spencer

    I am one of those administrators that needs to make the Tesla payment, except by Tesla payment I need to make alimony payments…

    I understand the argument, and for things like room, board, student fees, and all that jazz it I think he (and anyone else in his shoes) has a valid argument, at least for partial refunds. My institution issued partial refunds for room and board. It hurt a lot and will hamper us for the short to medium term, but it was also “the right thing to do”.

    For the most part, though I don’t think the tuition side of the argument is as valid. Students still were educated this semester. While classes moved online etc faculty were still expected to teach and students were still expected to learn. Final exams still took place, and projects were still submitted and graded. You can have some pretty shitty on ground professors. You get out of your education what you want to get out of it, and what you are willing to work for. There is no guarantee that you are going to learn anything in an on ground class.

    We don’t give refunds because your professor was terrible at their job. We will encourage you to change majors or avoid said professor in the future.

    If this continues and we are forced to stay online only for the upcoming future then the argument would have more validity. Paying “full price” for an online education, even from the hallowed GW, makes no sense.

    Probably off topic, but the ‘rona is going to seriously reshuffle the way higher education operates. Personally, quite happy about this.

    Scott

    Reply
    1. SHG Post author

      My general snark toward admins is “generally” well-earned, but not universally true, so I apologize if it doesn’t apply to you. I take my gratuitous slaps where I can.

      Your arg about bad profs has validity, but mostly because it’s nearly impossible to quantify the quality of a prof, course or major. There are exceptions, such as the thermo prof my son had who didn’t speak English, but that’s an outlier. Online ed, on the other hand, provides a sufficiently distinct line crossed, so it’s not the same as one kid’s bad prof who also happens to be a brilliant scholar and another kid’s dream prof.

      Reply
      1. Scott Spencer

        We have earned whatever snark gets thrown our way and I accept it. So no offense taken. I am a Registrar, I have thick skin……and tummy rub here, always happy to have the host and the other people in this community, comment and criticize I have been in the industry for decades so I don’t always see from the outside.

        I think your argument makes sense when you are dealing with hands on teaching. What I mean is things like (please don’t laugh) theater arts, dance, or the sciences. My institution has a relatively well known conservatory and have no idea how we are going to continue our dance programs. Sciences are in the same place. How do you teach a lab over the internet?

        But history, or English, literature, business management? These can and have gone successfully online. The higher ed accreditors are all requiring us to show (through syllabi, sample teaching, student work product) that the online programs are giving students the same level of instruction that the on ground programs do. It’s not perfect, but I also don’t think it is a total bait and switch.

        That being said, the attorney general in PA has opened an investigation or two at the behest of some of his voters into refunds for tuition from this last semester, so maybe everyone else is onto something and I am delusional….

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        1. Grant

          The simplest argument for an institutional lawyer to make is that the students are due the difference in tuition between regular and online classes.

          I say this with a smirk because, every time I’ve looked into it, online classes are taught at the same, if not a higher, price. Outside of the University of Phoenix, that is.

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          1. Syme

            I seem to recall reading a year or two ago of several Esteemed Institutions of Learning offering all their online lectures for free; I think one was that techschool on the river.

            A legal argument might be around adjunct costs. EIL’s and lesser palaces often require all students take {say} a swimming course to graduate. (This *might* have something to do with funding an expensive Athletics dept. budget.) Or the subsidy comes in the form of “fees” instead. (Nowhere is this more true than those Institutions offering majors in CTE.)

            Are those fees still collected if you are 1500 miles away from the pool/stadium?

            Reply
        2. Kathryn Kase

          The distinction between theoretical and applied work also applies to law school. One might get out of online law school what one puts into it in Tax, Marital Property, or Secured Transactions. However, I would not want to hire, nor do I know any clients who would want to hire, a criminal defense lawyer educated entirely at an online law school. While 60 percent (or more, depending on where you practice) of criminal defense work is written, that 40 percent of courtroom advocacy too often spells the difference between freedom and imprisonment, life and death. Perhaps the time is nigh to suggest again the U.S. licensing bodies require tutelages, as our learned British friends do?

          Reply
          1. SHG Post author

            More realistically, kids doing clinics or externships in third year are missing that opportunity. Then again, they didn’t have those when I went to law school. Did they have them when you went, Kamikaze?

            Reply
    2. DaveL

      You get out of your education what you want to get out of it, and what you are willing to work for. There is no guarantee that you are going to learn anything in an on ground class.

      This is not exactly a great argument for the wisdom of shelling out 5 figures per year on a formal college education versus getting a library card.

      Reply
      1. SHG Post author

        So you’re an admin, a tuition-paying parent, a random person who just happens to pay alimony or something else? It might have been worthwhile to explain why you wrote what you wrote since no one has a clue what it’s supposed to relate to.

        Reply
        1. Jerry

          How is Scott’s alimony relevant to anything?

          I am a wage slave (or was) — I don’t see how Scott’s alimony has any relevance on my daughter having to page tuition (I don’t pay her tuition fwiw). My company didn’t tell its customers they had to keep paying for services they weren’t receiving because I had to pay alimony. In fact, they actually laid me off even knowing I had to pay alimony.

          Colleges can’t deliver what they would like to deliver, so they should refund the money and then seek bailouts with the rest of us from their insurance companies or the government.

          Reply
          1. Scott Spencer

            I know this is a late response. I am sorry about that. I have been busy wasting tuition money on things like preparing diplomas and getting transcripts out to people so they can try to find a job.

            1: The alimony lone was a snark comment back to the snark comment about Tesla’s. I guess I could have referenced ultra marathon entrance fees which are also something I pay for?

            2: Colleges (mine at least) did give you what you paid for, an education. It’s not the same as not being able to go to the pool or the gym. We still taught you or your kids, and you still in theory learned. It may not have been delivered the way you wanted, but the knowledge was still delivered. Unfortunately for you, we are not in the customer service business. It’s a mistake that lots of people make.

            I concede any points made on room and board.

            I am sorry about your furlough though.

            Reply
            1. SHG Post author

              Since this is now an older post, I’m not concerned about it straying off topic and spending some time on a tangent. And no need to apologize about not being on top of replies; no one expects you to make this your full-time job.

              That said, a little strategic poking can turn unfocused or unclear commentary into a useful opportunity to express competing concerns. Your alimony reply to my Tesla snark was a reminder that campus admins aren’t all eating caviar. Jerry’s reply was a reminder that campus admins aren’t the only ones with alimony due. While individual circumstances don’t really change the overall considerations, it reminds all of us to remember that we’ve all got issues to deal with, and to recognize that it’s not all about us. Thank you both for bringing these important considerations forward.

  3. PseudonymousKid

    Pops,

    This is what happens when education is a commodity. You get to write a post trying to apply contract law to something that ought not be a transaction at all and sort through all the marketing double-talk at the same time. Education is not the same as putting up a building.

    We don’t know what the contracts actually say, so why speculate too much? You can talk general principles of contract law all day long, but whatever the contract says is more important almost always. Still, thank god there are attorneys out there looking to pump their families for potentially profitable class action claims amidst the pandemic. It gives me the warm and fuzzies.

    I hate everything about your well-written post. Good job.

    Best,
    PK

    Reply
      1. PseudonymousKid

        You steered away from good faith, which seems correct in the current circumstances.

        If there’s a devil it will be in the details that you also steer clear of to talk generically about the school experience and marketing talk and contract law basics. What exactly did GWU sell Shaffer and on what terms? Is the on-campus experience part of the bundle of goods and services transferred? How can we prove any difference from the baseline experience if we don’t know what that is? Too many questions to be answered.

        Maybe my jurisdiction is so into talking about “parole evidence” and the “four corners of the document” that I’ve been conditioned to immediately go to the source over all else. Bravo for wading into contract law, though.

        Reply
          1. PseudonymousKid

            You’re speculating and relating your feelz in a world that doesn’t give a damn. Philosophical SJ is still the worst, but contract law SJ is in the running.

            Reply
  4. Mark Sinton

    Let’s assume that Mark Shaffer has a good argument and can convince GWU to issue a refund. (I would say that his argument is baseless, but that is besides the point I have to make.)

    Now the issue becomes, who gets the refund? It’s probably not going to be Mr. Shaffer or his daughter, as neither likely paid for full tuition. Just about nobody pays the full sticker price for college these days, but only a portion of it. The rest is made up of grants, fellowships, loans, government aid, institutional aid, etc.

    In the business, we call this the institution’s discount rate. The typical discount rate is around 40% to 50%. At GWU, their discount rate was just under 42% in 2017 (taken from their 2018 taxable bond issuance document). Using this value, Mr. Shaffer’s daughter was only expected to pay 58% of the full tuition (the remaining 42% is composed of institutional aid and another funds). And of that 58%, Mr. Shaffer’s daughter may well have also received other grants, loans, and government financial aid. Thus, Mr. Shaffer or his daughter’s out-of-pocket cost was only part of the full tuition.

    So who gets the refund? The portion that Mr. Shaffer and/or daughter paid could be said to have been spent on her fall semester and the first half of her spring semester in which she had access to all the bells, whistles, and experience GW had to offer. The rest of their “tuition” never passed through their hands, so they shouldn’t get anything of the refund. Rather it should go to those organizations that provided the aid. So while he might win, he’d lose because the refund shouldn’t go to him or his daughter. He’ll just be out the cost of the litigation.

    Reply
      1. Jim P

        Are you saying that these other organizations should join Mr. Safffer, and also sue? If they do, they should use Mr. Shaffer’s lawyers. That way, if they win, at least some lawyers could make their alimony payments, and if the organizations use Federal income tax dollars, well, I sure would like my dime back.

        Reply
        1. SHG Post author

          While I have no actual clue what you’re talking about, whatever it is, the answer is no and you should immediately go to reddit and discuss it at great length.

          Reply
          1. Jim P

            I was trying for a little bit of humor ala Mr. Seaton, but ,alas, it didn’t work. Please don’t exile me to reddit.

            Reply
            1. SHG Post author

              Sorry about that. It wasn’t so far away from the OP that it couldn’t have been serious.

      2. Mark Sinton

        My apologies for wasting your bandwidth. As a chemistry professor, I was trying to explain how tuition payments work because most parent and student don’t understand how it works. But I obviously missed the mark. I’ll not let that happen again.

        Reply
        1. SHG Post author

          That’s why I leave the chemistry posts here to Chris Halkides. I am, however, qualified to opine about the Higgs Boson.

          Reply
    1. Sgt. Schutlz

      Did you think this was a “teach non-lawyers how law works” blog? There is nothing in your hypo or questions that isn’t invariably a very basic part of standing or damages in every case. It comes down to the party to the contract will get whatever damages he can prove were sustained.

      Reply
      1. LocoYokel

        Wait!! You mean I can get my online law school degree from this blog?

        THAT’S GREAT!!

        Just think, when I’m a millionaire lawyer I can look back and say it all started on the Simple Justice blog.

        Reply

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