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It seems like every law firm, accountant and consultant is offering insight on the remarkable array of things that could wind up being disputed during and in the aftermath of the coronavirus crisis. There really is a lot of heavy stuff to consider for businesses, employers, and insurance carriers.
But I am writing to you today as not only a litigation attorney, but also as a parent.
As a partner in Chartwell Law’s Pittsburgh, PA office. I’ve had the privilege of getting to know hundreds of clients over my career. It occurred to me that many of my contacts are now facing some of the same issues I am on one front: The coronavirus pandemic has unfortunately led to the cancellation of classes and the closure of campus facilities across the United State, leading to a great migration of college age children to their childhood homes. As a parent, I was pleased to see my son return safely home. Thereafter, my thoughts quickly turned to the financial realities associated with the shutdown of the economy and declining investments. More to the point, his return made me wonder about potential claims for refunds from colleges and universities.
A university education is fabulously expensive and for most families a significant financial commitment. In addition to the tuition, there are significant bills for room and board. Beyond these costs, universities levy a myriad of mandatory fees and charges that are paid prior to admission. These vary from university to university and are known by different names but may include:
Setting aside tuition for the moment, the closure of campus facilities means that the university is no longer providing the goods or services that were promised in the enrollment contract. A refund of the charges is clearly appropriate, but universities have not adopted a standard approach to the issue. Some are voluntarily offering a refund ranging from 30% to 60% of the charges for the spring semester. Others are offering a credit against future charges. And some are simply remaining silent.
The first step in analyzing your position - relative to a refund - is a review of the enrollment contract with the university. This contract will generally list the charges for the year including any fees. It is unlikely that the contract excuses a refund, since these charges were all paid in advance of enrollment. The next step is reviewing all payments made to the university to determine which fees should be included in the refund request. At this stage, you may also want to consider calculating a pro rata reduction in the refund based upon the date the campus was closed. The final step is contacting the university and making a formal request for a refund.
It is important to let the university know of your expectations. Considering that many reputable universities have already offered refunds, it is likely that more will follow suit, if for no other reason than to keep up with their competitors. To the extent that they do not, the facts suggest that students have a solid cause of action around the university’s breach of contract relative to room, board, and student fees.
Unlike room, board, and fees, most universities will continue to provide the agreed-upon services relative to tuition. They have set up for distance learning solutions in order to complete the second semester classes, often after an extended spring recess. The university will take the position that they are continuing to provide the agreed-upon services relative to academic instruction. And while this may be true in part, the fact remains that the student does not have the advantage of live, on campus instruction. Moreover, the student is unable to meet with, and learn from, professors in settings outside the classroom.
I believe that most universities will admit that the student is receiving a product of lesser quality than he/she would receive on campus. University promotional materials regularly highlight the student-to-faculty ratio and student access to the faculty. These advantages are effectively eliminated in a distance learning scenario. The quality of instruction will also suffer.
It’s up to each family to decide how hard they wish to push on this issue. Much of the decision may depend on the success of the distance learning experiment and the expected matriculation of the student. Regardless of whether a refund for tuition is ultimately requested, the elimination of face-to-face instruction is a key component of the refund discussion.
Although numbers vary, many colleges highlight the fact that 70% of the student body is receiving one form of financial aid or another. The specific nature of the financial aid may have a direct bearing on the refund amount. It may not be logical to ask a university to refund a student from a grant provided by the University. However, if loan money was used to pay the University for room and board, there is no reason why it should not be refunded to the student. Similarly, there is nothing to prevent the university from refunding money paid by third party funders of the student’s room and board.
A related issue involves housing charges that are not necessarily connected to the university. Many students are tenants in apartments on or off campus owned by private entities. Once the school cancels classes, the students have no further need for the apartments. As with the universities, landlords have no standard way of dealing with the coronavirus shut down.
There are stories of landlords excusing rents in reaction to crisis, but one suspects that this is the exception rather than the norm. Instead, landlords are more likely to insist that rent is paid pursuant to the terms of the lease. Options in this regard are somewhat limited. A call to the landlord with a request for a discount on remaining rents may be worth the effort.
A more radical solution involves withholding rent and forcing the landlord to negotiate or bring legal action. If the lease is otherwise valid, the chances for prevailing as a matter of law is low but the litigation process often presents opportunities to reach a negotiated resolution.
The foregoing is not formal legal advice but is offered as a high-level overview of the college refund issue and Covid-19. Should you have specific questions about a refund or a university reaction to a request for a refund, please feel free to contact me at aklaber@chartwelllaw.com.
