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Calculating Your University Refund After the COVID-19 Campus Shutdown

April 14, 2020
April 14, 2020
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Since the first installment of this series, “From One Parent to Another on University Refunds,” many universities have begun voluntarily offering a refund, rebate, or credit relative to student payments made for the spring semester of 2020. A quick survey of these responses reveal that approaches and attitudes vary significantly.

On one end of the spectrum, a few universities are offering a full refund of spring semester housing and dining fees. On the other end, a few universities have not yet announced their intentions. And in the middle are many universities who have offered a refund or credit for percentage of their fees.  Notably, few have offered a refund for fees related to campus activities such as athletics, labs, speaker fees, and parking.

The first class action lawsuit related to the COVID-19 crisis and university refunds was filed against the Arizona Board of Regents and similar actions have now been filed against Drexel, Perdue, and the University of Miami. The Arizona action is based upon an alleged breach of contract, unjust enrichment, and conversion (treating another’s property as one’s own). The Arizona suit was filed in reaction to the university’s offer of a 10-20% “credit” for spring semester fees against charges for the 2020 fall semester. The lawsuit charges that the offered credit is inadequate and instead seeks a full refund of the pro-rata portion of fees charged for services that were not provided by the Arizona University system.

Notably, more recent lawsuits seek a refund of tuition as well as fees, arguing that distance learning was not what students expected when they paid their tuition.

Calculate the Refund and Negotiate with the University

As suggested previously, students and parents should communicate with the university in question and make specific requests relative to the funds involved. The mere fact that a school has suggested a reimbursement scheme does not require a student to accept what the university offers. Considering the uncertainty associated with the virus and the unproven promise of distance learning, a full refund is proper, as opposed to a credit against future charges. A 10% or 20% credit does not adequately reimburse a student that was forced to leave school before the end of March 2020. The logical and proper reimbursement should be based upon the full pro-rated, unused portion of the room, board, and all other fees associated with the spring semester.

For purposes of illustration, assume the following;

  • Housing for a semester is $5,500.00.
  • The spring semester opened on January 16, 2020.
  • The university closed on March 13, 2020 and would have normally been open until May 15, 2020. (121 days)
  • The school provided housing for only 58 of the 121 days of the semester, or approximately 48% of what they promised under the contract.
  • The university should therefore refund 52% of the room charges. ($2,860.00)

A similar formula may be applied to dining, parking, athletic, and other fees and charges levied by the school. Commencement fees should be refunded in full, unless the school has made alternative plans.

Reimbursement of Grants and Loans

The high cost of university education forced many students to borrow money or secure grants from philanthropic organizations. And while charitable grant makers may not request reimbursement from the student, lending institutions will not be as forgiving. The lending institution will not accept a university “credit” as a loan payment. If the student remains obligated to pay on the loan, the university should be willing to refund the student fees charged in the spring of 2020.

And what of state and federal grants? State-level grants vary, but the federal government alone paid universities approximately $41 billion through student grants in 2019. This figure does not include government-sponsored loans. These funds are provided by taxpayers to the schools for the education of students, including associated fees. If the money was spent on services that were not provided by the universities, taxpayers should expect that money to be returned, and repurposed for similarly worthy purposes.

A Question of Loyalty?

No one relishes the idea of causing harm to their university. Some may find it distasteful to hold a university responsible for conditions beyond its control. Consider, however, that most universities will not allow a student to enroll until they receive full payment for tuition, room, board, and all other fees. Universities are sophisticated entities and enter into enrollment contracts with the full expectation that their students will comply with their rules and obligations. These contracts are clear that early withdrawals by a student - even in the context of an unforeseen tragedy - will result in the partial, or total, forfeiture of tuition and fees. Students do not expect the university to provide housing in the midst of COVID-19, but there is nothing untoward about asking the university to return the funds paid for services that were never provided.

There is little chance of universities collapsing if they refund their students. In addition to substantial endowments, universities have access to $14 billion of the multi trillion-dollar stimulus measure recently enacted by the federal government. These funds are designed to provide relief to the universities based upon the unforeseen circumstances surrounding the COVID-19 virus.

Closed campuses and on-line lectures are not what universities promised in exchange for exorbitant tuition dollars. It remains to be seen whether they can deliver a worthwhile product. All things considered; it would be prudent for universities to engender as much good will as possible through a voluntary refund of fees in the short term.

Conclusion

While the law may excuse a university’s performance of the contract given the unique present circumstances (i.e. housing the student), the law does not support the retention of fees for undelivered services. There is no logical reason for universities to refuse to refund students, their parents, grant makers, and lending institutions. The universities were paid in advance for services, did not provide said services, and should return the money.