As schools continue to face the ever-changing landscape of educating their students and developing relationships with the families that attend their institutions, they also can encounter situations in which tuition goes unpaid. In these situations, the schools must understand their rights and remedies to ensure that the school’s interests are protected.
Typically, when tuition is not paid or a payment according to a payment plan is missed, the school can rely on the enrollment contract to define their rights to collect the unpaid tuition. However, there may come a time when there is no signed agreement upon which the school may rely. In this situation, it is important to understand that the school still has the ability to attempt to collect
what is owed.
In Pennsylvania, there is an equitable theory called “unjust enrichment
,” which stands for the proposition when one individual receives a benefit at the expense of another, but there is no contract available to define the relationship between the parties. Because this theory is founded in the absence of a contract or agreement, it does not matter that there is no signed contract between the parties. In fact, it is applicable when no contract is signed between the parties.
Consider, for example, a recent transfer student comes into your school at the last minute before the start of the school year. Assume that for some reason, their parents do not sign an enrollment contract before the school year begins. The school administrators realize six months into the school year that not only is there still no signed enrollment agreement, but the student’s parents have not paid their tuition bill. In this situation, the school would not be without recourse.
If the situation deteriorates and the student has to leave school before the end of the school year with the tuition still unpaid, the school may attempt to collect the value of the benefit given to the student from the parents.
So, while it is true that the enrollment contract will be the most important document when attempting to collect tuition, that doesn’t mean a school is left with no options to protect themselves if the document isn’t available. Using the unjust enrichment theory for collections is not as foolproof of an option as relying on the contract. The likelihood of success would depend on many factual elements, so it is important to know what steps to take to protect your institution.
This blog is not a solicitation for business and it is not intended to constitute legal advice on specific matters, create an attorney-client relationship, or be legally binding in any way.