Students walk on campus at night

Since the advent of the COVID-19 situation in the United States, colleges and universities have largely suspended on-campus instruction, and have required students living in campus housing to move out. Displaced students, in turn, have filed lawsuits seeking reimbursement of tuition, room and board, and fees paid for the truncated semester, as well as the judicial determination that the cases be certified as class action cases, aggregating the claims of all similarly situated students at a particular school. To date, suits have been filed against schools from across the county, ranging from those within the University of California system to Ivy League schools such as Columbia.

Plaintiff claims

The suit filed against Drexel University in Philadelphia is representative of what has been alleged in the matters filed to date. In the Drexel matter, the plaintiff asserts that Drexel promised to provide certain services, including but not limited to:

  • Face to face interaction with professors, mentors and peers;
  • Access to facilities such as computer labs, study rooms, laboratories and libraries;
  • Student governance and student unions;
  • Extra-curricular activities, groups and intramurals;
  • Student art, cultures and other activities;
  • Social development and independence;
  • Hands on learning and experimentation; and
  • Networking and mentorship opportunities.

The plaintiff further asserts Drexel required him to pay certain fees designed to cover the cost of opportunities and services that are only available to students while they are physically present on campus, such as attendance to athletic events, access to the wellness center and student center, and on campus student activities. In addition to required fees, Drexel also charged optional fees for room and board, parking and extracurricular activities depending on a student’s situation.

Remedies sought

As a consequence of these allegations, the plaintiff is seeking:

  • Certification of a class consisting of all students who are enrolled for the 2020 academic year, and who paid tuition, mandatory fees, or voluntary fees for services that Drexel allegedly failed to provide;
  • Damages in the form of reimbursement for tuition, fees and other charges for services that were purportedly not delivered; and
  • Disgorgement of the tuition and fees, under the premise that Drexel has been unjustly enriched by retaining the benefit of the amounts paid, without providing the related services.

Class-wide damage issues

While it is too early in many of these cases for the defendants to have filed their answers, it is certain that most, if not all, will seek to defeat class certification, and in doing so argue that, among other issues, the asserted damages vary between potential members of the class, and as such, there is no way that uniform, class-wide damages can be quantified.

At their root, the damages claims put forward in these college refund matters rely on a benefit of the bargain argument - namely that the plaintiffs paid tuition and fees for based upon a set of promises made by the university, but did not receive the value of what they were promised because of the campus closure. As a consequence, the plaintiffs assert that they are entitled to damages reflecting the difference between the value of what they were promised and the value of what they received. The determination of whether a uniform measure of class-wide benefit of the bargain damages can be calculated will likely be complex, and entail consideration of questions such as:

  • What is the economic value of particular courses of study, and is there any impact on the value of that course of study when classes are held on-line versus in person on campus? For example, certain majors, such as those in the sciences, require laboratory time and activities that may be difficult to be completed remotely. In contrast, other majors, such as political science and history do not required similar laboratory activity, and may lend themselves more readily to remote learning.
  • What is the living situation of each student in the proposed class, and does that living situation have any impact on the claimed losses? An argument may be made that students who live off-campus do not use services in the same way that students living on campus do, and as such, have different considerations with respect to what was promised and received when compared to students living on campus.
  • Where were the affected students studying at the time that campus was closed, and is there any impact on value? For instance, certain students in the proposed class may have been working in co-op and/or internship programs, and may not have been physically studying on campus at the time of closure, creating a different set of circumstances when compared to students taking classes full-time.
  • Are there variations in what students within the proposed class paid in terms of tuition, fees, and meal plans, as well as variations in what they received in the form of student aid? Not every student pays the same tuition, or receives the same level of student aid, and this lack of uniformity may preclude the quantification of a uniform class-wide damages.
  • Are there potential offsets that need to be considered at the individual, rather than the class-wide level? For example, it is possible that there are students included in the proposed class who have unpaid tuition, fees and room and board charges, which makes their circumstances different than those who do not have similar unpaid items. 
  • Are there other issues that need to be considered, irrespective of whether a uniform calculation can be performed? Many schools have undertaken significant capital projects in recent years to upgrade or build dormitories, dining facilities, student activity centers and other campus facilities, all for the benefit of students. These capital projects are often funded through debt, and the principal and interest payments do not cease even though the campus may be closed. Moreover, tuition and fees help to fund other university operating activities and overhead, which similarly remains in place irrespective of status of campus activity.

Note that the foregoing is not meant to suggest that individual plaintiffs have not sustained damages based upon what is alleged. However, to the extent the damage considerations are different for each member of the proposed class, the colleges and universities that are defendants in these matters may have a basis to argue that there is no uniform measure of damages, and that the plaintiffs will need to bring claims individually.

Contact our COVID-19 support team

arrowCreated with Sketch.
David M. Duffus
Partner, CPA/ABV/CFF, CFE
Next up

Good news story: City of Salem, Oregon protects homeless population during COVID-19