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Perpetual Enrollment Agreements: Friend Or Foe?

By Sara Goldsmith Schwartz

More and more often, independent schools are inquiring about so-called “perpetual” enrollment agreements (i.e., enrollment agreements that continue for the entirety of a student’s time at a school).

While perpetual enrollment agreements have the potential to minimize financial and administrative burdens typically associated with the annual enrollment agreement process, schools should be aware that implementing a perpetual enrollment agreement may raise legal questions and risks that are not associated with the annual enrollment agreement process.

First and foremost, perpetual enrollment agreements are governed by state laws that vary dramatically state-to-state, so be sure to know your state’s laws.  Be sure to carefully structure such agreements in order to maximize the likelihood that they will be legally enforceable in the particular jurisdiction.  Special consideration should be given to how the school will incorporate and address any future changes that may impact the perpetual enrollment agreement, such as an increase in the tuition price, early withdrawal of a student, and any updates to relevant documents (e.g., applicable student/parent handbook).  Second, how will a deposit be handled?  Will it be paid once at the outset of the student’s career at the school?  Will it be supplemented annually?  When will it be applied to tuition or returned to the family?  Third, be sure to carefully preserve the school’s flexibility to terminate a perpetual enrollment agreement (and the student’s enrollment at the school) in the event that the student is not a good match for the school community.  Finally, if perpetual enrollment agreements will be electronically signed by families, all of the rules that apply to electronic signatures will apply, so the school will need to integrate the relevant language into the agreements.

If your school is considering implementing a perpetual enrollment agreement, we recommend carefully evaluating the applicable laws in the school’s jurisdiction, with the assistance of legal counsel.  Please do not hesitate to contact a member of the Firm’s Education Practice Group if you have any questions about perpetual enrollment agreements or enrollment agreements in general.