Preschool Deposit and Tuition

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Whether it's a layoff, a sweet PreK spot, a move, or a new job schedule, circumstances change. So what do you do when your chosen preschool isn't an option anymore - and you've already put down that killer deposit? Park Slope Parents members talk about their experiences with preschool tuition deposits and tuition.

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Disclaimer:  This post has been written for educational purposes only by Park Slope Parents and was not meant to be legal advice and should not be construed as legal advice or be relied upon. The post may contain errors, inaccuracies and/or omissions. You should always consult an attorney admitted to practice in your jurisdiction for specific advice.

 

Original Poster:

 

"I recently left my "day job" to run my own fledgling business full time. Probably the ONLY aspect of this major life change that I did not think through thoroughly (and plot on multiple budget tracking spreadsheets showing every possible scenario...) is my child care, because I foolishly assumed that I could forfeit my nursery school deposit of $3000 and keep my son in day care this fall, at a cost of $700 per month less than one of the Slope's highly renowned -- and costly -- preschool programs. Now that I've actually re-read my school contract, I see that:
1. My $3000 was not really a deposit, since it will not be applied against my future payments (hence when I read the fine print, the year's tuition is $3000 more in total than I expected, a markup of over 10%)
2. I have signed on the dotted line to purchase a year of school in this facility, whether my son goes there or not; it appears that the school has a legal right to a year's worth of tuition money regardless.
3. The tuition insurance that I also purchased only covers situations in which I get laid off from my job or perish.
I'm fully aware that I have made my own bed here, and I plan to approach the school and see what, if anything, my options are, but first I thought I would throw it to the group to see if anyone has some wisdom or experience to offer in this situation. The reality is that if I have no other choice, I will find a way to pay for the school (a way that will likely involve snaky high-interest loans when my business cash flow is bad...) But if
there are options short of being sued and/or completely destroying my credit, I really hate the idea of piling even more financial stress upon our little family at this fragile time -- stress that I believe would more than negate the positive benefits of sending my son to this (wonderful, but expensive!) school.
Any advice -- even just reminding me how short-sighted and stupid I've been, so that others don't have to learn my lesson the hard way! -- is much appreciated."

 

 Replies:

 

"We receive this question time and time again and the bottom line is this--- you are obligated to pay if you signed the contract saying you were willing to pay out the year. Some places are better than others at refunding the money, but since many places have put together their roster based on gender quotas and other things, they feel like it's an inconvenience that is worthy of payment. I'd write off the deposit for sure, but whether you have to pay the rest is hit or miss. Most places do have a waiting list though, so they will probably be able to find a replacement."

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"Generally speaking, school tuition contracts are enforceable contracts and in theory a school can insist on not returning a "non-refundable" deposit and that parents pay the entire remaining tuition.
Nonetheless, so as to avoid windfall, the school does have a legal duty to reasonably try and find a replacement student to mitigate its damages (as was noted in a previous post).  In addition, the "non-refundable" deposit (in legalese known as "liquidated damages"), has to be reasonable and not serve as a penalty. There are a couple of school tuition court cases in NY that side with the parents based on these issues but from lower courts and hence are not controlling.
In any event, you should follow the notice guidelines in the contract and if there aren't any, give written notice to the school as soon as possible.
The tuition contract in question would need to be reviewed to determine any legal rights/obligations that may exist."

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"I think that's the way the game is played, unfortunately - you are paying for the security of knowing you have a backup plan..."

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"I agree. And, if you signed a contract, you could be on the hook for the entire year's tuition, even if they fill the spot. I would go back and read that contract carefully, and then speak with the director at [the preschool]. I don't have any experience with [the preschool] (maybe someone else on this list who has used that preschool could chime in), but it is not unheard of for private schools to pursue all of their legal rights."

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"Seriously they MUST have a long line of waiting list moms chomping at the bit for the spot ... I would speak to director in person and appeal to them in this note and bite the bullet on the deposit. I'd rather lose 3 grand than fork over another $20,000."

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"I saw your post about preschool tuition. We were never in your shoes, however, I am not sure how legally enforceable those contracts are. Before giving up and paying, I would consider a short conversation with a regular attorney on this - I have a feeling you may be able to get out of your contract."

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"Maybe if you actively find someone to take your child's spot you can use that as leverage with the school. They want to be filled to capacity so if they give you your money back and can't fill the spot, that hurts their business. Just a thought. I know some families have had success with this approach but it depends on the school."

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"I think that if your son’s expensive school has a wait list so they could fill your spot they have NO BUSINESS holding you to a contract that you need to terminate due to changed financial circumstances. Saying you have to pay whether or not you can afford it - and sorry but taking out high interest loans to pay for something you don’t need is not being able to afford it, that’s insane of them to require or you to consider - is ridiculous and not definitely enforceable.
If your son’s school can fill the spot and thus replace the lost tuition, that’s called mitigation of damages and the law usually requires contracting parties to do that, and if they WILL fill the spot and still sue you for the balance, that seems like fraud to me.
I believe if you are willing to burn a bridge with this school, you could cancel the contract and say keep the deposit and you are walking away - really you could demand the deposit back if you wanted (not sure they would give it but still) - and if they can’t fill the spot (ha) they could come after you, but let them come after you instead of you offering it up. There ARE cases - at least one - where a school fought for its full year and won in Manhattan - but I’m not sure how that could be, it seems wrong, so check the law. And really - also requiring private school deposits before even hearing from competitive public schools, seems like bad faith - so many families put down deposits to be safe when they may well not stay at the school if the public school placement is favorable, and the private schools know that.   At those prices they have to expect it when lots of public schools are top notch in Brooklyn.
Your best bet is to negotiate with the pricey school. Tell them not that you weren’t laid off but that your financial circumstances have changed significantly and you can't afford them anymore and feel terrible but can’t afford to pay them whether or not your child goes there.  Work it out with them. For what it's worth, we pulled out of first grade a few years ago when we got into a great G&T program in June, a few months after we put down the deposit and at least one month of tuition had left our account - they didn't fight us for the rest and they didn't have a wait list.  And I know one family about 7 years ago that pulled out of a lovely preschool in the Slope the summer beforehand and demanded their deposit back and got it - the dad was a lawyer and apparently wrote a good demand letter, but they were willing to burn a bridge.  Good luck and please let the group know how it works out if you don't mind."

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"In my experience daycare programs will keep the deposit if you don't finish the contract year but that they will not charge you for the other months if they can fill the spot. (In fact I think it would be illegal to do so.)
I'd talk to the school. That is the only way to know how they would enforce the contract."

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"I feel your dilemma! (and this info supports long-held observations that waitlists often DO move, sometimes in September and even after the school year begins) We didn't have the same problem exactly, but ended up choosing to remain at our private preschool (Chickpeas, with UPK funding to cover part of the tuition), then have been 321 parents since kindergarten. (And I've worked with schools and schools admissions in more professional capacities, for what it's worth.)
My perspective, although to be taken with appropriate grains of salt: I understand your concerns about how your daughter might deal with such an abrupt transition, and although they're worth considering and require sensitivity, I'm not sure they'd be a deal-breaker. Transitions can be tough, but if it's a good change and she gets to be in her older sibling's school, the difficulties may be fleeting. She may get so engaged in her new class that the older one may lose its pull. So, it might be hard at first, but not necessarily for a significant amount of time. You'd still be able to ritualize some form of goodbye with the preschool if you wanted.
On the other hand, I think there's a lot to be said for the cozy community and student-teacher ratio of the private preschool. I like 321 a lot, but it's still an academically-focused and large public school. I crave the open-ended time for play, and the developmentally appropriate program, that I presume is available at the preschool. So for ME, this would be the deal-breaker, unless convenience and financial considerations trumped the others.
Best wishes with the decision. In the end, it sounds as if you have two great choices, which is a nice problem to have!"

 

More advice from a similar thread:

 

"There's no "standard contract" for private schools and so it is on the parent to decide what works for them. Read the contract and know that once signed, it is binding/enforceable. If you're not comfortable with the terms, voice your concerns before signing and see if the language can be edited. If the school's not willing to work with you, then that's a data point."

 

Looking for PSP member reviews of local preschools? Go here!

 

Useful reading from around the web:

For Some Parents, Leaving a Private School Is Harder Than Getting In (New York Times)
"Many parents have found that, after withdrawing their children from private schools in New York City, they are still expected to pay the full tuition for the coming school year."