## Facts

- American Computer Institute, Inc. (ACI) operated private vocational campuses in Fairbanks and Anchorage; students signed enrollment contracts incorporating ACI’s catalog.
- In March 1997 ACI abruptly closed its Fairbanks campus mid-term with little notice, though months remained in the term.
- ACI offered Fairbanks students an accelerated “teach-out” at a different location with increased weekly hours; ACI acknowledged the format might not work for certain programs.
- Six Fairbanks students did not complete the teach-out; the parties disputed whether and how much ACI had to refund them.
- Months later ACI also closed its Anchorage campus mid-term; it did not provide a teach-out.
- Charter College independently offered certain ACI students one quarter of tuition-free coursework (up to 12 credits), but the coursework was more demanding and the program differed from ACI’s.
- Some students did not enroll at Charter or did not complete enough coursework to finish their programs.
- The State (through the Alaska Commission on Postsecondary Education) sought tuition refunds for affected students, including amounts funded by state loans and grants.

## Issues

1. Whether ACI’s mid-term campus closures breached enrollment contracts incorporating the catalog’s promised programs despite a clause reserving a “right to make changes to the program schedule.”
2. Whether ACI had to refund tuition to students unable to complete their programs because of the closures, including tuition paid through loans and grants.
3. Whether offering an accelerated teach-out or pointing students to third-party coursework could satisfy ACI’s obligations or reduce refund liability for students who declined or did not complete those alternatives.
4. Whether restitution was an available and appropriate remedy to prevent ACI from retaining tuition for undelivered instruction.

## Decision

- The Alaska Supreme Court affirmed the judgment requiring ACI to refund tuition to students who could not complete their programs due to the mid-term closures.
- The court held ACI breached its enrollment contracts by failing to provide the educational programs promised in the catalog and contracts.
- The court rejected ACI’s reliance on the catalog’s scheduling-change language as authorization for unscheduled closure and materially different substitute performance.
- The court approved refunds grounded in restitution to prevent unjust enrichment, including repayment of funds originating from student loans and grants.
- Students’ refusal to accept, or inability to complete, materially different alternatives (accelerated teach-out or Charter coursework) did not bar refunds when the shortfall was caused by ACI’s closures.

## Legal Principles

- An enrollment contract that incorporates a school catalog obligates the institution to provide the described program; a general right to change schedules permits reasonable adjustments, not unilateral mid-term termination and materially different substitutions.
- When a school’s nonperformance prevents students from completing the contracted program, affected students are entitled to refunds to restore the value paid for undelivered instruction.
- Substitute arrangements must be substantially equivalent to satisfy contractual performance; accelerated or materially different programs, or third-party offerings requiring significant adjustment, may be inadequate.
- Restitution is appropriate when an institution retains tuition after failing to deliver promised educational services; refunds may run to both students and third-party payers to avoid unjust enrichment.

## Conclusion

ACI’s unscheduled mid-term closures constituted breach and failure of consideration under contracts incorporating its catalog promises, and the school could not avoid refund liability by offering materially different alternatives; restitutionary refunds, including amounts funded by loans and grants, were required for students unable to complete their programs due to the closures.


Am. Comput. Inst., Inc. v. State, 995 P.2d 647 (Alaska 2000)