New CLASS Act Bans Forced Arbitration Clauses in College Enrollment Agreements, Restoring Students' Right to Sue

The Court Legal Access and Student Support Act of 2025, or the CLASS Act, is designed to level the playing field between students and the higher education institutions they attend. Simply put, this bill prevents colleges and universities from using enrollment contracts to strip students of their right to sue in court. It focuses on institutions that receive federal student aid—which is essentially most accredited schools—and ensures that disputes over tuition, program quality, or other contractual issues can go through the traditional legal system rather than being forced into private, mandatory arbitration. The core changes kick in one year after the bill becomes law, giving everyone time to adjust.

No More Loophole: The End of Forced Arbitration

For years, many consumer contracts, including those for higher education, have included mandatory arbitration clauses. These clauses essentially require you to settle any dispute in a closed-door, private arbitration setting instead of a public courtroom. Section 2 of the CLASS Act cuts this off for students. It specifically states that Chapter 1 of Title 9 of the U.S. Code—the federal law that makes arbitration agreements generally enforceable—will no longer apply to “enrollment agreements” between students and colleges. Think of it this way: If you sign up for a coding bootcamp or a four-year degree program, and the school later fails to deliver what it promised, you won't be trapped in a private process designed to favor the institution. You get your day in court.

Restoring the Right to Group Up and Sue

Section 3 goes a step further, targeting institutions that rely on federal student aid money (Title IV funds). It explicitly prohibits these schools from requiring students to sign away their right to pursue legal claims against the institution. This is a huge deal because it applies whether the student is suing alone or “as part of a group or class action.” For the average person, this means if a large university engages in widespread misconduct—say, misleading hundreds of students about job placement rates—those students can now pool their resources and bring a class action lawsuit. Without this protection, schools could use contractual fine print to prevent students from holding them accountable for systemic issues.

What This Means for Your Wallet and Your Time

If you're a student or a parent paying tuition, this bill is a major win for consumer protection. Mandatory arbitration is often opaque, expensive for the individual, and lacks the public transparency of a court case. By eliminating it, the CLASS Act removes a significant barrier to justice. If your school suddenly cancels a program or you feel you were defrauded, you retain the full legal power to seek remedies in a public forum. For the schools themselves, which currently rely on these clauses to manage liability and keep disputes quiet, they will now need to prepare for potentially more public and costly litigation. The bill is clear that these new rules become effective one year after enactment, giving colleges a full 12 months to update their enrollment contracts and legal compliance procedures.