Montreal's LaSalle College seeks creditor protection after being fined $30M for having too many English students

Most families assume that once tuition is paid to a licensed, subsidized institution, that money is safely invested in their child’s future education. However, historical precedents with private colleges demonstrate that paid tuition carries inherent risks — a critical lesson for anyone paying higher-education fees in Canada.

Here’s the current situation, the legal loopholes that leave prepaid tuition unprotected during bankruptcy, and the concrete steps families can take to safeguard their funds against institutional financial risk.

What’s happening at LaSalle College

Under Quebec’s 2022 language legislation (Bill 96), caps were placed on student enrollments in English-language college programs. According to Quebec’s Higher Education Ministry, LaSalle College exceeded its authorized limit by 716 students in the 2023-24 academic year and by an additional 1,066 students in 2024-25. As a result, the province moved to recover approximately $8.7 million and $21.1 million in associated subsidies, respectively.

The Quebec Superior Court granted LaSalle a temporary protection window to negotiate a resolution with the provincial government. While college management has characterized the financial measures as unprecedented and unfair — noting that the affected students were legally admitted — government officials maintain that institutions must comply with established enrollment caps.

Why paid tuition isn’t automatically guaranteed

This is not the first time a private college’s financial strain has put student funds at risk. In 2022, three Quebec private colleges filed for creditor protection, leaving hundreds of international students attempting to recover over $11 million in prepaid tuition and fees.

When an educational institution enters creditor protection:

• Unsecured Status: Students claiming tuition refunds typically rank as unsecured creditors.
• Repayment Priority: Unsecured creditors stand behind secured lenders, such as banks and tax authorities, meaning full recovery of funds is rarely guaranteed.

LaSalle’s situation differs in scale — it’s a large, established institution seeking restructuring to keep its doors open rather than shutting down. However, the fundamental exposure remains: Any funds handed over to a private entity, prior to the delivery of a service, carry financial risk regardless of the school’s licensing or subsidy status.

Actionable steps for affected students and families

If your tuition is tied up with LaSalle College or any private school undergoing restructuring, these steps can help minimize any financial loss:

• Document all terms: Secure written copies of cancellation and refund policies, specifically noting terms regarding delayed or cancelled academic sessions.
• Review account structures: Clarify whether tuition payments are maintained in segregated trust accounts or general operating accounts. Operating accounts carry higher risk during creditor proceedings.
• Pause RESP withdrawals: Delay requesting Registered Education Savings Plan (RESP) or Educational Assistance Payments (EAPs) until course start dates are officially confirmed, avoiding tax complications for unfulfilled terms.
• Clarify loan obligations: Remember that government and private student loans remain payable, according to their terms, independent of an institution’s operational status.
• Maintain detailed records: Keep all proof of payment, enrollment confirmations and formal correspondence. Should a formal claims process open, proper documentation will help you negotiate.

What to do before enrolling in a private institution

Families evaluating private career or community colleges should exercise due diligence before transferring tuition funds to these schools. Here are three steps to take:

1. Verify standing: Confirm accreditation and subsidy status directly with the provincial ministry of education rather than relying solely on marketing materials.
2. Opt for installment payments: Where available, arrange tuition payments in installments tied to the start of each term rather than paying full program fees upfront.
3. Limit advance deposits: Avoid paying non-refundable deposits far in advance of verified course start dates.

The situation surrounding LaSalle College remains fluid as negotiations with the Quebec government continue. Still, it serves as a practical reminder that a tuition invoice is not a financial guarantee.