Hmmmmm, this is a difficult one to think on. I think there is an implicit contract made, where you put in enough time, effort, and money; and in return you get a corresponding credential, or other record of your work (i.e. a transcript). Each quarter/semester may be thought of as a contract, but that doesn't tell the whole story, because it takes a series of these contracts to get a credential. That's where the implicit part comes in.

As much as people don't like added government regulation, I think the best way to address this may be to have a body similar to the FDIC (and the NCUSIF, for credit unions).

Member educational institutions would provide the actual cost charged to each student, including costs paid in cash and costs paid by loans, and including actual room & board costs (if the institution charges for that). Each institution would also survey the student body to determine average amount spent on supplies, as well as the average cost for room & board for those who live outside.

Through the accrediting agencies, the insuring body would be able to work out about how long students would spent in-school for a particular degree.

The idea would be, should an institution 'fail' (for whatever definition you want), the insuring body would step in and provide some immediate compensation to students, to keep them in housing. Then, assess if they can transfer to another institution. If not, then they are refunded all costs for the time spent at the failed institution.

The body's actuaries can work out the general risk of institutional failures, and figure out how much money each participating institution would have to contribute to fund and maintain the insurance (which would likely be invested in things like Treasury bonds).