The show starts with 3 members of the Cohen household at home looking through the leftovers in their pretty wasted kitchen when Julie comes over and has some bad news for Sandy. The parents of Newport signed a petition to expel Ryan and Marissa from school. That would mean they couldn't go to college. That's just what Julie tried to prevent Marissa from in the last episode. They don't tell the kids and we go to the opener. Now we see our 2 favorite couples in the diner making plans for their first day back in school. Except Summer, no one wants to go so she motivates them by reminding them what they had gone through the summer so far and to make it at least a better year in school they should look to the bright side of their relationships. It's time for Sandy and Julie to meet with Dr. Kim to discuss Ryan's and Marissa's future at Harbor High. She tells them it's no more in her hands and that a new Dean of Discipline will take care of it. He eventually comes in and in a rude way tells them his decision will be made in the afternoon.
Meanwhile Jimmy meets with a "business partner" in a bar and it is revealed that he once again lost all his money due to some crazy stock adventures. Unfortunately Jimmy borrowed some money from this guy and lost it too. Also his boat is already the property of the bank so he just came back to Newport Beach to get some cash from Julie. The scene ends with the guy being hardly pleased with the plan.Marissa and Summer run into the meeting of the social chair which apperantly already started with the new president Taylor. Summer quickly talks Taylor off her position cause Marissa still holds the presidency.
In Summerhold, Kirsten is packing her stuff when Charlotte enters her room and talks her into a "pitstop" before going back home. Sandy receives the message from the Dean that Ryan is still in but Marissa gets kicked out of Harbor High.
After a break, Sandy is in the clinic talking to Kirsten about her release. Unfortunately Kirsten tell him she wants to stay with her new friend before coming home. He agrees but is obviously woeful. Julie wants a 100 grant from Jimmy to bribe the school officials. Jimmy looks desperate but doesn't tell her the truth and finally agrees to get the money. He meets again wih his "friend" and even gets him to loan him the money. Unfortunately it's not needed anymore after Ryan and Marissa talk to the Dean and Marissa finally tells him she will never regret her actions and do it again. Julie takes the cheque anyway to pay the staff ending with Jimmy looking even more desperate. The next day Summer and Seth team up to bring down Taylor. They want some changes to make the carnival a success and get quickly accepted by the rest of the girls. Taylor looks angry. In the evening, Sandy meets Kirsten at Chalotte's house to have dinner with them. Sandy is angry with her but finally agrees with her by giving Kirsten the timeout Julie and Jimmy are in a restaurant where Jimmy proposes to her with her old ring. She accepts not knowing what he's up to.
At he carnival, Summer and Taylor have an argument but get over it when Ryan and Marissa show up. Marissa was banned from this school project so they eventually run into Dean Hess who wants Marissa out. Ryan tries to talk to him but the Dean provokes him by pulling Marissa's arm so he just hits him in the face like back in the old days.
The episode ends with Ryan and Marissa out of the carnivale and out of Harbor High!