As the gates open for a new term at Waterloo Road, the school is firmly in the spotlight following the murder of drama teacher, Izzie Redpath. Although Jack has won a national bravery award, he secretly blames himself for Izzie's death. Meanwhile, Steph is relishing her new position as head of pastoral care, but disaster looms as a new pupil, Karla Bentham, who has Asperger syndrome, is placed in her less-than-capable hands. Utter chaos ensues when Grantly is on the receiving end of one of Karla's violent outbursts, leaving new Deputy Eddie Lawson to pick up the pieces. Elsewhere, Tom Clarkson faces fresh troubles when Chlo skips school to marry Donte.

A fight club is in full swing at Waterloo Road, with Bolton Smilie and Paul Langley at the centre. Jasmine suspects Paul is being abused and raises her concerns with Steph. But her attentions are firmly on new music teacher, Matt Wilding. Jasmine shares her worries with Eddie and her suspicions are confirmed when he finds Paul following a beating. Eddie rounds up the usual suspects and gets the boys to confess. But an unstable Paul steals a knife from the kitchen and finally decides to stand up for himself. Meanwhile, Tom is worried that Chlo's new marriage could threaten her education, and asks Steph to give her extra French tuition. Chlo isn't happy with the idea, but is delighted when Brett offers to help. It's soon clear there is chemistry between the pair. Elsewhere, Auditions for the school musical are underway, giving Aleesha the opportunity to play a cruel trick on Karla.

Jack is desperate to win Davina back. Although she clearly loves him, she is unable to forgive him for sleeping with Steph. Jack's day gets worse when Eddie discovers Jack's use for the Excellence in Cities' money. Ria Cheetham forces Jack to confess that he's manipulated the budget, and calls an emergency government meeting... Jack's future at Waterloo Road hangs in the balance. Meanwhile, The school is in the spotlight yet again with the disappearance of Chlo. Mika seems to have disowned her sister, but Donte, nursing a broken heart, steals Seddon's moped and goes to look for Chlo. And, Grantly is desperate to hide his money troubles for his wife.

Waterloo Road is reeling after Jack's departure, apart from Eddie, who thinks he's the new acting Head. However, he's dealt a bitter blow in the shape of Rachel Mason, the newly appointed Head Teacher. It doesn't take long for them to be at loggerheads, the tension growing as she introduces her plans for a 'Business Enterprise College'. but when the scheme is a big hit with the pupils, Eddie views on Rachel take a different turn. Meanwhile, Chlo finds out the horror of how new flatmates Shaun and Lucy expect her to pay the rent following the failed shoplifting, she's to turn tricks. In a client's house, Chlo manages to call Tom, who with the police in tow, makes a mad dash over to save her, whilst back at school, Mika hits the bottle. Elsewhere, Grantly's gambling debt spirals out of control.

Matt's thrown into a panic when Rachel announces the school musical is to be performed earlier in the day for a VIP audience, without a proper rehearsal, and everyone's work looks set to be for nothing when a jealous Aleesha plots to sabotage the musical. Meanwhile, Fleur, Grantly's wife, finally learns the truth about their gambling debts and takes her own drastic course of action to repair things. Elsewhere, Eddie's in for a shock by the arrival of his ex-wife at the school, and the chemistry continues to heat up between Tom and Davina.

Rachel is bemused when developer Stuart Hordley shows up and makes a plea to reinstate his bid to build Waterloo Road's training centre. Rachel wants rid of Stuart, but he quickly ingratiates himself – especially with Eddie. It's music to Eddie's ears when Stuart offers an office junior's job for the best candidate at the afternoon's interviews. But what dark secret of Rachel's is Stuart hiding? Meanwhile, Darren Briggs Snr asks Davina out as a thank-you for helping his son. Davnina's flattered, but she is still harbouring feelings for Tom. An angry Darren accuses Davina of touching his son and takes his complaint to Rachel, leaving Davina fearing for her career. Elsewhere, Candice is delighted that Bolton has finally turned a corner.

Donte sees Davina getting into a swanky car and is shocked to see the driver is his old headmaster, Jack Rimmer. Jack, who has overcome his demons resulting from Izzie's death, is excited to have heard from Davina. He tells her about his new well-paid job as headteacher of an international school in Dubai, inviting her to accompany him. Will she come with him or stay to work things out with Tom? Steph's latest attempt at finding a sponsor for the school ends in near disaster.

It's the final day of term at Waterloo Road, and the school is pitted against a rival school in the spelling bee championships and the girls football. Stuart Hordley, enraged at the loss of all his business, returns to the school determined to expose Rachel's past to the school. A member of the Waterloo Road exam board visits the school, as the plagiarism scandal instigated by Maxine Barlow comes to their attention. As he was the only member of staff who knew of the cheating, Grantly Budgen decides to meet the exam board head on, determined not to let anyone else find out about his actions. Tragedy is in store as Hordley throws a smouldering fag-end into the bins filled with paper. As they burst into flames it ignites a leaky gas canister, leading to a massive explosion and sending a fireball ripping through the school's canteen.