Due to the fire that nearly destroyed the school, Rachel has suffered severe burns and emotional trauma, but she can't wait to get back to school and bury herself in the new initiatives: a full extended services program and a no-exclusion policy. She wants this to be the year that Waterloo Road serves everyone. Rachel's first act is to hire candidate Melissa Ryan as head of extended services - not telling anyone that Melissa is her sister. Rachel also makes it clear to Eddie that they are no longer a couple.
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It's Melissa's first day as head of extended services, and her sister, Rachel, is relying on her to make the initiative work. Unfortunately, inexperienced Melissa turns out to be a pretty uninspiring teacher as she loses control of an adult education class and is unable to stop a fistfight between grown-up classmates Rose and Candice.
Davina's reputation at Waterloo Road is jeopardized when she is accused of racism by a Maori substitute teacher, Maaka Lacey. Already upset because Maaka changed the curriculum so he could discuss his culture, Davina confronts him over a homophobic comment. With rumors flying and just her word against an experienced teacher's, she worries that she may not be able to clear her name.
The feud between Tom and Earl intensifies when a falconry day at Waterloo Road goes badly wrong. And romance abounds as a speed-dating event brings some couples back together.
School governor Ralph Mellor injects his own agenda into a drug awareness initiative. Convinced that Marley, who is dating Ralph's daughter, Flick, is using drugs, he plans to test him and have him expelled to keep him away from Flick.
After the devastated Rose's children are taken away by Social Services, drama teacher Matt potentially bites off more than he can chew by becoming an emergency foster parent to chaotic Sambuca Kelly, who goes out of her way to embarrass him in school.
Former student Danielle Harker falsely accuses her father, Andy, of abuse and leads a student revolt to force him to stop home-schooling her and allow her to return to Waterloo Road.
Rachel and Eddie are left glowing when Waterloo Road receives an encouraging report from school inspectors, but as the day unfolds, hidden truths come to light and tragedy threatens Earl, Maxine and Steph.
One week after Maxine's murder, the school is still mourning. The odd behaviour of Bolton and another student prompts Rachel to investigate the situation, and she persuades the scared Bolton to admit that he knew that the gun Denzil was recently accused of carrying was actually Earl's.
The whole school turns out to support Bolton in a crucial boxing match, and he doesn't disappoint anyone, crushing his opponent. But when Jasmine finds out that Rob gave Bolton illegal performance-enhancing drugs, she alerts an official and ends her relationship with Rob, not appreciating the way he put his need to win over the safety of a student.
As a new term starts at Waterloo Road, popular administrator Kim Campbell returns from Rwanda - with a baby - to resume her role as head of pastoral care. As rumors fly about the infant, Kim refuses to say who the father is.
With Davina away, Kim looks after student Karla, who despite having Asperger's syndrome is an impressive artist. But while Kim is distracted by the arrival of her baby's uncle, David, who demands money or he'll take the infant back to Rwanda, Karla's manipulative classmate, Michaela, exploits the innocent Karla by persuading her to paint portraits for money.
Eddie has his work cut out for him when a group of "travelers" sets up camp on the school grounds, and a government official introduces eight kids who must be enrolled for the duration of their stay - despite thinly veiled prejudice from students and faculty alike.
On a mission to protect the students from sexually transmitted diseases, Kim takes over a sex education lesson but ends up embarrassing Philip, who must admit that, as his sixteenth birthday party approaches, he is still a virgin.
Determined to reunite his floundering and out-of-shape soccer team, Tom invites his old friend Captain Andy Rigby to the school for a day to put the girls through their paces. But an anonymous practical joke, along with a flare-up between rivals Michaela and Janeece, mars the day.
With the exception of cynical Grantly, everyone at Waterloo Road is enamored with a new substitute teacher, Jem Allen, who drives a fancy car and brags about her lavish, wealthy lifestyle.
After two weeks of hiding in the countryside with Kim's baby, Steph returns to suspicion from Rachel, especially since the substitute French teacher has worked wonders in Steph's absence. Steph also loses control of her classroom when a new student, Tasha Lefton, leads a mutiny after being accused of cheating.
After Donte announces that he intends to raise Chlo's baby with or without her, she goes into premature labor. Everyone works together to help Chlo endure a difficult birth at Waterloo Road and safely deliver a healthy baby girl.
Still reeling from losing the Rwandan baby she tried to save, Kim is surprised by a visit from her ex-boyfriend Andrew. They take part in a Rwandan fundraising day at which the choir is slated to proudly perform and Rose is to provide a Rwanda-themed menu.
On the last day of the term, the Waterloo Road school choir prepares for a high-profile televised performance of a school song written by Marley and Flick as part of a prestigious competition. When a local poet charges that Flick plagiarized his poem for her lyrics, however, she confesses that it's true, and the choir's entry into the competition is threatened.