It is graduation time for the gang at Degrassi High, and everyone is making plans for the summer and their future. Most are preparing for university or far-off travel except for Joey Jeremiah (Pat Mastroianni) who is preparing for another year in high school. His longtime girlfriend Caitlin Ryan (Stacie Mistysyn) has taken a number of extra classes and completed high school in three years and has graduated with Joey's former peers.
Eager to hold on to her before she leaves for university to study journalism, Joey proposes to Caitlin at a graduation party hosted by Lucy Fernandez (Anais Granofsky). Caitlin demurs, explaining that she is not ready for that kind of commitment. Joey storms out, only to run into classmate Tessa Campanelli (Kirsten Bourne) fresh from an argument with her boyfriend Todd (Christian Campbell), and agrees to give her a ride home.
Arriving at the Campanelli house, Tessa pulls Joey toward her for a kiss. The next day, on a break from the photo shop where she works, Tessa visits Joey next door at the drug store where he works and asks him on a date. Joey, though initially hesitant, accepts Tessa's offer, has a great time, and, as he tells Wheels (Neil Hope) the next day, gets to "third base." Tessa confides in her co-worker, Spike (Amanda Stepto), the details of the relationship. Spike reminds her that Joey and Caitlin have a pattern of breaking up and reuniting. Tessa rejects Spike's argument, noting that Caitlin will be leaving for university in a matter of weeks anyway. With Caitlin working most evenings and weekends and Joey working days, they spend little time together and Joey starts seeing Tessa more frequently and they soon go all the way. As the summer goes on, Joey sees both Tessa and Caitlin with neither realizing he is dating them both.
By the middle of August, Tessa discovers she is pregnant and decides to have an abortion. When she realizes that Joey is still with Caitlin with no intention of breaking up with her, she dumps him. Joey and Caitlin finally make love on his nineteenth birthday, approximately a week before Caitlin, Lucy, and Snake are all scheduled to depart for university. It's Caitlin's first time, though she is unaware that it is not Joey's. Unbeknownst to Joey, Caitlin has decided to attend a local university in order to remain close to him.
The next day, at an end of the summer lake house party, hosted by Lucy's boyfriend Bronco (L. Dean Ifill), Caitlin accepts Joey's earlier marriage proposal. Joey, who had been teasing Snake (Stefan Brogren) all summer about his inability to get a girlfriend brags once more about his abilities with women. Snake finally lashes out at Joey for all the teasing and blurts out about him sleeping with Tessa. Caitlin overhears and confronts Joey about it. She storms out after breaking off their engagement and telling Joey of her would-be plans to study locally in order to be with him. Immediately after unintentionally breaking up Joey and Caitlin, Snake realises that former classmate Allison Hunter (Sarah Holmes) is drowning and rushes into the lake to rescue her. Everyone congratulates him for saving her life, but he breaks down in a flood of emotion and anxiety.
Wheels, who had been drinking heavily, leaves the party with Lucy to get more chips but ends up crashing into another car. The crash kills a two-year-old boy in the other car, and seriously injures Lucy and the driver of the other car. The next day, Joey visits Wheels in jail, where Wheels tells him he has been charged with one count of criminal negligence causing death, two counts of criminal negligence causing injury, and drunk driving. He asserts that it was not his fault that the child was not wearing a seatbelt or that Lucy wanted to get more chips. Caitlin visits Lucy at the hospital where she is immobilized and unsure if she will ever see or walk again. Later, Joey stops to see Snake as he prepares to leave for university and asks why he won't accept Wheels' phone calls. Snake is disgusted by Wheels, particularly in light of Wheels having lost his own parents to a drunk driver. He apologizes to Joey for saying what he said at Bronco's place. Joey accepts his apology, saying that Caitlin would have found out sooner or later.
Two months later, most of the gang get together for the wedding of Alexa Pappadopoulos (Irene Courakos) and Simon Dexter (Michael Carry). Absent are Wheels, Erica (Angela Deiseach), and Lucy. Wheels, still incarcerated, is planning to plead guilty for his crimes. Erica is teaching abroad in the Dominican Republic and has met a new boyfriend in the process. Meanwhile, Lucy has since regained vision in one of her eyes, but is still not well enough to attend the wedding. Snake is accompanied by his girlfriend Pam (Tara Burt) whom he met at university, and he appears considerably more self-assured; he is still vocally disgusted by Wheels. Both Snake and Caitlin are receptive to Joey's apologies for the way he had behaved toward them. Joey and Snake make plans to hang out before he goes back to university, and as Simon and Alexa have their first dance as husband and wife, former fiancés Joey and Caitlin share a dance as friends. He predicts that she will be famous.
The film proved a success and drew in around 2.325 million Canadian viewers on its initial showing, doubling the average audience that Degrassi High received. Although common in cable television, the scene where Snake utters the infamous line "Joey Jeremiah spends his summer dating Caitlin, and fucking Tessa" was the first time the word "fuck" was heard on Canadian broadcast television. When the show was first broadcast in the United States in 1993, the line was edited out.
The film featured eight songs from Toronto-based rock group Harem Scarem. Songs by popular Canadian '80s singer (now Styx lead singer) Lawrence Gowan are also featured in the film.
School's Out was released on DVD on October 9, 2007 as part of the Degrassi High Complete Series set.
Individual of Degrassi School's Out DVD