The management at a primary and secondary school on the Vanuatu island of Malekula sent 300 students home on Tuesday after a protest by custom land owners.
The landowners closed down the school claiming the Government owes them 90 million vatu, or 940,000 US dollars, in outstanding rent.
The Government is negotiatiing with the landowners to let the children go ahead with their studies.
The director general of lands, Russel Nari, says the government can't release the money because the land is still in dispute and the issue is now before the land court.
He says the government will pay it after the court confirms the true custom owners.
The present term is particularly important for many students because they have examinations which determine whether they can progress to higher classes next year.