When Peter receives a new car for his birthday, he quickly becomes a frequent face in the street racing scene. Peter gains a new friend, equally into the scene...a recently returned Sean! Immediately it is apparent that Emma and Sean are oozing chemistry. Will things heat up again between them? Marco and Dylan find an apartment in the Annex perfectly close to school, but Marco has to contend with helping Dylan find roommates, choosing courses with Ellie and throwing Paige a blow-out going party all at the same time.

Things intensify between Emma and Sean, and when she takes time off from Peter to consider her relationship with Sean, Peter takes action. To settle things, Peter and Sean decide to have a midnight race that ends in disaster. Ellie's cutesy new roommate Amberley is making dorm life miserable, so she writes an "anonymous" article about roommates for the school newspaper. Ellie suddenly finds herself intrigued with her editor -- and without a place to live.

The girls' basketball team is burning up the court with Jimmy as their coach. Off the court, Jimmy faces humiliation when he isn't able to share an intimate relationship with Ashley. On the sidelines, cheerleading captain Darcy has serious conflicts with teammate Manny.

Jay turns to Emma for help with Sean's legal trouble. Ellie gains the attention of an editor of the university newspaper but he may be interested in more than just Ellie's writing.

Darcy decides to shed her good girl image by pursuing a relationship with an online admirer. JT tries to move on from Liberty's clutches when he develops a crush on new girl Mia.

Darcy continues her dangerous online double-life despite knowing the risks. But Darcy's world comes crashing down when her internet life collides with her real one. Ellie looks to Ashley for help when she encounters some problems with the mature college lifestyle.

Spinner is distressed after receiving the results of his career aptitude test. He convinces Jimmy to go into business designing t-shirts together but the stresses of industry might break their friendship.

Sean is released from jail and vows to comply with his two-year probation sentence. He's eager to be reunited with Emma but she has a big confession to make about her past.

Craig returns to Degrassi for a music festival and Manny wastes no time in hooking back up with him. As Craig further embraces the rock star lifestyle, Manny has to decide whether the new Craig is the guy she really loves. Much to Liberty's frustration, Mia and JT are the new "it" couple at Degrassi. When tensions reach a breaking point, Mia demands to know the truth about JT's past.

Ellie thinks all Craig's bad behaviour is due to Manny - to help him, she's determined to stay by his side while he's in town.

When Emma tells Manny that her parents are out of town for the weekend. Manny decides to have a party at Emma's. J.T. tells them they should have it for Liberty's birthday so they do. However, when everybody finds out about the party, Manny learns that it was a mistake. The students at Lakehurst come to the party but start trouble and are thrown out. By the end of the night, someone will lose their life.

The news has spread that J.T. was killed and everyone is upset except for Liberty who seems to blank. Knowing that J.T. died looking for Liberty to tell her that he was still in love with her is eating Toby alive but he decides to keep it bottled. To cheer Liberty up, Toby helps Liberty skip class and on their journey they end up kissing. At the memorial Toby tries to take back what he did without success and ends up spilling the beans to Mia(J.T.' girlfriend) and Liberty that J.T. stilled loved Liberty and was searching for her when he died.

Manny is moving back in with her family and Emma is not agreeing with this idea. Instead of talking it out with Manny, Emma starts a protest for the upcoming cheer competition that is being held at Degrassi because the school from which the kids that killed J.T. will be coming.

After Paige has a massive panic attack in class, her professor offers her one last chance in the form of a huge workload to be completed over the holiday weekend. Poor Paige tries to keep up appearances for her family but the pressure reaches a breaking point. Peter grovels to Darcy but her forgiveness won't come without a high price.

Paige finally throws in the towel when one disaster after another keeps happening at college. She returns to Toronto and vows to keep her failure a secret no matter what the cost. Peter is a changed man but his lies are catching up with him as Darcy continually rejects his apologies. Can he find a way to get through to her?

Paige has one goal: to return to her former pre-Banting glory. She's going to get back to doing what she does best. Everything - and that includes dating. Paige surprises Spinner by asking him out. Nothing serious, just casual.

Peter and Darcy are spending more time together but must hide their relationship from friends and family. Once one of Darcy's friends spots Peter and Darcy together in the park, after blowing her off, she goes straight to Peter's mother. Peter and Darcy will now have to endure a forced separation because Peter's parents have decided to send him away to Boarding School. Marco is on edge after Dylan has left to join a Swiss Hockey team. To keep him preoccupied he starts playing on-line poker and starts winning. Spinner sees the tension in Marco and suggests that they go on a vacation. To earn the money Marco starts playing in a poker game with Jay and his garage buds. After his first win he feels confident but that doesn't last when his next game goes bust and he looses $1100. Since he is in the whole he steals money from his father and plays another game in Spinner and Jimmy's store. Because Marco doesn't know the code for the alarm he and the other guys arrested for trespassing and Spinner is mad at Marco.

Alex is having trouble at home when her mother's boyfriend is arrested for credit card fraud. Unfortunately her mother also opened a credit card that he ran up to the tune of $6000. Alex gets a job back at the movie theater but is persuaded by Jay's new girlfriend to get a job as a cocktail waitress at the strip joint where she works. Paige is unhappy about it but is fine with it as long as Alex's clothes are on. Alex is feeling better and making great tips until she finds out that she and her mom are close to getting evicted because their checks have been bouncing. At this point Alex has decided that the extreme must be done and she hits the stage. Emma is thinking about college and in her picture perfect world that is her and Sean in an apartment at college all to themselves but Sean's has other ideas. At a dinner with Emma and her family he drops the news that he has enlisted in the army to learn more about engineering. This sends Emma up in arms especially because she thinks she is pregnant.

Alex is regretting what she has done especially after she gets a call from Paige at work and they get back together later. Alex is happy she has brought a lot of money into the house but doesn't want Paige to find out that she is stripping. All the plans are fine until Paige shows up at work with flowers causing an inevitable break up. At work Alex figures out that she is not meant to give up her soul and quits. Unfortunately home isn't any better when she finds out her mother has used the money she gave her to free the idiot boyfriend from jail. Alex left her home and reunited with Paige at the dance. Sean's world is turned upside down thinking about what to do if Emma is pregnant and decides that Emma should have the baby but he will still go to the army. This doesn't please Emma at all and we find out later she isn't pregnant. At this point Emma and Sean are just going to try and enjoy the time they have left.