Thanks everyone! These are all good points... didn't think about the early withdrawal reason. There is absolutely no incentive to pay the lump sum since they offer no discount. Actually, it's good I asked this question because it made me look closer at the contract, and I caught that they made a mistake... the payment should be $525 each and every month, otherwise I will be paying $1575 too much! I'm perfectly capable of having just blindly paid that extra money according to their schedule. Have contacted the office to get it corrected.
With respect to getting refunds if we withdraw early, there's only so much I can do since it is all prepaid to some extent. Contract says, "If I withdraw my child on or before Jan 31, 2018, written notice must be received by the School at least 30 days prior to the date of withdrawal. If 30 days notice is not received by the School prior to withdrawal, I will be responsible for additional 30 days tuition. Prepaid tuition, excluding the $750 registration fee, and any tuition due pursuant to this paragraph, will be credited to me. If I withdraw my child after Jan 31, 2018, no portion of prepaid tuition will be refunded to me."
However, I guess the split payment could be useful under the unlikely case that they kick my daughter out in the fall for being disruptive, and there is a disagreement over how much refund I am owed, etc.
Fortunately this place has been in business for decades, and has a tremendous waiting list so I think there is little chance it will go belly up.