On the morning of graduation day, the Laguna Beach kids are slowly getting ready for their commencement ceremonies. As they try on their cap and gowns, their parents surprise them with graduation gifts. Lo receives a brand new German sports car, Christine gets a shiny new bible, Morgan gets a slick laptop computer and Trey receives a high-tech sound system. After a high-speed skateboarding session, Stephen, Trey, Polster and Dieter are lounging around a table, talking about college. Dieter asks Stephen if he is still going to be with Kristin while he's away at college. Stephen doesn't think they will be together and says he is really looking forward to the ladies he will meet up in San Francisco. Meanwhile, at Kristin's house, Kristin is hanging out with Jessica. Jessica asks her if she is going to break up with Stephen. Kristin says "yes," but thinks they will be together when they are home in Laguna Beach. Kristin states that she doesn't want a boyfriend when she's at college. Later at the graduation ceremony, the Laguna Beach kids are sitting together and having a great time. The senior speaker is called upon to address the senior class. Before he can deliver his speech, Dieter stands up to shake his hand. After someone yells at Dieter to sit down, the senior speaker gives a inspiring speech about the excitement of moving on to college and the lingering feeling of not wanting to leave the beauty of Laguna. The next day, LC and Lo are sunbathing in Lo's backyard, talking about boys. Life continues in Laguna Beach.