Merry old king round stage in school (7)
I believe the answer is:
college
'school' is the definition.
(I know that school can be written as college)
'merry old king round stage' is the wordplay.
'merry old king' becomes 'cole' (I've seen this in another clue).
'round' indicates putting letters inside.
'stage' becomes 'leg' (a leg is a stage of a competition).
'cole' placed around 'leg' is 'COLLEGE'.
'in' is the link.
(Other definitions for college that I've seen before include "Jesus or Magdalene, for example" , "Balliol, perhaps?" , "pudding?" , "Teaching establishment" , "School" .)