Money spent to keep old former pupil in touch (3,2,4)
I believe the answer is:
out of play
'in touch' is the definition.
(I've seen this before)
'money spent to keep old former pupil' is the wordplay.
'money spent' becomes 'outlay' (outlay can mean expenses).
'to keep' indicates putting letters inside.
'old' becomes 'o' (common abbreviation eg in OE for Old English).
'former pupil' becomes 'FP' (abbreviation in education).
'o'+'fp'='ofp'
'outlay' placed around 'ofp' is 'OUT OF PLAY'.
(Other definitions for out of play that I've seen before include "may be in touch" , "No longer taking part" , "Dismissed from cast" , "actor no longer in the cast?" , "In touch maybe" .)