Freddy is convinced he will become a basketball star, so he decides to draw pictures on Gabe's test instead of trying to pass it. Gabe refuses to pass him even though he is the school's basketball star. When Gabe offers Freddy a make-up exam, Freddy still refuses. Gabe then offers to play a one-on-one game against Freddy to convince Freddy he's not as good as he thinks. If Gabe wins Freddy agrees to take the test, and if Freddy wins Gabe agrees to pass Freddy. Freddy naturally wins, but Gabe's score of 16 to 21 makes Freddy realize that he'd better complete school rather than rely on becoming a big basketball star.
Gabe Kotter wakes up in the morning ready to start his first day as a teacher at James Buchanan high school. When he arrives, Mr. Woodman assigns Kotter to the remedial class, the class he was in years before. Gabe walks into the room and "teaches" class. He's introduced to four main students. Vinnie Barbarino, Juan Epstein, Freddie Washington and Arnold Horshack. The class turns into a disaster and Kotter quits. When Kotter gets home, he and his wife, Julie, get a visit from the Sweathogs. In the end, Kotter returns as teacher.
The sweathogs go bananas over Bambi, a pretty blonde girl from California. We get some very funny scenes of the guys in various costumes: Epstein as a guru, Freddy in a colorful shirt, Horshack as a movie producer, and Vinnie as a surfer. When Mr. Kotter gets fed-up with them disrupting the class, it's revealed that Bambi was just pretending to be from California in order to get attention.
Mr. Kotter takes the sweathogs on a field trip to a museum. Mrs. Kotter and Mr. Woodman are along as chaperones. They meet the unusual museum curator Mr.Gore (John Astin) who seems odd and superstitious. In the Egyptian display, he warns them of the mummy coming back to life if they joke and kid around. Naturally, the door shuts itself and everyone is trapped. They humorously begin to panic and make attempts to get out. Epstein manages to get the door open.
When Arnold finally shows back up at school, it's discovered that his absence was due to the recent death of his fifth father. A feeling of responsibility within him, Arnold sets out to find a job to help support his siblings and his mother, who's only priority lies in finding a replacement father for her kids.
Juan buys four term papers - one for each Sweathog - from Carvelli, only to end up with an essay that Gabe had turned in eleven years earlier. DETAILS: Instead of writing their own term papers for Gabe's class, the Sweathogs choose to buy old "guaranteed A papers" for $5 each from Carvelli. Epstein's paper is on Franklin D. Roosevelt ("a mighty knight who fights for what's right"), Horshack's is on Joseph Stalin, Freddy's is on the Dust Bowl, and Vinnie's is on the Irish Potato Famine ("Great French Fry Phantom"). When Gabe grades Epstein's paper, he recognizes it as the same paper he handed in 11 years ago, so he gives all of them F's. Epstein then demands Carvelli refund their $20 per his guarantee, but Carvelli weasels out of that. Gabe tells Epstein he knows that Carvelli is selling used term papers and to thwart future use of the papers, Gabe passes around a list of them to all teachers and schools. Gabe then gives the Sweathogs one more chance to do the paper because, as he admits, he may have turned in that paper on FDR 11 years ago -- but he never said he WROTE it.
Rosalie "Hotsy" Totsy has grown up ... a little too fast. The Sweathogs go to a local strip club on a dare, and learn that Hotsy has gotten a job performing there (yup, she bares all, unknowingly in front of her former classmates). Vinnie, Freddie and Epstein all ride Hotsy's case, but Arnold is sensitive to her plight. Seems that, during a coversation with her former teacher Gabe, Rosalie really lived up to her nickname one night and got pregnant. And getting a job at a strip joint is the only way for this single mother (the baby's father had left Hotsy) to support her child. Gabe and Arnold convince the others to give Hotsy Totsy moral support, and they also refer her to a social agency which can help her finish school and find a more meaningful job.