Is it more cost effective to forfeit the cancellation fee
I'm not a contract lawyer but if the school can't provide the course you booked on - then they can't charge a cancellation fee. Don't let them intimidate you otherwise. It's not you cancelling - they are cancelling your course because they can't provide it.
I've heard their contract is 20+ pages but does it really say - "If we are unable to provide the course you booked on you will still forefeit the deposit and any costs paid" - I hope not!
Take it up with your credit card, or get a lawyer - this is an easy win - there is no reason for anyone to lose any money at the school and a good lawyer should be able to get any deposits on housing etc back for you.