One of the most prestigious students of Durham School was also one of the earliest; this was John Balliol, who was placed on the throne of Scotland in 1292 after 'the Great Cause' determined that he had the best claim to the throne. His reign lasted until 1296, when the 'Auld Alliance' deposed him due to his loyalty to the English crown. The fact that he was educated at Durham School is often a source of surprise for people.

The main evidence for this claim comes from an anecdote repeated in Robert of Greystone's Historia de Statu Ecclesiae Dunelmesis, written circa 1320. In September 1290 there was a dispute when Ranulph de Neville, the lord of Raby, brought the body of a buck in payment of the Abbey lands to Richard of Houghton, the prior of Durham. Before going, he asked John Balliol if he would accompany them, but Balliol declined, "saying that he had for a long time attended the schools of Durham and had never heard of such a claim as that preferred by the lord of Raby." Balliol was soon proved correct. Lord Neville insisted on having the deer cooked in the convent kitchen, but Richard refused as it was not proper custom. The argument heightened, and when Lord Neville's men tried to take the deer into the kitchen, the monks fought back, and "the large wax candles they were carrying were used on the heads of the men at arms". Lord Neville's men were driven out, and the stag remained with the monks.

This leaves us with something of a puzzle, however. School education in the Middle Ages was largely a province of the middle classes, such as the sons of gentry or wealthy merchants. It was decidedly unusual that a member of the wealthy aristocracy should join a public school, as most of their education would involve being taught at home by private tutors. In Nicholas Orme's 2006 study Medieval Schools, he only lists two people of a high social class who attended schools: John Balliol himself and Alexander de la Pole, the son of the earl of Suffolk who attended a school in Ipswich. In addition, the school that Balliol must have attended would have been the one present before Langley established the current Grammar School in 1414. The Bishop's Grammar School (as it would likely have been known) would have had the Bishop as its patron, with pupils likely paying fees to attend. The first definitive piece of evidence of its existence came in 1190, where Reginald of Durham 's Life of Godric called it "the school of clerks"; elsewhere, it was called "the school for liberal arts". It is believed to have stood at the bottom of the steps leading to St. Nicholas' Church, at what is now Back Silver Street.

The question is what was John Balliol, the son of the Lord of Barnard Castle and future King of Scotland, doing attending a small grammar school patronized by the Bishops of Durham? An explanation of this comes from an examination of the Balliol family history. John Balliol's father, likewise named John I de Balliol, was in a position that he owed the Bishop of Durham homage, due to a dispute over land ownership that arose in the mid-12th century. Homage was a medieval ceremony where a feudal tenant pledged submission to his lord in a vassal relationship. In addition to the homage owed to the Bishop, he was forced to give the Bishop a yearly tithe- described as "5 ¼ knights' fees"- in order to have the Long Newton land returned to him. Despite having agreed to this arrangement, however, John I refused to give either homage or tithe to the Bishop, resulting in a good deal of enmity erupting between the two factions. Henry III was indifferent to this, but backed John I de Balliol as his favourite.

Durham Cathedral grew more insistent as John I de Balliol became more determined not to pay homage. It was during this period, 1248 to 1255, that he became Sherrif of Cumberland, but his enmity with Bishop Walter Kirkham of Durham, and the dispute over Long Newton, worsened. This led to a dramatic event in the summer of 1255 when Balliol's men seized a Long Newton church by force, dwelling within for forty days. Henry III could no longer ignore Balliol's behaviour. In a statement given by Bishop Kirkham, Balliol's men "did irreverently insult and most enormously handle himself [the Bishop], his clerks, and his attendants, with swords and other weapons, taking four of his retainers prisoners to Bernard's Castle, where they remain".

The King forced Balliol to give the Bishop satisfaction, terminating his position as Sherrif of Cumberland. According to the Chronicle of Lanercost, "he suffered whipping at the hands of the Bishop, and assigned a sum of fixed maintenance to be continued for ever to Scholars studying at Oxford." The precise nature of this deal is unknown, but Amanda Beam, in her excellent article "John Balliol, the Bishops of Durham, and Balliol College, 1255-1260", published in the 2005 issue of Northern History, surmises that it was the following:

1. To give homage to the Bishop of Durham, and provide him with the tithe that was required of him.
2. To fund a new college at Oxford University, to be called 'Balliol College'.
3. To send his son, John Balliol, to study under the Bishop of Durham at his grammar school.

   This (argues Amanda Beam) is the reason that John Balliol attended Durham School; as a punishment for his father, and, possibly, as a hostage to ensure that he did not rise against the Bishop again.

   His education at Durham "placed him among the more literate of Scottish medieval kings", to quote historian Geoffrey Stell. In 1294, it is recorded that he read out a written petition in public, a feat of grammar and Latin that was unusual for the nobility of the time. This did not help his political ability, however; his willingness to act as a vassal to Edward I earned him the enmity of the Scottish people, giving him the name 'Toom Tabard' or 'empty coat'. In 1296 he was deposed by the Scottish nobility, and after Scotland was defeated during the Wars of Scottish Independence he was imprisoned for a time in the Tower of London. The rest, as they say, is history.