Performance based contracts are nothing new in the field of business, but with the explosive cost of college tuition, such contracts increasingly popular between parents and their children. Let me explain through a personal story.
A few years ago, I received a panicked phone call from my father. It seems my little brother, who had just finished the fall semester of his freshman year at the University of Richmond, had received a couple “D’s” on his report card. My father was threatening to pull him out of Richmond – for which my father was paying nearly $35,000 per year – and to make him attend the local community college. My father’s logic made sense. Why should he pay so much for college if his son (my brother) was not applying himself? (more…)