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?
In that telephone conversation with my father, I expressed my concern that such a knee-jerk reaction would place the blame of leaving college not on my brother, but on my father (at least in my brother’s eyes). After some discussion, we agreed that writing down on paper what my father expected from my brother in return for paying for college might be a better solution. In a nutshell, my father agreed to pay for all classes that my brother received an “A” or “B”. He would pay 50% for a “C” and pay nothing for “D’s” or “F’s”. He put this in a contract that my brother had to sign in order to return to Richmond for his spring semester. Needless to say, my younger brother never saw a “D” or “F” for the rest of college; in fact, once he got on course he excelled at Richmond. The point of the story is that my father successfully put the responsibility of achieving good grades directly on my brother through this “parent-child” contract.
I was reminded of this story last week when a business colleague mentioned that he had just sent his 18 year old son off to college. He mentioned he had entered into a written, short-form contract with his son. The contract set forth what each party could expect from the other during the son’s college career. He gracefully sent me the contract and gave me permission to share it on ePrep. An edited version appears below:
Parents struggle most their adult lives saving for their children’s college tuition; it only makes sense that parents should have a performance goal in return for their investment.
Parent-Child College Contract:
July 20, 2007
INDIANA UNIVERSTIY CONTRACT
This contract is between XXXXXXXXXXX, student and XXXXXXXXXXX, parent.
WHAT I EXPECT FROM YOU:
â€¢ Work hard and accept responsibility for your own learning.
â€¢ Get your self organized.
â€¢ Do all of your work to the best of your ability.
â€¢ Make good use of private study time.
â€¢ Ask for help when you need it.
â€¢ Attend all classes.
â€¢ Keep me informed about important college matters.
â€¢ Abide by the college rules.
â€¢ Employment; you will need to get a part time job. The exception will be your first semester. For the first semester you are not to work and commit yourself to college and getting acclimated.
â€¢ Graduate from Indiana University in four years*, in the spring of 2011.
â€¢ Should you drop a class you will be responsible to pay for any replacement class.
â€¢ Maintain at least a 3.0 grade point average.
WHAT YOU CAN EXPECT FROM ME:
â€¢ To be helpful and supportive.
â€¢ Pay for tuition, including room board, books and school supplies.**
â€¢ Pay for transportation to and from Indiana University.
â€¢ Provide a weekly allowance which is to be paid one time at the beginning of each semester.
We have read the above stated responsibilities and agree to jointly work toward the successful goals of completing your college experience at Indiana University.
* Eight semesters.
** $112,000.00 based on $28,000.00 per year or a) $903 per unit, b) $2,709.00 per 3 unit course / one class.