Gainful employment rules have impacted 20% of our students: Gregory W. Cappelli
Gregory W. Cappelli, chief executive of Apollo Education Group, the leading US-based for-profit education group, said he is for expansion of the Bridge School of Management, a joint venture between Apollo Global and HT Media Ltd. In an interview, Cappelli explains how the new gainful employment rule and the new debt-to-earnings ratio provisions for education have impacted his organization and 20% of the students in the US. He feels the gainful employment rules should apply to not-for profit colleges and universities as well and touches upon why US should not kick out foreign students after Donald Trump’s victory. Edited excerpts:
How do you assess the progress of Bridge School of Management?
We are in the investing mode, which is necessary for building a great institution. I appreciate the approach of Bridge School of Management: when they were building the institutions, they took the opportunity to look at what we have done across the world, what has worked well, things they could learn from, areas where we can make programmes, new technology and the learning platform. What they are doing best is, they are not letting the pace of enrolment be dictated by anything other than quality, which from my experience is the single most important thing to build great institutions.
Bridge School already has two facilities in Gurgaon and Noida; do you have expansion plans?
Yes. This is a country with large population, but we are not trying to be everything to everyone. India has some very good educational institutions. We are trying to understand the skills gap. We are ensuring students are trained in areas where there is opportunity today and tomorrow. As we expand the Bridge School, we are looking at how we can help both consumers and employers fulfil their needs. Our intention is to expand with Bridge School… we have already two facilities and will expand as the demand grows.
How do you view the for-profit vs not-for-profit education debate? Some authorities in US have expressed doubts over for-profit education institutions.
I believe we need both for-profit and not-for-profit institutions. Typically in the US, for-profit institutions are aggressive in innovation and putting private capital to work… they are pioneers in serving students in evening. In the US, we have around 135 million people below 25 in the labour force, 80-85% of them don’t have a graduate degree. They all don’t need one, but the reality is your income doubles when you have one. All may not afford a four-year course… if you have time, it’s a wonderful thing. But increasingly, more working adults want to have a job, a family and learn. And for-profit institutions really serve their need. I don’t look at the quality of an institution from the tax status. I obviously believe in them (for-profit institutions) because I run one of the largest in the world.
But it is important to have a good, solid, practical regulation in place. It should be for all institutions—single definition for both for-profit and not-for-profit to make sure we are bringing in the right kind of students and right kind of education, and not taking too much debt. The problem is when students come in and do a college or university degree and take on some debt, and they might not have a plan what it will lead to.
So, what are you doing for students to avoid such a situation?
We have put in a new series of students protection and let each student know what they are getting into. This allows students to have a risk-free career. We give them a month to figure out before they take up professional student financial aid (debt). We ensure transparency on cost; we make sure students understand how the programmes lead to employment.
Of late, gainful employment rules in the US has impacted for-profit institutions and the debt-to-earning ratio rule has forced closing down of scores of programmes, impacting a lot of students. How has it impacted colleges and universities run by Apollo Global?
The concept of gainful employment is primarily pointed at for-profit institutions. Government has come up with a series of ratios… (students must not pay more than certain percentage of their post-study earnings on debt servicing)… there is debate around the pros and cons of the ratio that has been pegged.
But it has impacted your enrolment…
Yes, it has. I believe it (the rule) should apply to both for-profit and not-for-profit institutions. I believe in a single definition—whatever the rules are for for-profit, it can be for not-for-profit too. Remember, not-for-profits are educating many more students and enrolling students in history courses, music courses, and English and psychology courses. And they have the same issues and many of them are charging more than what we do. Schools are charging $60,000 or $70,000 (a year), we don’t charge that. That’s why there is debate about what’s the right ratio.
In general, we closed programmes, impacting 20% of our students coming out. We are building new programmes… There are several programmes in a stream, if any one of them does not pass the gainful employment regulations, the students may come back and ask, do you have a programme in (another) area.
So, most of the programmes that you closed down impacting 20% of students happened in 2016?
As gainful employment rules have impacted 20% of your students, it may not be good news for your growth.
But, it does not mean that those students might not have taken up other subjects of study... they might not take psychology, but enrol in business school. That’s okay. We are focusing more on areas where employers will hire.
Net net, how many of your students must have moved out of the campuses due to the new rules?
It’s about 20%. We have 100,000 students and so, it’s a fairly significant number. We believe it will normalize over the next two-three years as they choose other programmes.
There were reports that you are looking to challenge the new rules. Is it true?
We are supporters of good regulations and gainful employment. We agree with hundreds of regulations. Do we appreciate that we can have a voice and give our perspective to our regulators? Yes. We think regulations can be better. Gainful employment rule is a good concept and we are always for working with the regulators to improve it.
Do you see Donald Trump’s win going to impact foreign students’ flow to the US?
It’s too early to say that. We should not kick talented students out… because certain industries in Silicon Valley rely on them heavily.