CEO Interview: American Public Education, Inc. (APEI) - Dr. Wallace Boston
September 8, 2010 - The Wall Street Transcript has just published Education Report offering a timely review of the sector. This Special Report contains expert industry commentary through in-depth interviews with public company CEOs, Equity Analysts and Money Managers. Please find an excerpt below.
Dr. Wallace Boston, Ph.D., is the CEO of American Public Education. He guided APUS through its successful accreditation with the Higher Learning Commission of the North Central Association in 2006. In addition, he initiated the institution's application to be the first totally distance learning university to receive Federal Student Aid after the repeal of the 50/50 rule in 2006. In 2007 Dr. Boston led the parent company of APUS, American Public Education, Inc., to an initial public offering, and he led APEI to successful secondary offerings in 2008. Dr. Boston earned an A.B. degree in history from Duke University, an MBA in marketing and accounting from Tulane University's Freeman School of Business Administration and a Doctorate in higher education management from the University of Pennsylvania's Graduate School of Education.
TWST: American Public Education has been singled out by several analysts as one company that is less likely to be negatively impacted by possible regulatory changes. Tell us what you're doing differently than your competition.
Dr. Boston: First of all, we were founded back in 1991 as American Military University (AMU) to serve military professionals. So during most of our early history, our students either paid for their education using military tuition assistance, veteran's benefits or their own financial resources. We did not participate in the federal student loan program until 2006, when we received regional accreditation and launched our civilian outreach efforts. As a result, many of our practices, our culture and really the way we operate were born out of our experience serving military students. For example, at the undergraduate level, we set our tuition low so that it does not exceed the military's tuition assistance limit, and our tuition is well below the federal student loan limit.
The concept of providing an affordable, high-quality education is central to our mission. We have not increased our undergraduate tuition in almost 10 years, unlike some schools that regularly increase tuition to drive incremental revenue growth and margins or to meet the 90/10 rule. Simply put, the 90/10 rule specifies that to be eligible for federal student aid, an institution must not receive more than 90% of its revenues from federal student aid. Today approximately 22% of our net course registrations are from students using federal student aid. The rest are from students using military tuition assistance, veteran's benefits or their own resources. Our overriding goal is to make higher education more accessible to more people. Many of our students are working adults. They're able to graduate from our programs with low debt, and many return to get a second degree.
TWST: You are in a relatively stronger position with regard to regulatory compliance, but there are still risks for any company in this industry. Tell us about the steps you're taking internally to minimize your exposure to regulatory risk.
Dr. Boston: Some people feel strongly that for-profit universities should be regulated to a greater extent than nonprofit institutions. I believe there is a need for regulation on both sides of that fence. There are both nonprofit and for-profit universities that could improve some of their current practices. Right now the emphasis on regulating for-profits is a response in part to the improper actions of a few bad actors. At American Public University System (APUS), we believe the long-term stability of our university depends on strict compliance with all the rules and regulations that govern our institution. For example, we have never compensated admissions reps using some of the crazy, multitiered pay structures we've seen at other institutions. Our admissions reps are compensated with a salary. They do not receive bonuses based on the number of students they enroll.
Our admissions team does, however, participate in a company-wide bonus plan that ties bonuses to our budget goals and student satisfaction criteria. We believe a bonus system for all employees that focuses on student satisfaction, rather than enrollment, properly aligns everyone's activities with our goals: high levels of student satisfaction and academic quality. American Public University System is intensely focused on academic quality and measuring student learning. In 2009 we received numerous specialty accreditations and gained increasing recognition from our peers and others in the field of academia. This recognition is exemplified by the fact that APUS received The Ralph E. Gomory Award for Quality Online Education by The Sloan Consortium, a renowned nonprofit group of higher education institutions dedicated to improving the quality of online learning. We were the first for-profit institution to win an award from the Sloan Consortium, which is a top award in the world of online higher education.
TWST: You have historically served primarily military students. How are increased deployments impacting your military enrollments?
Dr. Boston: American Public University System operates through two universities, American Military University (AMU) and American Public University (APU). AMU is the largest provider of higher education to active-duty military and enjoys a strong relationship with the military community. Three retired U.S. military generals sit on our board of trustees. Our students are heroes and professionals with serious jobs that are becoming more difficult as military engagement increases in response to world events.
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