Okay before I get into the main question, I'll just outline the sparring structure we employ at the school where I teach.
Beginner level students do not spar at all to give them a chance to build up some confidence in blocking/kicking/striking before being put under pressure.
Intermediate level students go into very light or no contact sparring (point sparring) which has a small sub set of strikes and kicks that can be used to score a point. This gives them the opportunity to work on speed and control without being overwhelmed by the massive 'tool set' that they have available to them.
Advanced level students move up into contact sparring which allows significant contact (up to around 60% power) and allows the student to use most of the strikes and kicks they know provided that contact is limited to the chest protector (and any strikes to the back are strongly discouraged).
In both point and contact sparring full protective gear is worn - chest protectors, groin protectors (men), gloves, head protector, mouth guards and skin guards (optional). Obviously the use of gloves further limits the kinds of strikes that can be used.
Now to my question.
At the school we have been having issues with attendance levels of sparring classes - mostly the contact sparring classes. The Chief Instructor has investigated and found that a single student is a major contributing factor in the reluctance of students to participate. He is overly aggressive and competitive. He essentially bullies students that are newer to contact sparring and thus less able to handle his intimidation techniques while in the ring. He also lacks fitness and so makes up for this by going in even harder - especially on the students that can challenge him technically. Most of the significant 'incidents' we have had in sparring classes over the last few years have involved him in some way and one those was serious enough to get him suspended from contact sparring for a period of time.
The Chief Instructor is considering suspending him from contact sparring again while still allowing him to attend point sparring so he can work on control. However, this hasn't worked in the past since it's still an issue now. The Chief Instructor also doesn't want to lose this student but for the greater good of the school something has to be done.
Does anyone here have any suggestions for how this can be dealt with?
UPDATE:
The Chief Instructor has decided to give him another chance but is going to step in and be active in all sparring classes for the immediate future. I think he is going try to use it as an educational opportunity for all students (not just this one causing issues). However, if the student doesn't like it and ends up leaving because of it then so be it