What changed in this filing

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Item 1. Business

2021-02-25 compared with 2020-02-27 · 357 added, 564 removed, 430 unchanged (68% of the section changed)

Basis of Presentation

As previously reported in our filings with the SEC, we have undertaken strategic reviews of our global portfolio and have announced plans to divest certain of our subsidiaries as part of a strategic shift.

This strategic shift will have a significant effect on our operations and financial results.

Accordingly, all of the divestitures announced in 2017 and 2018 that are part of this strategic shift, as well as the Company’s operations in the Kingdom of Saudi Arabia that were managed under a contract that expired on August 31, 2019 and was not renewed, are now accounted for as discontinued operations for all periods presented.

Our Continuing Operations include Mexico and Peru.

Unless otherwise indicated, the information in or incorporated by reference into this Form 10-K, including our segment information, relates only to our Continuing Operations.

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On January 27, 2020, we announced that our board of directors had authorized the Company to explore strategic alternatives for each of its businesses to unlock shareholder value.

As part of this process, we will evaluate all potential options for our businesses, including sales, spin-offs or business combinations.

There can be no assurance as to the outcome of this process, including whether it will result in the completion of any transaction, the values that may be realized from any potential transaction or how long the review process will take.

In the interim, we will continue to focus principally on the Latin American markets where we operate large scale platforms, as well as on the online market in the United States.

We have built the largest international portfolio of degree-granting higher education institutions, primarily focused in Latin America, with approximately 875,000 students enrolled at over 25 institutions with more than 150 campuses included in our continuing operations as of December 31, 2019, which we collectively refer to as the Laureate International Universities network.

Our institutes operate within scaled country networks, which provide advantages in terms of shared infrastructure, technology, curricula and operational best practices.

The institutions in the Laureate International Universities network are leading brands in their respective markets and offer a broad range of undergraduate and graduate degrees through campus-based, online and hybrid programs.

As of December 31, 2019, the vast majority of our students attend traditional, campus-based institutions offering multi‑year degrees, similar to leading private and public higher education institutions in developed markets such as the United States and Europe.

Nearly two thirds of our students are enrolled in programs of four or more years in duration.

During 2020, we made significant progress on this initiative.

Laureate completed the sales of its operations in Chile, Malaysia, and Australia & New Zealand and signed definitive agreements to sell Walden University, its higher education institution in the U.S., as well as its operations in Brazil and Honduras.

The Company expects to close the Brazil and Honduras transactions during the first half of the year.

The closing for the Walden transaction is anticipated to occur in the second half of 2021.

For Laureate’s institutions in Mexico and Peru, the board decided after a thorough evaluation of all strategic options, including a potential sale, to continue to operate these assets under Laureate management.

The decision to focus on a regional operating model in Mexico and Peru at this time does not preclude further engagement with potential buyers for those businesses.

Laureate does not intend to provide further interim updates unless and until it believes disclosure is appropriate.

See “Item 1A—Risk Factors—Risks Relating to Our Business—Our exploration of strategic alternatives and our activities related to previously announced divestitures may disrupt our ongoing businesses, result in increased expenses and present certain risks to the Company.”

COVID-19 Update

On March 11, 2020, the novel coronavirus (“COVID-19” or the “virus”) outbreak was declared a pandemic by the World Health Organization.

In order to prevent the spread of the virus in our student communities, we closed all of our physical campuses in March 2020 and quickly activated our business continuity plans.

In a matter of a few short weeks, all of our students were effectively transitioned to an online learning environment, at scale, and our staff and faculty were effectively moved to a fully remote environment.

We believe that our institutions have a competitive advantage in online and distance learning given the investments that we have made in digital learning platforms over the past three-to-five years and believe that we are well-positioned to continue to serve our students through the pandemic.

While our universities continue to deliver learning online, they also are focused on planning for a safe return to campus, when appropriate to do so.

Most of our universities are expecting to adopt a phased approach, prioritizing classes that require the use of labs and other physical resources.

Consistent with local regulations and health authority recommendations, we will implement a range of precautions to protect the health and safety of our students, faculty and staff, to ensure the safe return of activity on our campuses.

We will continue to monitor the situation and adjust based on what is most appropriate for each market.

We operate a portfolio of degree-granting higher education institutions in Mexico and Peru.

These institutions, which we collectively refer to as the Laureate International Universities network, are leading brands in their respective markets and offer a broad range of undergraduate and graduate degrees through campus-based, online and hybrid programs.

Collectively, we have approximately 336,500 students enrolled at five institutions with over 50 campuses included in our Continuing Operations as of December 31, 2020.

Our institutions in Mexico and Peru operate within scaled country networks, which provide advantages in terms of shared infrastructure, technology, curricula and operational best practices.

More than 75% of our students are enrolled in programs of four or more years in duration.

As of December 31, 2020, the vast majority of our students were enrolled at traditional, campus-based institutions offering multi-year degrees, similar to leading private and public higher education institutions in developed markets such as the United States and Europe.

Due to the COVID-19 pandemic, all of our students were effectively transitioned to an online learning environment in early 2020 and remained online throughout the remainder of the year.

Our institutions are focused on planning for a safe return to campus, when appropriate to do so.

See “—COVID-19 Update.”

Our programs are designed with a distinct emphasis on applied, professional-oriented content for growing career fields and are focused on academic disciplines that we believe offer strong employment opportunities and high earnings potential for our students.

We continually and proactively adapt our curriculum to the needs of the market.

In particular, we emphasize science, technology, engineering and math (STEM) and business disciplines, areas in which we believe that there is large and growing demand, especially in developing countries.

Since 2009, we have more than doubled our enrollment of students pursuing degrees in Medicine & Health Sciences, Engineering & Information Technology and Business & Management, our three largest disciplines.

In particular, we emphasize science,

technology, engineering and math (STEM) and business disciplines, areas in which we believe that there is large and growing demand, especially in developing countries.

Students pursuing degrees in Medicine & Health Sciences, Engineering & Information Technology and Business & Management, our three largest disciplines, constitute over 70% of our total post-secondary enrollments.

We believe that the work of our graduates in these disciplines creates a positive impact on the communities we serve and strengthens our institutions’ reputations within their respective markets.

Our focus on private-pay and our track record for delivering high-quality outcomes to our students, while stressing affordability and accessibility, has been a key reason for our long record of success.

We believe that the global higher education market presents an attractive long-term opportunity, primarily because of the large and growing imbalance between the supply and demand for affordable, quality higher education in many parts of the world.

We believe that the higher education markets in Mexico and Peru present an attractive long-term opportunity, primarily because of the large and growing imbalance between the supply and demand for affordable, quality higher education in those markets.

We believe that the combination of the projected growth in the middle class, limited government resources dedicated to higher education, and a clear value proposition demonstrated by the higher earnings potential afforded by higher education creates substantial opportunities for high-quality private institutions to meet this growing and unmet demand.

By offering high-quality, outcome-focused education, we believe that we enable students to prosper and thrive in the dynamic and evolving knowledge economy.

We operate institutions that address regional, national and local supply and demand imbalances in higher education.

As the international leader in higher education, we believe that we are uniquely positioned to deliver high-quality education across different brands and tuition levels in the markets in which we operate.

In many developing markets, traditional higher education students (defined as 18-24 year olds) have historically been served by public universities, which have limited capacity and are often underfunded, resulting in an inability to meet growing student demands and employer requirements.

Our institutions in these markets offer traditional higher education students a private education alternative, often with multiple brands and price points in

each market, with innovative programs and strong career-driven outcomes.

In many of these same markets, non-traditional students such as working adults and distance learners have limited options for pursuing higher education.

Through targeted programs and multiple teaching modalities, we are able to serve the differentiated needs of this unique demographic.

In addition, in many of these same markets, non-traditional students, such as working adults and distance learners, have limited options for pursuing higher education.

With strong brands and highly reputed institutions in Mexico and Peru, we believe that we are uniquely positioned to address these market opportunities.

Country Institution Enrollment at December 31, 2020 Market Segment QS Stars™ Overall University Rating Ratings/Rankings

Mexico Universidad del Valle de México (UVM)

95,000 Premium/ Traditional «««« • Ranked #7 university in Mexico

• One of only three 4-Star rated universities in Mexico by QS Stars™

Mexico Universidad Tecnológica de México (UNITEC)

99,000 Value/Teaching ««« • Largest private university in Mexico

• 5-Stars rated by QS Stars™ in categories of Teaching & Employability

Peru Universidad Peruana de Ciencias Aplicadas (UPC)

55,000 Premium/Traditional «««« • Ranked #3 university in Peru

• Only 4-Star rated university in Peru by QS Stars™

Peru Universidad Privada del Norte (UPN) 73,700 Value/Teaching ««« • 2 nd largest private university in Peru

• 5-Stars rated by QS Stars™ in categories of Teaching & Employability

Peru CIBERTEC

13,800 Tech/Voc N/A • 2 nd largest private tech/voc institute in Peru

QS Stars™, Guía Universitaria (UVM), Scimago Institutions Rankings (UPC)

Our institutions in Mexico and Peru offer traditional higher education students a private education alternative, with multiple brands and price points in each market and innovative programs and strong career-driven outcomes.

Additionally, through targeted programs and multiple teaching modalities, we are able to serve the differentiated needs of non-traditional students in these markets.

Our program and level of study mix for 2020 was as follows:

Based on 12/31/2019 total enrollments

High school students are primarily in Mexico

We have five reportable segments, which are summarized in the charts below.

We group our institutions by geography in Brazil, Mexico, Andean and Rest of World for reporting purposes.

Our Online & Partnerships segment principally consists of Walden University.

Based on 12/31/2020 total enrollments Based on 12/31/2020 total enrollments

All high school students are in Mexico

We have two reportable segments, which are summarized in the charts below.

The following information for our segments is presented as of December 31, 2020.

We operate in the international market for higher education, which is characterized by a significant imbalance between supply and demand, especially in developing economies.

In many countries, demand for higher education is large and growing.

GSV Advisors estimates that higher education institutions accounted for total revenues of approximately $1.5 trillion globally in 2015, with the higher education market expected to grow by approximately 5% per annum through 2020.

Global growth in higher education is being fueled by several demographic and economic factors, including a growing middle class, global growth in services and technology-related industries and recognition of the significant personal and economic benefits gained by graduates of higher education institutions.

At the same time, many governments have limited resources to devote to higher education, resulting in a

diminished ability by the public sector to meet growing demand, and creating opportunities for private education providers to enter these markets and deliver high-quality education.

As a result, the private sector plays a large and growing role in higher education globally.

While the Laureate International Universities network is the largest international network of degree-granting higher education institutions in the world, our total enrollment at December 31, 2019 of approximately 875,000 students represents only 0.4% of worldwide higher education students.

We operate higher education institutions in Mexico and Peru.

These markets are characterized by what we believe is a significant imbalance between supply and demand.

The demand for higher education is large and growing and is fueled by several demographic and economic factors, including a growing middle class, global growth in services and technology-related industries and recognition of the significant personal and economic benefits gained by graduates of higher education institutions.

At the same time, the respective Mexican and Peruvian governments often have limited resources to devote to higher education, resulting in a diminished ability by the public sector to meet growing demand, and creating opportunities for

private education providers to enter these markets and deliver high-quality education.

As a result, the private sector plays a large and growing role in higher education.

Favorable industry dynamics in Mexico and Peru driving growth in the higher education sector include the following:

Large, Growing and Underpenetrated Population of Qualified Higher Education Students.

According to United Nations Educational, Scientific and Cultural Organization (“UNESCO”), 222.7 million students worldwide were enrolled in higher education institutions in 2017, more than double the 100.2 million students enrolled in 2000, and approximately 90% of those students were enrolled at institutions outside of the United States.

In many countries, including throughout Latin America and other developing regions, there is growing demand for higher education based on favorable demographics, increasing secondary completion rates and increasing higher education participation rates, resulting in continued growth in higher education enrollments.

While global participation rates have increased for traditional higher education students (defined as 18-24 year olds), the market for higher education is still significantly underpenetrated, particularly in developing countries.

For example, participation rates in Brazil and Mexico in 2017 were approximately 36% and approximately 29%, respectively, as compared to approximately 62% in the United States for the same period.

While global participation rates have increased for traditional higher education students (defined as 18-24 year olds), the market for higher education in Mexico and Peru is still significantly underpenetrated, at approximately 30% and 47%, respectively, as compared to approximately 62% in the United States.

Strong Economic Incentives for Higher Education.

According to the Brookings Institution, approximately 3.2 billion people in the world composed the middle class in 2016, a number that is expected to be over five billion people by 2028.

We believe that members of this large and growing group seek advanced education opportunities for themselves and their children in recognition of the vast differential in earnings potential with and without higher education.

According to 2015 data from the Organization for Economic Co-operation and Development (“OECD”), in the United States and European Union countries that are members of the OECD, the earnings from employment for an adult completing higher education were approximately 74% and approximately 53% higher, respectively, than those of an adult with only an upper secondary education.

This income gap is even more pronounced in many developing countries around the world, including a differential of approximately 149% in Brazil, and approximately 102% in Mexico.

According to data from the Organization for Economic Co-operation and Development (“OECD”), in countries that are members of the OECD, the earnings from employment for an adult completing higher education were approximately 54% higher than those of an adult with only an upper secondary education.

We believe that the cumulative impact of favorable demographic and socio-economic trends, coupled with the superior earnings potential of higher education graduates, will continue to expand the market for private higher education.

Increasing Role of the Private Sector in Higher Education.

In many of our markets, the private sector plays a meaningful role in higher education, bridging supply and demand imbalances created by a lack of capacity at public universities.

In both Mexico and Peru, the private sector plays a meaningful role in higher education, bridging supply and demand imbalances created by a lack of capacity at public universities.

In Mexico, private education providers constitute 35% of the total higher-education market (44% in states in which we have operations).

In Peru, private education providers constitute 72% of the total higher-education market.

In addition to capacity limitations, we believe that limited public resources, and the corresponding policy reforms to make higher education systems less dependent on the financial and operational support of local governments, have resulted in increased enrollments in private institutions relative to public institutions.

For example, Brazil relies heavily upon private institutions to deliver quality higher education to students, with approximately 73% (in 2016) of higher education students in Brazil enrolled in private institutions.

Favorable Industry Dynamics in Key Latin American Markets.

In the large Latin American markets in which we operate, many of the industry trends described above are even more prevalent, with strong growth in higher education over the past 15 years.

% Private Sector#

Participation

Wage Premium†

Based on 2016 OECD data.

Based on 2017 UNESCO data.

Based on 2017 UNESCO data;

defined as 18-24 year olds.

Based on 2015 OECD data.

Increasing Demand for Online Offerings.

The acceptance of online learning in higher education is well-established, as evidenced by a survey conducted by the Babson Survey Research Group that reported that approximately 71% of academic leaders rated online learning outcomes as the same or superior to classroom learning in 2014.

We believe that increasing student demand (for

example, students taking at least one distance education course made up approximately 30% of all higher education enrollments in the United States as of the second half of 2015 according to the Distance Education Enrollment Report 2017), new instruction methodologies designed for the online medium, and growing employer and regulatory acceptance of degrees obtained through online and hybrid modalities will continue to drive online learning growth globally.

We believe that increasing student demand, new instruction methodologies designed for the online medium, and growing employer and regulatory acceptance of degrees obtained through online and hybrid modalities will continue to drive online learning in Mexico and Peru.

Moreover, increasing the percentage of courses taught online in a hybrid educational model has significant cost and capital efficiency benefits, as a greater number of students can be accommodated in existing physical campus space.

Growth in Outsourced Academic and Administrative Services.

To adapt to changing student preferences and greater demand for online and distance learning solutions, university leaders are refocusing their strategies around core academic functions, while seeking to outsource specialized technology functions and other administrative services.

Private sector partners offering operational expertise and economies of scale are increasingly assisting universities through long-term relationships in areas such as online program management, technology support, facilities management, student services and procurement.

According to a survey conducted by Inside Higher Ed in 2017, approximately 27% of college business officers in the United States believe that outsourcing more administrative services is a strategy they will implement in 2017-2018.

We believe that these trends will increase opportunities for private sector partners to deploy their capabilities to traditional educational providers.

Our Strengths and Competitive Advantages

We believe our key competitive strengths that will enable us to execute our strategy include the following:

We believe that our key competitive strengths that will enable us to execute our strategy include the following:

Scaled Platform Institutions Across Country Networks.

Our scale within the countries in which we operate facilitates distinct advantages for our students and allows us to leverage our operating model across multiple brands in our large markets.

It would take a competitor considerable time and expense to establish a country network of similar scale with the high-quality brands, intellectual property and accreditations that we possess.

Our scale within the countries in which we operate facilitates distinct advantages for our students and allows us to leverage our operating model across multiple brands in Mexico and Peru.

Our in-country networks facilitate competitive advantages related to:

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We believe that this collection of intellectual property, including online capabilities, campus management, faculty training, curriculum design and quality assurance, among other proprietary solutions, provides our students a truly differentiated learning experience and creates a significant competitive advantage for our institutions over competitors.

We have made significant investments to create unified technology systems across our in-country networks.

We have made significant investments to

create unified technology systems across our in-country networks.

These systems will provide data and insights on a scale that we believe will allow us to improve student experience, retention rates and outcomes, while also enabling a more efficient and lower cost educational delivery model.

Leading Online Technology .

Our commitment to digital teaching and learning has been manifested through significant investments in core technologies, as well as in human resources, training and development activities.

These investments have been instrumental in establishing a deep level of expertise in online education, facilitating the design and delivery of high quality, effective and differentiated online courses in the markets in which we operate.

Long-Standing and Respected University Brands.

We believe that we have established a reputation for providing high-quality higher education in the countries in which we operate, and many of our institutions are among the most respected higher education brands in their local markets.

Many of our institutions have over 50-year histories and are ranked among the best in their respective countries.

For example, Universidade Anhembi Morumbi in Brazil is ranked by Guia do Estudante as one of São Paulo’s top universities, UVM Mexico, the largest private university in Mexico, was ranked eighth among all public and private higher education institutions in that country by Guía Universitaria , an annual publication of Reader’s Digest, Universidad Peruana de Ciencias Aplicadas (“UPC”) recently attained a 4-Star Rating from QS Stars™, making it the only 4-Star Rated university in that country, and Universidad Andrés Bello in Chile is ranked by SCImago among the top three universities in the country.

Many of our institutions and programs have earned the highest accreditation available, which provides us with a strong competitive advantage in local markets.

We believe that we have established a reputation for providing high-quality higher education, and our institutions are among the most respected higher education brands in their local markets.

Our institutions have long-established histories and are ranked among the best in their respective countries.

In addition, many of our institutions and programs have earned the highest accreditation available, which provides us with a strong competitive advantage in local markets.

For example, medical school licenses are often the most difficult to obtain and are only granted to institutions that meet rigorous standards.

We serve more than 225,000 students in the fields of medicine and health sciences across more than 100 campuses throughout the Laureate International Universities network, including 20 medical schools and 14 dental schools.

We believe that the existence of medical schools at many of our institutions further validates the quality of our institutions and programs and increases brand awareness.

Throughout Mexico and Peru we operate 12 medical schools and seven dental schools.

We believe that the establishment of our medical and dental schools further validates the quality of our institutions and programs and increases brand awareness.

Commitment to Academic Quality.

We offer high-quality undergraduate, graduate and specialized programs in a wide range of disciplines that generate strong interest from students and provide attractive employment prospects.

Our commitment to quality is demonstrated by, for example, the fact that our Brazilian institutions’ IGC scores (an indicator used by the Brazilian Ministry of Education to evaluate the quality of higher education institutions) have increased by more than 25% on average from 2010 to 2018, placing four of our institutions in the top quarter, and 97% of our students in Brazil enrolled in institutions ranked in the top third, of all private higher education institutions in the country.

We focus on programs that prepare our students to become employed in high demand professions.

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This information results in timely curriculum upgrades, which helps ensure that our graduates acquire the skills that will make them marketable to employers.

We are also committed to continually evaluating our institutions to ensure we are providing the highest quality education to our students.

Our proprietary management tool, the Laureate Education Assessment Framework (“LEAF”), is used to evaluate institutional performance based on 44 unique criteria across five different categories:

Employability, Learning Experience, Personal Experience, Access & Outreach and Academic Excellence.

LEAF, in conjunction with additional external assessment methodologies, such as QS Stars™, allows us to identify key areas for improvement in order to drive a culture of quality and continual innovation at our institutions.

Strong Student Outcomes.

We track and measure our student outcomes to ensure we are delivering on our commitments to students and their families.

In 2017, we commissioned a study by Kantar Vermeer, a leading third-party market research organization, of graduates at Laureate institutions representing over 65% of total Laureate enrollments.

Graduates at 10 of our 12 surveyed international institutions achieved, on average, equal or higher employment rates within 12 months of graduation as compared to graduates of other institutions in the same markets.

In addition, in 10 of the 12 institutions surveyed, graduates achieved equal or higher starting salaries as compared to graduates of other institutions in those same markets (salary premium to market benchmarks ranged from approximately 15% to approximately 47%).

Furthermore, a joint study by Laureate and the IFC/World Bank Group in 2014 showed that graduates of Laureate institutions in Mexico experienced higher rates of social mobility, finding jobs, and moving up in socioeconomic status than their peers in non-Laureate institutions.

In 2016, we conducted a similar study with the IFC in Peru for two of our network institutions, UPC and Cibertec, which showed that graduates from the larger programs of both institutions had higher salaries than their control group counterparts.

Additionally, graduates from UPC were found to experience a larger positive change in their socioeconomic status than their peers who completed studies at non-Laureate institutions.

We also are committed to continually evaluating our institutions to ensure we are providing the highest quality education to our students.

External assessment methodologies, such as QS Stars™, allows us to identify key areas for improvement in order to drive a culture of quality and continual innovation at our institutions.

Attractive Financial Model.

• Private Pay Model.

Approximately 73% of our total revenues for the year ended December 31, 2019 were generated from private pay sources.

Essentially all of our revenues for 2020 were generated from private pay sources, as there are no material government-sponsored student loan programs in Mexico or Peru.

We believe that students’ and families’ willingness to allocate personal resources to fund higher education at our institutions validates our strong value proposition.

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The length of our programs provides us with a high degree of revenue visibility.

The majority of the academic programs offered by our institutions last between three and five years, and nearly two thirds of our students were enrolled in programs of at least four years or more in duration as of December 31, 2019.

The majority of the academic programs offered by our institutions last between four and five years, and more than 75% of our students were enrolled in programs of at least four years or more in duration as of December 31, 2020.

Additionally, we actively monitor and manage student retention because of the impact it has on student outcomes and our financial results.

The historical annual student retention rate, which we define as the proportion of prior year students returning in the current year (excluding graduating students), of 80% has not varied by more than four percentage points in any one year over the last five years.

Our historical annual student retention rate, which we define as the proportion of prior year students returning in the current year (excluding graduating students), was 79% on average over the last five years.

Given our high degree of revenue visibility, we are able to make attractive capital investments and execute other strategic initiatives to help drive sustainable growth in our business.

• Attractive Margin Profile with Significant Operating Leverage.

Our network of universities within each country provides significant advantages of scale, enabling us to operate efficiently with attractive margin levels by leveraging the scale.

In 2014, we launched our first Excellence in Process (“EiP”) enterprise wide initiative to optimize and standardize our processes to enable sustained growth and margin expansion.

Given the success of the first wave of EiP, we expanded the initiative into other back and mid office areas, as well as certain student-facing activities, expenses associated with streamlining the organizational structure and certain non-recurring costs incurred in connection with the planned and completed dispositions, in order to generate additional efficiencies and create a

more efficient organizational structure.

Beginning in 2019, EiP also includes expenses associated with an enterprise-wide program aimed at revenue growth.

Our EiP programs have implemented vertical integration of procurement, information technology, finance, accounting, and human resources, enabling us to fully leverage the growing size and scope of our local operations while also enhancing our internal controls and have expanded to leveraging additional opportunities for efficiencies and savings related to the mid office functions (including, for example, student information systems and the enrollment to graduation cycle) as well as general and administrative structure and certain student facing activities.

Our scale within each country provides significant advantages, enabling us to operate efficiently with attractive margin levels.

We focus on optimizing our operations at the country level through our in-county networks.

While the countries in which we operate currently are affected by the COVID-19 pandemic, we do not presently believe that the pandemic will materially impact our long-term strategy and initiatives.

See “—COVID-19 Update” and “—Employees and Human Capital Management—Health and Safety” for information related to the impact of the COVID-19 pandemic on our students, faculty and staff.

That said, see “Item 1A—Risk Factors—Risks Relating to Our Business—An epidemic, pandemic or other public health emergency, such as the recent outbreak of a novel strain of coronavirus (COVID-19), could have a material adverse effect on our business, financial condition, cash flows and results of operations.”

The execution of our strategy will be enabled by the following initiatives:

Integration of Latin American Campus-Based Operations Through Common Operating Models Within Each Country.

We anticipate that our focus on our core, scaled markets will allow us to integrate our campus-based operations in those markets.

Our institutions in Latin America serve approximately 800,000 students in a relatively homogenous operating environment, creating a unique opportunity to harvest the benefits of scale.

We believe that by implementing and optimizing our common operating model within each country, we will be able to transition our institutions from operating as decentralized, stand-alone units to operating as an integrated country network.

Tighter integration of our Latin American campus-based operations within each country will also enable us to significantly reduce our cost structure and allow us to leverage the benefits of our scale.

By continuing to build on our success with the implementation of EiP, we believe that we can increase consistency and achieve scale with respect to back and mid-office functions, as well as certain front-office functions which impact the student from enrollment through graduation.

We anticipate that the common operating model within each country will enable closer collaboration and will facilitate innovation and improved student experiences, such as joint program development initiatives, increased sharing of best practices and additional coordinated investments in unified technology systems and new capabilities such as artificial intelligence and enhanced data analytics.

Integration of Campus-Based Operations in Mexico and Peru.

Our institutions in Mexico and Peru serve approximately 336,500 students in a relatively homogenous operating environment, creating a unique opportunity to harvest the benefits of scale.

We believe that by implementing best practices within each country we will enable closer collaboration and facilitate innovation and improved student experiences.

We believe that this unification will enable us to be more nimble in our day-to-day operations and will allow us to extract valuable insights from more data across our network.

We believe that this will enable further innovation and efficiency in our academic model and operations.

Further, we believe that this common operating system will enable us to lower the cost of delivery of education, which we believe should lead to improved margins and expanded market share.

Further, we believe that integration will enable further innovation and efficiency in our academic model and operations, and allow us to expand our market share.

Leverage and Expand Existing Portfolio.

We will continue to focus on opportunities to expand our programs and the type of students that we serve, as well as our capacity in our markets to meet local demand, leveraging our existing platform to execute on attractive organic growth opportunities.

In particular, we intend to add new programs and course offerings, expand target student demographics and, where appropriate, increase capacity at existing campuses, open new campuses and enter new cities in existing markets.

In particular, we intend to add new programs and course offerings, expand target student demographics and, where appropriate, increase capacity at existing campuses and through hybrid online opportunities, open new campuses and enter new cities in existing markets.

We believe that these initiatives will drive growth and provide an attractive return on capital.

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We intend to increase the number of our students that receive their education through fully online or hybrid programs to meet the growing demands of students.

Our online initiative is designed to not only provide students with access to innovative programs and modern digital experiences, but also to diversify our offerings, increase

our enrollments and expand our digital solutions in a capital efficient manner, leveraging current infrastructure and improving classroom utilization.

For 2019, the percentage of student credit hours taken online in our campus-based institutions was approximately 28%, an increase from approximately 11% in 2015.

With a common learning management system implemented across our universities, we believe that we have the scale to execute on this market opportunity, allowing us to differentiate ourselves further from our competitors.

Our online initiative is designed to not only provide students with access to innovative programs and modern digital experiences, but also to diversify our offerings, increase our enrollments and expand our digital solutions in a capital efficient manner, leveraging current infrastructure and improving classroom utilization.

The percentage of student credit hours taken online in our campus-based institutions was approximately 28% at the end of 2019.

During 2020, due to the COVID-19 pandemic, all of our students were effectively transitioned to an online learning environment, at scale.

Once our students, faculty and staff are able to safely return to campus, we expect that our students will transition back to a more traditional campus-based environment, with blended learning modalities.

With a common learning management system implemented across our universities, we believe that we have the expertise to continue to expand online and hybrid offerings to meet the growing demand for this market opportunity, allowing us to differentiate ourselves further from our competitors.

We continue to accelerate the advancement of online education programs and technology-enabled solutions that deliver high-quality differentiated student experiences for our institutions at scale.

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Traditional 18-24 year old students attending campus-based institutions are increasingly seeking digital learning experiences that are blended with in-person learning.

We provide those students with a hybrid learning experience, mixing face-to-face classroom experience with technology through our online platform, which we believe improves the student experience by providing them with a wide range of online courses, interactive discussions, virtual experiences, digital resources, and simulations that enhance their learning experiences both within and outside the classroom.

courses, interactive discussions, virtual experiences, digital resources, and simulations that enhance their learning experiences both within and outside the classroom.

• Fully Online Programs.

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Our fully online programs provide students with a high-quality curriculum experience to achieve their goals.

Distance Learning in Brazil.

The Brazil market offers a unique opportunity to provide a quality and at-scale distance learning offering.

The distance learning format reduces the need for on-site support, providing students with flexibility to plan their studies.

With an established presence of over 500 active learning centers and nearly 1,000 polo licenses as of December 31, 2019, we have continued to leverage our local brands in Brazil to capitalize on our investment in distance learning centers to support demand.

Our Segments and Institutions

Effective August 9, 2018 (giving effect to discontinued operations and the renaming of our segments), Laureate offers its educational services through five reportable segments:

Rest of World;

Online & Partnerships.

Effective September 30, 2020 (giving effect to discontinued operations and the renaming of our segments), Laureate offers its educational services through two reportable segments:

Mexico and Peru.

We determine our segments based on information utilized by our chief operating decision maker to allocate resources and assess performance.

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The following table presents information about the institutions as of December 31, 2020 and excludes institutions that are part of discontinued operations as of that date.

Operating Segment

Higher Education Institution

Reportable Segment

Higher Education Institution Year

Joined Laureate Network

Universidade Anhembi Morumbi (UAM Brazil)

Universidade Potiguar (UnP)

Centro Universitário dos Guararapes (CUG)

Faculdade Internacional da Paraíba (FPB)

Business School São Paulo (BSP)

FADERGS Centro Universitário (FADERGS)

Instituton Brasileiro de Medicina de Reabilitação (Uni IBMR)

Universidade Salvador (UNIFACS)

Centro Universitário Ritter dos Reis (UniRitter)

Faculdade dos Guararapes de Recife (FGR)

FMU Education Group (FMU)

Faculdade Porto-Alegrense (FAPA)

Universidad del Valle de México (UVM Mexico)

Universidad Tecnológica de México (UNITEC Mexico)

Universidad de Las Américas (UDLA Chile)*

Instituto Profesional AIEP (AIEP)

Universidad Andrés Bello (UNAB)*

Instituto Profesional Escuela Moderna de Música (EMM)

Universidad Viña del Mar (UVM Chile)*

Universidad del Valle de México (UVM) 2000 1960

(194,000) Universidad Tecnológica de México (UNITEC) 2008 1966

Universidad Peruana de Ciencias Aplicadas (UPC) 2004 1994

(142,500) CIBERTEC 2004 1983

Universidad Privada del Norte (UPN) 2007 1994

Rest of World

THINK Education Group (THINK)

Torrens University Australia (TUA)

Blue Mountains International Hotel Management

School-Suzhou (Blue Mountains Suzhou)‡

Media Design School (MDS)

Online & Partnerships

United Kingdom

Laureate Online Education B.V.

(University of Liverpool)†

Laureate Online Education B.V.

(University of Roehampton)†

United States

Walden University

Not-for-profit institution consolidated by Laureate as a variable interest entity.

Managed by Laureate as part of a joint venture arrangement.

We stopped accepting new enrollments at the University of Roehampton and the University of Liverpool in 2017 and 2018, respectively.

We face competition in each of our operating segments.

We believe that competition focuses on price, educational quality, reputation, location and facilities.

Brazil, Mexico, Andean and Rest of World

The market for higher education outside the United States is highly fragmented and marked by large numbers of local competitors.

The target demographics are primarily 18- to 24-year-olds in the individual countries in which we compete.

We generally compete with both public and private higher education institutions on the basis of price, educational quality, reputation and location.

institutions tend to be less expensive, if not free, but more selective and less focused on practical programs aligned around career opportunities.

We face competition in both of our reportable segments.

We believe that competition focuses on price, educational quality, reputation, brand positioning, location and facilities.

The market for higher education in Mexico and Peru is highly fragmented and marked by large numbers of local competitors.

The target demographics are primarily 18- to 24-year-olds in the countries in which we compete.

Public institutions tend to be less expensive, if not free, but limited in capacity.

The top public universities in these market are selective, and many of the other public universities are less focused on practical programs aligned around career opportunities.

This creates market demand for private educational providers.

We compete with other private higher education institutions on the basis of price, educational quality, reputation and location.

We believe that we compare favorably with competitors because of our focus on quality, professional-oriented curriculum and the competitive advantages provided by our network.

At present, we believe that no other company has a similar network of international institutions.

There are a number of other private and public institutions in each of the countries in which we operate.

Because the concept of private higher education institutions is fairly new in many countries, it is difficult to predict how the markets will evolve and how many competitors there will be in the future.

We expect competition to increase as the markets mature.

United States

The post-secondary education market is highly competitive, with no private or public institution holding a significant market share.

We compete primarily with public and private degree-granting regionally accredited colleges and universities.

Our competitors include both traditional and proprietary colleges and universities offering online programs.

Traditional colleges and universities increasingly offer a variety of distance education alternatives to professional adults.

Competition from traditional colleges and universities is expected to increase as they expand their online offerings.

We believe that the competitive factors in the post-secondary education market primarily include the following:

relevant, high-quality and accredited program offerings;

reputation of the college or university and marketability of the degree;

flexible, convenient and dependable access to programs and courses;

regulatory approvals;

qualified and experienced faculty;

level of learner support;

affordability of the program;

availability of Title IV funds;

marketing and recruiting effectiveness;

the time necessary to earn a degree.

Online & Partnerships

The market for fully online higher education is highly fragmented and competitive, with no single institution having any significant market share.

The target demographic for Walden University is adult working professionals who are over 25 years old.

Walden University competes with traditional public and private nonprofit institutions and for-profit schools.

In recent years, the competition for online enrollments has increased as more traditional campus-based institutions are becoming online-enabled.

Typically, public institutions charge lower tuitions than Walden University because they receive state subsidies, government and foundation grants, and tax-deductible contributions and have access to other financial sources not available to Walden University.

However, tuition at private nonprofit institutions is typically higher than the average tuition rates charged by Walden University.

Walden University competes with other educational institutions principally based upon price, educational quality, reputation, location, educational programs and student services.

See “Item 1A-Risk Factors-Risks Relating to Our Continuing Business-The higher education market is very competitive, and we may not be able to compete effectively.”

Recent Developments

Sale of Laureate Costa Rica

On January 10, 2020, Laureate International B.V., a Netherlands private limited liability company (“Laureate International”), an indirect, wholly owned subsidiary of the Company, the Company, solely as guarantor of certain of Laureate International’s obligations thereunder, and SP Costa Rica Holdings, LLC, a Delaware limited liability company (“the Costa Rica Buyer”), entered into, and consummated the transactions contemplated by, an Equity Purchase Agreement (the “Costa Rica Agreement”).

Pursuant to the Costa Rica Agreement, the Costa Rica Buyer purchased from Laureate International (i) all of the equity units of Education Holding Costa Rica EHCR, S.R.L., which owns, directly or indirectly, all of the equity units of Lusitania S.R.L., Universidad U Latina, S.R.L.

(“ULatina”) and Universidad Americana UAM, S.R.L.

(collectively, “Laureate Costa Rica”), and (ii) a note due from ULatina to Laureate International.

Consideration for the transaction consisted of $15 million paid at closing and up to $7 million to be paid within the next two years if Laureate Costa Rica meets certain performance metrics.

Additionally, Laureate Costa Rica retained obligations to pay approximately $30 million in finance lease indebtedness for which the Costa Rica Buyer has no recourse to Laureate International.

Buyer is controlled by certain affiliates of Sterling Capital Partners II, L.P.

(“Sterling II”).

Sterling II has the right to designate a director to our board of directors pursuant to a securityholders agreement, and Steven Taslitz currently serves as the Sterling-designated director.

Taslitz did not participate in our board of directors’ consideration of the transaction, which was approved by the audit committee of our board of directors as a related party transaction.

Exploration of Strategic Alternatives

On January 27, 2020, we announced that our board of directors had authorized the Company to explore strategic alternatives for each of its businesses to unlock shareholder value.

As part of this process, we will evaluate all potential options for our businesses, including sales, spin-offs or business combinations.

We have already initiated separate processes to explore the sale of our Peru, Mexico and Australia/New Zealand businesses.

This follows our successful track record over the past several years in divesting higher education institutions across the U.S., Europe, Asia and Africa at accretive valuations.

There can be no assurance as to the outcome of this process, including whether it will result in the completion of any transaction, as to the values that may be realized from any potential transaction or as to how long the review process will take.

We do not intend to provide interim updates on the progress of this review unless and until we believe that disclosure is appropriate.

There are a number of private and public institutions in both of the countries in which we operate, and it is difficult to predict how the markets will evolve and how many competitors there will be in the future.

We expect competition to increase as the Mexican and Peruvian markets continue to develop.

See “Item 1A—Risk Factors—Risks Relating to Our Business—The higher education market is very competitive, and we may not be able to compete effectively.”

Intellectual Property

We currently own, or have filed applications for, trademark registrations for the word “Laureate,” for “Laureate International Universities” and for the Laureate leaf logo in the trademark offices of all jurisdictions around the world in which we operate institutions of higher learning.

We currently own, or have filed applications for, trademark registrations for the word “Laureate,” for “Laureate International Universities” and for the Laureate leaf logo in the trademark offices of all jurisdictions in which we operate institutions of higher learning.

We have also registered or filed applications in the applicable jurisdictions in which we operate for the marks “Laureate Online International” and “Laureate Online Education.” In addition, we have the rights to trade names, logos and other intellectual property specific to most of our higher education institutions, in the countries in which those institutions operate.

Employees and Human Capital Management

As of December 31, 2020, including Discontinued Operations, we had approximately 37,000 employees, of which approximately 3,000 were full-time academic teaching staff and 14,000 were part-time academic teaching staff.

Our employees at many of our institutions outside the United States are represented by labor unions under collective bargaining agreements, as is customary or required under local law in those jurisdictions.

As of December 31, 2020, for Continuing Operations only, we had approximately 22,000 employees, of which approximately 2,000 were full-time academic teaching staff and 9,000 were part-time academic teaching staff.

Our employees at our institutions outside the United States are represented by labor unions under collective bargaining agreements, as is customary or required under local law in those jurisdictions.

At various points throughout the year, we negotiate to renew collective bargaining agreements that have expired or that will expire in the near term.

We consider ourselves to be in good standing with all of the labor unions of which our employees are members and believe that we have good relations with all of our employees.

Effect of Environmental Laws

We believe that we are in compliance with all applicable environmental laws, in all material respects.

We do not expect future compliance with environmental laws to have a material adverse effect on our business.

We were founded in 1989 as Sylvan Learning Systems, Inc., a provider of a broad array of supplemental and remedial educational services.

In 1999, we made our first investment in global higher education with our acquisition of Universidad Europea de Madrid, and in 2001, we entered the market for online delivery of higher education services in the United States with our acquisition of Walden University.

In 2003, we sold the principal operations that made up our then K-12 educational services business and certain venture investments deemed not strategic to our higher education business, and in 2004, we changed our name to Laureate Education, Inc.

Commitment to Ethics and Values

Acting ethically and in accordance with the law is at the very core of who we are.

Maintaining our integrity is more important than any financial gain.

We have incorporated as a benefit corporation and believe that long-term success is linked to the delivery of strong outcomes for all out stakeholders.

The Laureate Code of Conduct and Ethics (the “Code”) is central to that effort.

Our Code sets out principles of integrity and ethical behavior, and our responsibilities to each other, our students, suppliers, stockholders and the public.

The Code covers such topics as accurate records, proper use of assets and information, conflicts of interest, and bribery and corruption.

The Code sets a baseline:

it does not cover every issue that may arise, but it provides basic principles and a methodology to help guide us in the attainment of this common goal.

The Code establishes common standards for Laureate Education, Inc.

and all of our institutions.

We maintain an Ethics Hotline, which is a secure, confidential resource for Laureate employees, faculty members, students and others to ask a question or raise a concern related to the Code or other ethics or compliance issues.

Further, as a Company, we will continue to use our platform to actively be non-discriminatory in all we do, we will promote diversity, inclusion and equality across our workplace, and we will inspire a generation of graduates to continue advancing these principles in their work and throughout their communities.

Health and Safety

The health and well-being of our students, faculty and staff has been, and remains, a high priority.

The COVID-19 pandemic has affected nearly every sector and every business around the world, with higher education experiencing a significant impact.

Shortly after the World Health Organization declared the global pandemic, millions of students needed to move away from their campus-based, face-to-face classes and abruptly switch to online learning.

For many years, we have had the capacity to deliver high-quality, digital learning experiences, and we acted quickly to leverage our existing technologies and learning platforms to serve students outside of the traditional classroom setting.

In addition to transitioning to fully online delivery, we also effectively moved other essential functions, including student support services and marketing and enrollment, to a fully remote environment.

We have communicated with our students, faculty and staff regularly throughout the pandemic to ensure that they remain informed of our response.

While Laureate universities continue to deliver learning online, they also are focused on planning for a safe return to campus, when appropriate to do so.

Most of our universities are expected to adopt a phased approach, prioritizing classes that require the use of labs and other physical resources.

We also moved quickly to support our corporate workforce transitioning to an entirely remote, online environment.

We launched “Excelling Remotely,” an initiative to share resources, best practice and inspiration for employees to ensure a successful transition to remote work.

In addition, we established a COVID-19 Employee Relief Fund to provide financial assistance to those experiencing financial hardship as a direct result of the pandemic.

Since making our first investment in global higher education in 1999, we have focused on expanding access to differentiated higher education and learning opportunities to traditionally underserved areas of the world.

In August 2007, we were acquired in a leveraged buyout by a consortium of investment funds and other investors.

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Under Delaware law, public benefit corporations are required to identify in their certificate of incorporation the public benefit or benefits they will promote and their directors have a duty to manage the affairs of the corporation in a manner that balances the pecuniary interests of the stockholders, the best interests of those materially affected by the corporation’s conduct, and the specific public benefit or public benefits identified in the public benefit corporation’s certificate of incorporation.

Public benefit corporations organized in Delaware are also required to assess their benefit performance internally and to disclose publicly at least biennially a report detailing their success in meeting their benefit objectives.

Our public benefit, as provided in our certificate of incorporation, is to produce a positive effect (or a reduction of negative effects) for society and persons by offering diverse education programs delivered online and on premises operated in the communities that we serve.

Public benefit corporations organized in Delaware also are required to assess their benefit performance internally and to disclose publicly at least biennially a report detailing their success in meeting their benefit objectives.

Our public benefit, as provided in our amended and restated certificate of incorporation, is to produce a positive effect (or a reduction of negative effects) for society and persons by offering diverse education programs delivered online and on premises operated in the communities that we serve.

By doing so, we believe that we provide greater access to cost-effective, high-quality higher education that enables more students to achieve their academic and career aspirations.

Most of our operations are outside the United States, where there is a large and growing imbalance between the supply and demand for quality higher education.

Our Continuing Operations are outside the United States, where there is a large and growing imbalance between the supply and demand for quality higher education.

Our stated public benefit is firmly rooted in our company mission and our belief that when our students succeed, countries prosper and societies benefit.

Becoming a public benefit corporation underscores our commitment to our purpose and our stakeholders, including students, regulators, employers, local communities and stockholders.

Certified B Corporation

While not required by Delaware law or the terms of our certificate of incorporation, we have elected to have our social and environmental performance, accountability and transparency assessed against the proprietary criteria established by an independent non-profit organization.

As a result of this assessment, we have been designated as, and have maintained our certification as, a “Certified B Corporation TM ” under the standards set by an independent organization, which refers to companies that are certified as meeting certain levels of social and environmental performance, accountability and transparency.

Available Information

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Industry Regulation

Australian Regulation

We operate two post-secondary educational institutions in Australia-Torrens University Australia Ltd (“Torrens”) and Think:

Colleges Pty Ltd (“Think”).

In Australia a distinction is made between higher education organizations and vocational education.

Higher education providers consist of public and private universities, Australian branches of overseas universities and other higher education providers.

Higher education qualifications consist of undergraduate awards (bachelor’s degrees, associate degrees and diplomas) and postgraduate awards (graduate certificates and diplomas, master’s degrees and doctoral degrees).

The regulation of higher education providers is undertaken at a national level by the Tertiary Education Quality and Standards Agency (“TEQSA”).

All organizations that offer higher education qualifications in or from Australia must be registered by TEQSA.

Higher education providers that have not been granted self-accrediting status must also have their courses of study accredited by TEQSA.

Registration as a higher education provider is for a fixed period of up to seven years.

TEQSA regularly reviews the conduct and operation of accredited higher education providers.

The vocational education and training (“VET”) sector consists of technical and further education institutes, agricultural colleges, adult and community education providers, community organizations, industry skill centers and private providers.

VET qualifications include certificates, diplomas and advanced diplomas.

The regulation of VET providers is undertaken at a national level by the Australian Skills Quality Authority (“ASQA”).

Organizations providing VET in Australia must be registered by ASQA as a Registered Training Organisation.

Courses offered by Registered Training Organisations need to be accredited by ASQA.

Registration as a registered training organization is for a fixed period of up to seven years.

ASQA regularly reviews the conduct and operations of registered training organizations.

Torrens is one of 43 universities in Australia.

It is a for-profit entity and registered as a university by TEQSA.

As a self-accrediting university, it is not required to have its courses of study accredited by TEQSA.

Torrens is also registered by ASQA as a Registered Training Organisation and is thus entitled to offer vocational and training courses.

Think is one of approximately 5,000 Registered Training Organisations in Australia and in that capacity is regulated by ASQA.

It is also registered as a higher education provider by TEQSA.

Its higher education courses require, and have received, accreditation by TEQSA.

Australia also maintains a Commonwealth Register of Institutions and Courses for Overseas Students (“CRICOS”) for Australian educational providers that recruit, enroll and teach overseas students.

Registration in CRICOS allows providers to offer courses to overseas students studying on Australian student visas.

Both Torrens and Think are so registered.

The Commonwealth government has established income-contingent loan schemes that assist eligible fee-paying students to pay all or part of their tuition fees (separate schemes exist for higher education and vocational courses).

Under the schemes, the relevant fees are paid directly to the institutions.

A corresponding obligation then exists from the participating student to the Commonwealth government.

Neither Torrens nor Think have any responsibility in connection with the repayment of these loans by students and, generally, this assistance is not available to international students.

Both Torrens and Think are registered for the purposes of these plans (a precondition to their students being eligible to receive these loans).

Continuing Operations

Mexican Regulation

Mexican law provides that private entities are entitled to render education services in accordance with applicable legal provisions.

These provisions regulate the education services rendered by the federal government, the states and private entities and contain guidelines for the allocation of the higher education role among the federal government, the states and the municipalities, including their respective economic contributions, in order to jointly participate in the development and coordination of higher education.

There are three levels of regulation in Mexico:

federal, state and municipal.

The federal authority is the Federal Ministry of Public Education ( Secretaría de Educación Pública ).

Each of the 31 states and Mexico City has the right to establish a local Ministry of Education, and each municipality of each state may establish a municipal education authority that only has authority to advertise and promote educational services and/or activities.

Some functions are exclusive to the Federal Ministry of Education, such as the establishment of study plans and programs for Basic and Mid-Superior education services.

There are also concurrent functions, such as the granting and withdrawal of governmental recognition of validity of studies ( Reconocimiento de Validez Oficial de Estudios ) (“REVOEs,” for its acronym in Spanish).

The General Law on Education ( Ley General de Educación ) in Mexico classifies studies in the following three categories:

(i) Basic Education, which includes pre-school (kindergarten), elementary school and junior high school ( secundaria );

(ii) Mid-Superior Education, which includes high school ( preparatoria ) and equivalent studies, as well as professional education that does not consider preparatoria as a prerequisite;

and (iii) Superior Education, which includes the studies taught after preparatoria, including undergraduate school ( licenciatura ), specialties ( especialidades ), master’s studies, doctorate studies and studies for teachers ( educación normal ).

The REVOEs are issued either by the Federal Ministry of Education under the General Law on Education or by any of the state Ministries of Education under the applicable state law.

REVOEs are granted for each program taught at each campus.

If there is a change in the program or in the campus at which it is taught, the entity will need to get a new REVOE.

The Federal Ministry of Education has issued a set of general resolutions ( Acuerdos ) that regulate the general requirements for obtaining REVOEs.

The main Acuerdos are (i) Acuerdo 243, issued on May 27, 1998, which sets the general guidelines for obtaining an Authorization or REVOE;

(ii) Acuerdo 17/11/17, issued on November 10, 2017, which sets the procedures related to REVOEs for Superior Education studies;

and (iii) Acuerdo 18/11/18, issued on November 27, 2018, which defines the different levels, models and educational options at Superior Education.

The Federal Ministry of Education recommends to the local Ministries of Education the adoption and inclusion of the provisions contained in Acuerdo 243 and Acuerdo 17/11/17 in the local Law on Education and other applicable local laws and regulations.

Depending on each state, other requirements may apply;

for example, in certain states, private institutions that provide educational services with REVOEs need to be registered with the corresponding local authorities.

Acuerdo 17/11/17 regulates in detail the provisions contained under the General Law on Education to grant REVOEs for Superior Education studies, regarding faculty, plans and programs of studies, inspection visits, procedures, etc.

Acuerdo 17/11/17 also provides that private institutions that provide Superior Education services in accordance with presidential decrees or secretarial resolutions ( acuerdos secretariales ) issued specifically to them may maintain the obligations provided to them thereunder and may function under the simplified provisions of Acuerdo 17/11/17.

Currently, Universidad Tecnológica de México, S.C.

and Universidad del Valle de México, S.C.

have secretarial resolutions that were issued in their favor before the issuance of Acuerdo 17/11/17.

The obligations contained in these secretarial resolutions generally conform to the obligations provided under Acuerdo 17/11/17.

The regulatory authorities are entitled to conduct inspection visits to the facilities of educational institutions to verify compliance with applicable legal provisions.

Failure to comply with applicable legal provisions may result in the imposition of fines, the cancellation of the applicable REVOE and the closure of the education facilities.

Private institutions with REVOEs are required to grant a minimum percentage of scholarships to students.

Acuerdo 17/11/17 requires private institutions to grant scholarships to at least five percent of the total students registered during each academic term.

Scholarships consist, in whole or in part, of payment of the registration and tuition fees established by the educational institution.

Private entities may also obtain the recognition of validity of their programs from the National Autonomous University of Mexico ( Universidad Nacional Autónoma de México or “UNAM”).

The General Regulations of Incorporation and Validation of Studies issued by UNAM provide that programs followed in private entities may be “incorporated” to UNAM in order for UNAM to recognize their validity.

The UNAM regulations also require private entities incorporated to UNAM to grant scholarships to at least five percent of the total students registered at such entity.

The students entitled to have this benefit will be selected by UNAM.

Some of our high school programs and one of our medical programs are incorporated to UNAM.

A new higher education bill was approved by the senate on December 9, 2020, and we currently anticipate that the house of representatives will consider the legislation in the spring of 2021.

Should the bill be enacted, no foreseeable material changes are expected to impact the business.

Peruvian Regulation

We operate three post-secondary education institutions in Peru, two of which are universities and one of which is a technical-vocational institute.

Peruvian law provides that universities and technical-vocational institutes can be operated as public or private entities, and that the private entities may be organized for profit.

The Ministry of Education has overall responsibility for the national education system.

In 2014, the Peruvian Congress enacted a new University Law to regulate the establishment, operation, monitoring and closure of universities.

The law also promotes continuous improvement of quality at Peruvian universities.

The law created a new agency, the Superintendencia de Educación Superior Universitaria (“SUNEDU”), which is responsible for carrying out the governmental role in university regulation, including ensuring quality.

While institutional autonomy is still recognized, and universities are permitted to create their own internal governance rules and determine their own academic, management and

economic systems, including curriculum design and entrance and graduation requirements, all of these matters are now subject to review and evaluation by SUNEDU through its periodic review of universities as part of a license renewal process.

Under the new law, university licenses are temporary but renewable, and are granted by SUNEDU for a maximum of eight years.

On November 24, 2015, the Board of SUNEDU promulgated regulations for the university licensing process.

For licenses to be renewed, universities have to demonstrate to SUNEDU that they comply with, at a minimum, certain Basic Quality Conditions (“BQCs”) (i.e., that they have specified academic goals and that the degrees granted and plans of study are aligned with those goals;

that their academic offerings are compatible with their planning goals (e.g., there is sufficient labor demand for careers offered);

that there are only two regular semesters of studies per year;

that they have appropriate infrastructure and equipment;

that they engage in research;

that they have a sufficient supply of qualified teachers, at least 25% of whom will need to be full-time;

that they supply adequate basic complementary educational services (e.g., medical and psychological services and sports activities);

that they provide appropriate placement office services;

and that they have transparency of institutional information).

Both UPC and UPN had their licenses renewed in 2017, in each case for a period of six years.

Technical-vocational institutes are regulated by the Ministry of Education, which grants operating licenses for not less than three nor more than six years, after which the Ministry conducts a revalidation process.

The approval of new institute licenses is based on the evaluation by the Ministry of the institute’s institutional goals, the curricula of its education programs and their link with careers needed in the Peruvian economy, the availability of adequate qualified teachers, the institute’s infrastructure, the institute’s financial resources, and the favorable opinion of the National System of Assessment, Accreditation and Certification of Education Quality (“SINEACES”) regarding the appropriateness of the programs that the institute is offering.

SINEACES is also responsible for the accreditation of programs and careers at all higher education institutions.

On November 2, 2016, a new law regarding technical-vocational institutes (the “Institutes Law”) was enacted.

Under the Institutes Law, technical-vocational institutes are regulated by the Ministry of Education, which grants operating licenses.

The Institutes Law created two types of institutes:

Higher Education Institutes (“Institutes”) and Higher Education Colleges (“Colleges”).

Institutes are dedicated to technical careers and Colleges are devoted to technical careers related to education, as well as science and information Technology.

Colleges grant Technical Bachelor Degrees and Professional Technical Degrees.

Institutes and Colleges are subject to a mandatory license granted by the Ministry of Education, based on an evaluation to determine compliance with BQCs.

BQCs include:

an appropriate institutional management guaranteeing a proper relation with the educational model of the institution;

appropriate academic management and proper program studies aligned with the Ministry of Education norms;

appropriate infrastructure and equipment to develop educational activities;

adequate teachers and staff which, at a minimum, should consist of 20% full-time staff;

and appropriate financial and economic provisions.

The Institutes Law provides that the process will last no more than 90 days and will grant a license for a five-year period to be renewed once expired.

Unlike licenses, quality accreditation is voluntary, except for certain careers for which it might be mandatory as determined by law.

Such accreditation will be taken into consideration for access to public grants for scholarships and research, among other things.

Private Institutes and Colleges may be organized as for-profit or not-for-profit entities under Peruvian law.

Not-for-profit Colleges’ and Institutes’ income is exempt from taxes on their educational activities.

For-profit Colleges and Institutes are subject to income taxes but may qualify for a tax credit on 30% of their reinvested income, subject to a reinvestment program to be filed with the Ministry of Education for a maximum term of five years.

The specific requirements of such programs were determined by regulations in August 2017.

According to the schedule determined by the regulations, in May 2018, Cibertec was granted a license by the Ministry of Education for a five-year period.

In November 2018, Laureate Education Peru SRL acquired Instituto de Educación Superior Tecnológico Privado Red Avansys S.A.C.

Avansys is an Institute that offers 25 degrees to approximately 3,000 students in a single campus located in downtown Lima in an educational cluster for Institutes.

Avansys obtained its license from the Ministry of Education in April 2018, for a five-year period.

Cibertec and Avansys merged from a corporate and tax perspective as of February 1, 2019 and changed its corporate name to Instituto de Educación Superior Cibertec SAC.

(“IES Cibertec”).

During November 2019, the Ministry of Education issued a license for both entities (like separate entities for regulatory purposes) to permit cross selling of degrees in campuses of both the former Avansys and/or Cibertec.

A merged license for IES Cibertec will be required.

Discontinued Operations

Brazilian Regulation

The Brazilian educational system is organized according to a system of cooperation among federal, state and local governments.

Higher education (i.e., undergraduate and graduate level education provided by public and private higher education institutions (“HEI”)) is regulated primarily at the federal level, particularly in terms of public policy goals, accreditation and academic oversight.

The legislative influence of state and municipal governments is generally restricted to taxation, real estate and operational permitting issues.

With respect to the federal role, the National Educational Basis and Guidelines Law (“LDB”), provides the general framework for the provision of educational services in Brazil and establishes the duty of the federal government to:

coordinate the national educational policy;

• coordinate the national education policy;

• ensure national process of evaluation of higher education institutions, with the cooperation of evaluation agencies that have responsibility for this level of education;

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In 2011, SERES - which operates as a MEC branch - became the specific agency directly responsible for regulation and supervision of public and private HEIs, as well as undergraduate courses and lato sensu graduate programs, for both face-to-face and distance learning modalities.

Its mission is to elevate the quality level of all higher education through the establishment of guidelines for the expansion of HEIs and their courses, in accordance with national curriculum guidelines and proprietary quality parameters.

Its mission is to elevate the quality level of all higher education through the establishment

of guidelines for the expansion of HEIs and their courses, in accordance with national curriculum guidelines and proprietary quality parameters.

SERES plans and coordinates the policy-making process for higher education and has been granted the power to (i) accredit HEIs and their undergraduate courses;

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Additionally, universities have the ability, upon prior authorization by MEC, to apply for accreditation of new campuses and courses outside the municipality in which the university’s seat is located, provided that they are within the same state as the seat, and, under certain circumstances, autonomy might be extended to them as well.

Among the HEIs in the Laureate International Universities network, there are three faculdades (Faculdade Internacional da Paraíba, located in João Pessoa, PB;

Faculdades Porto-Alegrense, located in Porto Alegre, RS;

and Faculdade dos Guararapes de Recife, located in Recife, PE), five university centers (FADERGS Centro Universitário, located in Porto Alegre, RS;

Among the HEIs in the Laureate International Universities network are one faculdade (Faculdade Internacional da Paraíba, located in João Pessoa, PB), six university centers (Centro Universitário FADERGS, located in Porto Alegre, RS;

Centro Universitário dos Guararapes, located in Jaboatão dos Guararapes, PE;

FMU Education Group, located in São Paulo, SP;

FMU Education Group (formed by Centro Universitario das Faculdades Metropolitanas Unidas – FMU and Centro Universitario FIAM-FAAM), located in São Paulo, SP;

Centro Universitário Ritter dos Reis, located in Porto Alegre, RS;

and Instituto Brasileiro de Medicina de Reabilitação-IBMR, located in Rio de Janeiro, RJ), as well as three universities (Universidade Potiguar, located in Natal, RN;

and Centro Universitario IBMR, located in Rio de Janeiro, RJ), and three universities (Universidade Potiguar, located in Natal, RN;

UNIFACS-Universidade Salvador, located in Salvador, BA;

and Universidade Anhembi Morumbi, located in São Paulo, SP).

In addition, Business School São Paulo, which is a professional degree-granting institution, is owned and operated by Universidade Anhembi Morumbi, and CEDEPE Business School, which is a professional degree-granting institution, is operated as a division of the Guararapes operation.

Originally standalone HEIs, Faculdades Porto-Alegrense and Faculdade dos Guararapes de Recife have been integrated, respectively, to Centro Universitário Ritter dos Reis and Centro Universitário dos Guararapes.

Also included are Business School São Paulo, a professional degree-granting premium branch owned and operated by Universidade Anhembi Morumbi, and CEDEPE Business School, a professional degree-granting

premium branch owned and operated by Guararapes.

As noted below, each form of HEI is entitled to a different level of autonomy within the regulatory framework.

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EaD certificates or diplomas issued by accredited HEIs have national validity, with the same force and effect as those issued for face-to-face programs.

As a means of coping with the COVID-19 pandemic, MEC issued a series of regulations allowing activities developed in the face-to-face programs to be provided online, though preserving certain peculiarities, such as their synchronous character.

All planning to resume face-to-face classes is subject to the sanitary conditions assessed by the States and will follow the respective protocols.

Accreditation.

The first accreditation of an institution of higher education is necessarily as a college.

The accreditation as a university or university center is only granted after the institution has operated as a college for at least six years and has demonstrated that it has met satisfactory quality standards, including positive evaluation by the SINAES, as well as met legal requirements applicable to each type of institution of undergraduate learning, including minimum degree attainment and terms of faculty employment.

requirements applicable to each type of institution of undergraduate learning, including minimum degree attainment and terms of faculty employment.

Following accreditation, colleges must obtain MEC permission to offer new undergraduate degree programs.

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at each campus receiving autonomy.

Centros universitarios , once geographically limited to the headquarters municipality, are now allowed to

expand statewide, although there will be no autonomy prerogatives for such units;

Centros universitarios , once geographically limited to the headquarters municipality, are now allowed to expand statewide, although there will be no autonomy prerogatives for such units;

their new programs and seat expansion initiatives will have to be authorized by MEC.

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Programa Universidade Para Todos (“PROUNI”) is a federal program of tax benefits designed to increase higher education participation rates by making college more affordable.

PROUNI provides private HEIs with an exemption from certain federal taxes in exchange for granting partial and full scholarships to low-income students enrolled in traditional and technology undergraduate programs.

PROUNI provides private HEIs with an exemption

from certain federal taxes in exchange for granting partial and full scholarships to low-income students enrolled in traditional and technology undergraduate programs.

All of our HEIs adhere to PROUNI.

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On the other hand, there was considerable flexibilization for P-FIES, the most significant being to disregard the applicant’s family income as a condition to financing access.

P-FIES will also free candidates from the usual selection via ENEM ( Exame Nacional do Ensino Medio -the official, non-mandatory high school national examination promoted by MEC), as well as allow students to apply for financing at any time, and for private banks to offer credit lines, effectively untying P-FIES from the traditional FIES annual chronogram and original modelling.

Operational regulations that will detail the application, selection and contracting, including the maximum and minimum financing amounts, are expected to be implemented in the first quarter of 2020.

P-FIES will also free candidates from the usual selection via ENEM ( Exame

Nacional do Ensino Medio -the official, non-mandatory high school national examination promoted by MEC), as well as allow students to apply for financing at any time, and for private banks to offer credit lines, effectively untying P-FIES from the traditional FIES annual chronogram and original modelling.

Due to the effects of the COVID-19 pandemic, several measures to assist beneficiaries were implemented, such as temporary payment suspension and deadline extension for renewing contracts.

As of December 31, 2020, approximately 4.3% of our students in Brazil participated in FIES, representing approximately 8.5% of our Brazil 2020 net revenues.

Chilean Regulation

The Political Constitution of the Republic of Chile guarantees every individual’s right to education and sets forth the state’s obligation to promote the development of education at all levels.

It also provides for liberty in teaching, which includes the right to open, organize and maintain educational institutions, providing that a Constitutional Organic Law, which requires a super-majority vote in the Chilean Congress, must establish the requirements for the official recognition of educational institutions.

The General Law on Education sets forth the requirements and the procedure for the official recognition of educational institutions, providing for an educational system that is mixed in nature, including a form of education owned and managed by the state and its bodies and another one that is privately provided.

The principles that inspire the Chilean educational system include those of universality, by virtue of which education should be affordable to all individuals, quality of education, and respect for and promotion of the autonomy of the educational institutions, within the framework of the laws governing them.

In the case of higher education, the law provides a licensing system for new institutions that, once completed, makes it possible for these institutions to achieve full autonomy.

This autonomy consists of every higher education institution’s right to govern itself, as provided in its bylaws, in all matters regarding the fulfillment of its purpose, and encompasses academic, economic and administrative autonomy.

Academic autonomy includes the higher education entities’ power to decide by themselves the manner

in which their teaching, research and extension functions will be fulfilled and the establishment of their curricula and programs.

Economic autonomy makes it possible for those establishments to manage their resources to fulfill their goals pursuant to their bylaws and the laws, while administrative autonomy empowers each higher education establishment to organize its operation in the form deemed most appropriate in accordance with its bylaws and the relevant laws.

The Ministry of Education (“MINEDUC”) is the department of state in charge of promoting the development of education at all levels.

Its functions include those of proposing and assessing the policies and plans for educational and cultural development, assigning the necessary resources for the conduct of educational and cultural extension activities, evaluating the development of education, discussing and proposing general norms applicable to the sector and overseeing their enforcement, granting official recognition to educational institutions, supervising the activities of its dependent units and fulfilling the other functions assigned by the law.

The New Higher Education Law (the “New Law”), enacted on May 29, 2018, introduced major changes in the higher education sector.

It created the Superintendency of Higher Education, whose purpose is to supervise and oversee compliance with the legal and regulatory provisions that regulate the higher education institutions in its field of competence as well as to supervise the allocation of resources by higher education institutions to ensure their allocation to appropriate purposes in accordance with the law and each institution’s bylaws.

The Superintendency of Higher Education is empowered to enter the premises of the universities it supervises when necessary, in order to request documents for inspection processes, and carry out on-site audits.

In the case of related parties, the Superintendency may request any information it deems appropriate for its audit processes, may supervise “by the means it deems appropriate” all operations, assets, files, etc.

of the individuals or institutions supervised, as well as of the related third entities, and will be able to summon for deposition any person related to the institution who has had transactions with the institution.

The Superintendency is empowered to impose fines for infractions.

The Superintendency also is empowered to issue regulations to effectuate its responsibilities under the New Law.

The Undersecretary of Higher Education, which replaced the MINEDUC’s Higher Education Division, will serve as a direct collaborator with the Minister of Education in the preparation, coordination, execution and evaluation of policies and programs for higher education, especially in matters relating to its development, promotion, internationalization and ongoing improvement, both in the university and in the technical-professional subsystems.

The National Education Council ( Consejo Nacional de Educación ) is an autonomous entity composed of ten members who must be academicians, professors or professionals with an outstanding career in teaching and educational management and whose functions, regarding higher education, consist of:

managing the license-granting system for new institutions;

deciding on institutional projects submitted by institutions for the purpose of their official recognition;

verifying the development of institutional projects of the institutions that have been approved;

establishing selective examination systems for the subjects or courses of study delivered by the higher education institutions subject to license-granting processes in order to evaluate compliance with the curricula and programs and the performance of students;

requesting from the MINEDUC, on a supported basis, the revocation of official recognition of the universities, professional institutes and technical training centers under the license-granting process;

managing the revocation process of higher education institutions;

assisting the MINEDUC in the management of the shutdown processes of autonomous higher education institutions, especially as to the process of awarding diplomas and degrees to students who are in the course of their education at the time of shutdown;

serving as an appeals body for decisions of the National Accreditation Commission.

The National Accreditation Commission ( Comisión Nacional de Acreditación ) is an autonomous entity, the function of which is to verify and promote the quality of the autonomous universities, professional institutes and technical training centers and of the courses of study and programs offered by them.

The National Accreditation Commission is in charge of the institutional accreditation of higher education institutions and specialty programs in the area of medicine and education, authorizes the private agencies in charge of certifications of undergraduate programs and bachelor programs, and supervises their operation.

The Managing Commission of the Credit System for Higher Education Studies ( Comisión Administradora del Sistema de Créditos para Estudios Superiores ) is an entity whose functions include defining and assessing policies for the development and implementation of financing arrangements for higher education studies, entering into and proposing modifications to any necessary agreements with both domestic and foreign public and private financing entities and implementing those arrangements, and defining and evaluating the policies for higher education loans guaranteed by the state.

Organization and recognition of higher education institutions.

The law recognizes state-owned higher education institutions, which may only be created by a law, and private institutions, which must be organized in accordance with provisions contained in the law.

The Chilean legislation provides that the state will officially recognize the following higher education institutions:

Universities:

Universities may grant professional certificates and all kinds of academic degrees, including graduate certificates, bachelor’s degrees and Ph.Ds.

Universities are the only institutions entitled to grant professional certificates with respect to which the law requires having previously obtained a bachelor’s degree.

Professional Institutes:

Professional institutes may only confer professional certificates of the type that do not require a bachelor’s degree, and technical certificates of a superior level to those students who have completed programs of at least 1,600 class hours without receiving a bachelor’s degree.

Technical Training Centers:

Technical training centers may only confer a technical certificate of a superior level to those students who have completed programs of at least 1,600 class hours.

Educational institutions of the armed forces and police.

Private universities must be created in accordance with the procedures set forth by law and must always be not-for-profit entities in order to be officially recognized.

Private professional institutes and technical training centers may be created by any individual or legal entity, they may be organized as for-profit or not-for-profit entities, and their sole purpose must be the creation, organization and maintenance of a professional institute or technical training center.

In order to be officially recognized, universities, professional institutes and technical training centers must have the necessary teaching, didactic, economic, financial and physical resources to offer the academic degrees, professional certificates or technical certificates, as appropriate, which must be certified by the National Education Council.

Additionally, these institutions must have a certification granted by the National Education Council evidencing that the entity has had both its institutional project and its academic programs approved and that it will have the progressive verification of its institutional development performed.

Higher education institutions may only start their teaching activities once the official recognition has been granted.

In Chile, the Laureate International Universities network comprises three universities and two professional institutes.

The official recognition of a higher education institution may be revoked and, in the case of universities, their legal existence may be revoked through a supported Statutory Decree of the MINEDUC, after a decision of the National Education Council adopted by the majority of its members in a meeting called for that sole purpose and after hearing the affected party if that party (i) fails to comply with the objectives set forth in its bylaws, (ii) conducts activities contrary to morals, public order, good customs or national security, (iii) commits gross violations of its bylaws or (iv) ceases to confer professional certificates to its graduates.

The law provides for a system of license grants to higher education institutions, which includes the approval of institutional project and the evaluation, progress and materialization of its educational project for a period of no less than six years, at the end of which they may become fully autonomous.

National system of quality assurance in higher education.

The law provides for a system of quality assurance in higher education that includes a system of institutional accreditation that consists of a process of analysis of existing mechanisms within the autonomous higher education institutions to guarantee their quality, bearing in mind both the existence of those mechanisms and their application and results, and a process of accreditation of courses of study or programs, consisting of a process of verification of the quality of the courses of study or programs offered by the autonomous higher education institutions, on the basis of their declared purposes and the criteria set forth by the respective academic and professional communities.

Both the institutional accreditation and the accreditation of courses of study and undergraduate programs are voluntary, except that the courses of study and academic programs leading to the professional degrees of Surgeon, Elementary Education Teacher, Secondary Education Teacher, Differential Education Teacher and Nursery School Teacher are subject to mandatory accreditation.

The institutional accreditation is filed with the National Accreditation Commission, whereas the accreditation of courses of study and undergraduate programs can be performed by domestic, foreign or international accreditation entities authorized by the National Accreditation Commission.

Tax benefits.

Chilean universities recognized by the state, and the associations, corporations, partnerships and foundations that are created, organized or maintained by those universities, are exempt from paying tax on the income arising exclusively from their educational activities.

Likewise, educational institutions are exempt from paying value-added tax, an exemption that is limited to the revenues arising from their teaching activities.

Additionally, universities are exempt from paying withholding taxes for payments made abroad.

There are also specific tax benefits for donations made to universities.

The Chilean state contributes to the direct financing of universities existing as of December 31, 1980 by means of contributions from the state.

In addition, all universities, professional institutes and technical training centers recognized as higher education institutions receive an indirect contribution from the state, which is distributed on the basis of the scores obtained in the university admission test by the students enrolled in each higher education institution.

Under the Crédito con Aval del Estado (the “CAE Program”), the state guarantees up to 90% of the principal plus interest on loans granted by financial institutions to students of higher education at autonomous, accredited institutions officially recognized by the state that select their first-year students on the basis of the score obtained in the university admission test and that use the aforesaid indirect contribution by the state exclusively for institutional development purposes.

The Nuevo Milenio Scholarship (“NMS”) program supports access to vocational and technical education for students in the lowest 70% (NMS I) or 50% (NMS II) income who met or exceeded certain academic standards by providing annual scholarships (i) under NMS I in amounts up to CLP 600,000 and (ii) under NMS II in amounts up to CLP 860,000 per year.

Provisional administrator.

In December 2014, the Chilean Congress adopted the Provisional Administrator Law, which provides for the appointment of a provisional administrator or closing administrator to handle the affairs of failing universities or universities found to have breached their bylaws.

Recent developments.

On May 29, 2018, the New Law was enacted.

Among other things, the New Law prohibits conflicts of interests and related party transactions involving universities and their controlling parties, with certain exceptions, including the provision of services that are educational in nature or essential for the university’s purposes.

The New Law established the Superintendency of Higher Education, with authority to regulate institutions of higher education and promulgate regulations and procedures implementing the New Law.

As of May 29, 2019, the New Law’s provisions regarding related party transactions came into force, and the Superintendent has since issued some further interpretive guidance and regulations.

Immediately prior to these provisions coming into force, each of the Chilean non-profit universities and the relevant Laureate services provider reached an agreement to terminate the prior network services agreement in favor of an open bidding process, wherein unrelated third parties and Laureate-related providers were invited to compete in the provision of the range of services that are essential to the fulfillment of each of their academic missions.

Each of the Chilean non-profit universities has completed all of the bidding and contractual processes subsequent to the May 2019 contract terminations.

The Company participated in these open bid processes, conducted by a third party, and was judged to have submitted the superior bid in many of them.

Awarded contracts entered into force once the applicable university’s board approved them or in January 2020, in the case of some of the educational services, due to the academic calendar.

Within the ordinary regulatory course of supervision, the Company and its Chilean non-profit universities will continue to interact with the Superintendent to maintain compliance with the New Law.

We do not believe that the New Law will change our relationship with our two technical-vocational institutes in Chile that are for-profit entities.

Additionally, we will continue to evaluate our accounting treatment of the Chilean non-profit universities to determine whether we can continue to consolidate them.

Our continuing evaluation of the impact of the New Law may result in changes to our expectations due to changes in our interpretations of the law, assumptions used, and additional guidance that may be issued.

Mexican Regulation

Mexican law provides that private entities are entitled to render education services in accordance with applicable legal provisions.

There are three levels of regulation in Mexico:

federal, state and municipal.

The federal authority is the Federal Ministry of Public Education ( Secretaría de Educación Pública ).

Each of the 31 states and Mexico City has the right to establish a local Ministry of

Education, and each municipality of each state may establish a municipal education authority that only has authority to advertise and promote educational services and/or activities.

Some functions are exclusive to the Federal Ministry of Education, such as the establishment of study plans and programs for Basic and Mid-Superior education services.

The General Law on Education ( Ley General de Educación ) in Mexico classifies studies in the following three categories:

(i) Basic Education, which includes pre-school (kindergarten), elementary school and junior high school ( secundaria );

(ii) Mid-Superior Education, which includes high school ( preparatoria ) and equivalent studies, as well as professional education that does not consider preparatoria as a prerequisite;

The REVOEs are issued either by the Federal Ministry of Education under the General Law on Education or by any of the state Ministries of Education under the applicable state law.

REVOEs are granted for each program taught at each campus.

If there is a change in the program or in the campus at which it is taught, the entity will need to get a new REVOE.

The Federal Ministry of Education has issued a set of general resolutions ( Acuerdos ) that regulate the general requirements for obtaining REVOEs.

The main Acuerdos are (i) Acuerdo 243, issued on May 27, 1998, which sets the general guidelines for obtaining an Authorization or REVOE;

(ii) Acuerdo 17/11/17, issued on November 10, 2017, which sets the procedures related to REVOEs for Superior Education studies;

and (iii) Acuerdo 18/11/18, issued on November 27, 2018, which defines the different levels, models and educational options at Superior Education.

Depending on each state, other requirements may apply, for example, that private institutions that provide educational services with REVOEs need to be registered with the corresponding local authorities.