What changed in this filing

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Item 1. Financial Statements

2023-07-27 compared with 2023-04-28 · 235 added, 166 removed, 568 unchanged (41% of the section changed)

3 unchanged sentences

(in thousands, except share and per share data)

December 31, 2022 March 31, 2023

December 31, 2022 June 30, 2023

Current assets:

2 unchanged sentences

Tuition receivable, net 62,953 82,373

Assets held for sale — 3,793

Income taxes receivable — 9,719

Other current assets 43,285 52,330

23 unchanged sentences

32,000,000 shares authorized;

24,402,891 and 24,591,375 shares issued and outstanding at December 31, 2022 and March 31, 2023, respectively

24,402,891 and 24,465,671 shares issued and outstanding at December 31, 2022 and June 30, 2023, respectively

Additional paid-in capital 1,510,924 1,509,077

5 unchanged sentences

STRATEGIC EDUCATION, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except per share data)

For the three months ended March 31,

For the three months ended June 30, For the six months ended June 30,

2022 2023 2022 2023

Revenues $ 273,564 $ 287,680 $ 532,419 $ 544,286

6 unchanged sentences

Total costs and expenses 251,699 270,863 497,113 528,818

Income (loss) from operations 13,441 ( 1,349 )

Income from operations 21,865 16,817 35,306 15,468

Other income (expense) 300 3,171 ( 871 ) 3,569

Income (loss) before income taxes 12,270 ( 951 )

Income before income taxes 22,165 19,988 34,435 19,037

Provision for income taxes 6,945 5,757 12,186 6,834

Net income (loss) $ 7,029 $ ( 2,028 )

Earnings (loss) per share:

Net income $ 15,220 $ 14,231 $ 22,249 $ 12,203

Earnings per share:

Basic $ 0.64 $ 0.61 $ 0.93 $ 0.52

6 unchanged sentences

(in thousands)

For the three months ended March 31,

Net income (loss) $ 7,029 $ ( 2,028 )

For the three months ended June 30, For the six months ended June 30,

2022 2023 2022 2023

Net income $ 15,220 $ 14,231 $ 22,249 $ 12,203

Other comprehensive income (loss):

6 unchanged sentences

(in thousands, except share data)

For the three months ended March 31, 2022

For the three months ended June 30, 2022

Common Stock Additional

2 unchanged sentences

Comprehensive

Income (Loss) Total

Shares Par Value

Balance at December 31, 2021 24,592,098 $ 246 $ 1,529,969 $ 174,572 $ 9,203 $ 1,713,990

Balance at March 31, 2022 24,963,542 $ 250 $ 1,528,328 $ 166,550 $ 29,185 $ 1,724,313

Stock-based compensation — — 5,529 — — 5,529

6 unchanged sentences

Net income — — — 15,220 — 15,220

Balance at June 30, 2022 24,637,268 $ 246 $ 1,513,509 $ 166,175 $ ( 28,009 ) $ 1,651,921

For the three months ended June 30, 2023

Common Stock Additional

Capital Retained

Earnings Accumulated

Comprehensive

Income (Loss) Total

Shares Par Value

Balance at March 31, 2023 24,591,375 $ 246 $ 1,511,590 $ 142,893 $ ( 44,300 ) $ 1,610,429

For the three months ended March 31, 2023

Stock-based compensation — — 5,493 — — 5,493

Issuance of restricted stock, net 3,369 — — — — —

Repurchase of common stock ( 129,073 ) ( 1 ) ( 8,006 ) ( 2,006 ) — ( 10,013 )

Common stock dividends ($ 0.60 per share)

— — — ( 14,750 ) — ( 14,750 )

Foreign currency translation adjustment — — — — ( 6,822 ) ( 6,822 )

Unrealized gains on marketable securities, net of tax — — — — 38 38

Net income — — — 14,231 — 14,231

Balance at June 30, 2023 24,465,671 $ 245 $ 1,509,077 $ 140,368 $ ( 51,084 ) $ 1,598,606

The accompanying notes are an integral part of these condensed consolidated financial statements.

STRATEGIC EDUCATION, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands, except share data)

For the six months ended June 30, 2022

Common Stock Additional

6 unchanged sentences

Stock-based compensation — — 10,597 — — 10,597

Issuance of restricted stock, net 438,206 4 ( 2,782 ) — — ( 2,778 )

Repurchase of common stock ( 393,036 ) ( 4 ) ( 24,275 ) ( 693 ) — ( 24,972 )

Common stock dividends ($ 1.20 per share)

— — — ( 29,953 ) — ( 29,953 )

Foreign currency translation adjustment — — — — ( 36,506 ) ( 36,506 )

Unrealized losses on marketable securities, net of tax — — — — ( 706 ) ( 706 )

Net income — — — 22,249 — 22,249

Balance at June 30, 2022 24,637,268 $ 246 $ 1,513,509 $ 166,175 $ ( 28,009 ) $ 1,651,921

For the six months ended June 30, 2023

Common Stock Additional

Capital Retained

Earnings Accumulated

Comprehensive

Income (Loss) Total

Shares Par Value

Balance at December 31, 2022 24,402,891 $ 244 $ 1,510,924 $ 159,690 $ ( 35,068 ) $ 1,635,790

Stock-based compensation — — 11,125 — — 11,125

Exercise of stock options, net 1,322 — 55 — — 55

Issuance of restricted stock, net 190,531 2 ( 5,021 ) — — ( 5,019 )

Repurchase of common stock ( 129,073 ) ( 1 ) ( 8,006 ) ( 2,006 ) — ( 10,013 )

Common stock dividends ($ 1.20 per share)

2 unchanged sentences

Unrealized gains on marketable securities, net of tax — — — — 146 146

Net loss — — — ( 2,028 ) — ( 2,028 )

Balance at March 31, 2023 24,591,375 $ 246 $ 1,511,590 $ 142,893 $ ( 44,300 ) $ 1,610,429

Net income — — — 12,203 — 12,203

Balance at June 30, 2023 24,465,671 $ 245 $ 1,509,077 $ 140,368 $ ( 51,084 ) $ 1,598,606

The accompanying notes are an integral part of these condensed consolidated financial statements.

2 unchanged sentences

(in thousands)

For the three months ended March 31,

For the six months ended June 30,

Cash flows from operating activities:

Net income (loss) $ 7,029 $ ( 2,028 )

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Net income $ 22,249 $ 12,203

Adjustments to reconcile net income to net cash provided by operating activities:

Gain on sale of property and equipment — ( 2,136 )

Amortization of deferred financing costs 276 276

16 unchanged sentences

Proceeds from marketable securities 2,100 4,960

Proceeds from sale of property and equipment — 5,890

Proceeds from other investments — 457

8 unchanged sentences

Effect of exchange rate changes on cash, cash equivalents, and restricted cash ( 4,981 ) ( 1,924 )

Net increase (decrease) in cash, cash equivalents, and restricted cash 28,103 ( 8,649 )

Net decrease in cash, cash equivalents, and restricted cash ( 2,855 ) ( 29,372 )

Cash, cash equivalents, and restricted cash — beginning of period 279,212 227,454

19 unchanged sentences

All intercompany accounts and transactions have been eliminated in the consolidated financial statements.

All information as of March 31, 2022 and 2023, and for the three months ended March 31, 2022 and 2023 is unaudited but, in the opinion of management, contains all adjustments, consisting only of normal recurring adjustments, necessary to present fairly the condensed consolidated financial position, results of operations, and cash flows of the Company.

All information as of June 30, 2022 and 2023, and for the three and six months ended June 30, 2022 and 2023 is unaudited but, in the opinion of management, contains all adjustments, consisting only of normal recurring adjustments, necessary to present fairly the condensed consolidated financial position, results of operations, and cash flows of the Company.

The condensed consolidated balance sheet as of December 31, 2022 has been derived from the audited consolidated financial statements at that date.

1 unchanged sentence

These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022.

The results of operations for the three months ended March 31, 2023 are not necessarily indicative of the results to be expected for the full fiscal year.

The results of operations for the three and six months ended June 30, 2023 are not necessarily indicative of the results to be expected for the full fiscal year.

Below is a description of the nature of the costs included in the Company’s operating expense categories.

8 unchanged sentences

Merger and integration costs include integration expenses associated with the Company’s merger with Capella Education Company and the Company’s acquisition of ANZ.

Restructuring costs include severance and other personnel-related expenses from voluntary and involuntary employee terminations, as well as early lease termination costs and impairments of right-of-use lease assets and fixed assets associated with vacating leased space in connection with the Company’s restructuring plans.

Restructuring costs include severance and other personnel-related expenses from voluntary and involuntary employee terminations, right-of-use lease and fixed asset impairment charges, gains on sale of real estate and early termination of leased facilities, and other costs associated with the Company’s restructuring activities.

See Note 4 for additional information.

8 unchanged sentences

The effects of these translation adjustments are reported as a component of accumulated other comprehensive income (loss) within shareholders’ equity.

For any transaction that is in a currency different from the entity’s functional currency, the Company records a net gain or loss based on the difference between the exchange rate at the transaction date and the exchange rate at the transaction settlement date (or rate at period end, if unsettled), in the unaudited condensed consolidated statements of income (loss).

Restricted Cash

3 unchanged sentences

higher education institution during the academic term.

The Company had approximately $ 1.4 million and $ 1.5 million of these unpaid obligations as of December 31, 2022 and March 31, 2023, respectively.

The Company had approximately $ 1.4 million and $ 1.8 million of these unpaid obligations as of December 31, 2022 and June 30, 2023, respectively.

In Australia and New Zealand, advance tuition payments from international students are required to be restricted until a student commences his or her course.

In addition, a portion of tuition prepayments from students enrolled in a vocational education and training program are held in trust by a third party law firm to adhere to tuition protection requirements.

As of December 31, 2022 and March 31, 2023, the Company had approximately $ 11.9 million and $ 14.0 million, respectively, of restricted cash related to these requirements in Australia and New Zealand.

As of December 31, 2022 and June 30, 2023, the Company had approximately $ 11.9 million and $ 14.8 million, respectively, of restricted cash related to these requirements in Australia and New Zealand.

These balances are recorded as restricted cash and included in other current assets in the unaudited condensed consolidated balance sheets.

1 unchanged sentence

The Company holds these funds in an interest-bearing account, which is included in other assets.

The following table illustrates the reconciliation of cash, cash equivalents, and restricted cash shown in the unaudited condensed consolidated statements of cash flows as of March 31, 2022 and 2023 (in thousands):

As of March 31,

As of June 30,

Cash and cash equivalents $ 262,941 $ 181,024

10 unchanged sentences

Management reviews the fair value of the portfolio at least quarterly, and evaluates individual securities with fair value below amortized cost at the balance sheet date for impairment.

In order to determine whether there is an impairment, management evaluates whether the Company intends to sell the impaired

security and whether it is more likely than not that the Company will be required to sell the security before recovering its amortized cost basis.

In order to determine whether there is an impairment, management evaluates whether the Company intends to sell the impaired security and whether it is more likely than not that the Company will be required to sell the security before recovering its amortized cost basis.

If management intends to sell an impaired debt security, or it is more likely than not the Company will be required to sell the security prior to recovering its amortized cost basis, an impairment is deemed to have occurred.

13 unchanged sentences

In the event that current collection trends differ from historical trends, an adjustment is made to the allowance for credit losses and bad debt expense.

The Company’s tuition receivable and allowance for credit losses were as follows as of December 31, 2022 and March 31, 2023 (in thousands):

December 31, 2022 March 31, 2023

The Company’s tuition receivable and allowance for credit losses were as follows as of December 31, 2022 and June 30, 2023 (in thousands):

December 31, 2022 June 30, 2023

Tuition receivable $ 110,066 $ 128,250

1 unchanged sentence

Tuition receivable, net $ 62,953 $ 82,373

Approximately $ 2.7 million and $ 2.5 million of tuition receivable, net, are included in other assets as of December 31, 2022 and March 31, 2023, respectively, because these amounts are expected to be collected after 12 months.

The following table illustrates changes in the Company’s allowance for credit losses for the three months ended March 31, 2022 and 2023 (in thousands).

For the three months ended March 31,

Approximately $ 2.7 million and $ 2.5 million of tuition receivable, net, are included in other assets as of December 31, 2022 and June 30, 2023, respectively, because these amounts are expected to be collected after 12 months.

The following table illustrates changes in the Company’s allowance for credit losses for the three and six months ended June 30, 2022 and 2023 (in thousands).

For the three months ended June 30, For the six months ended June 30,

2022 2023 2022 2023

Allowance for credit losses, beginning of period $ 44,892 $ 45,286 $ 48,783 $ 47,113

8 unchanged sentences

Gains are not recognized until the date of sale.

Assets are not depreciated

or amortized while they are classified as held for sale.

Assets are not depreciated or amortized while they are classified as held for sale.

Upon determining that a disposal group meets the criteria to be classified as held for sale, the Company reports the assets and liabilities of the disposal group as assets held for sale and liabilities held for sale in its unaudited condensed consolidated balance sheets.

Over the last several years, the Company has been evaluating its owned and leased real estate portfolio to identify underutilized facilities to either downsize or exit.

One facility identified is an owned U.S.

Higher Education campus, which the Company began marketing for sale in the fourth quarter of 2022.

The long-lived assets being marketed for sale consist of land, buildings, and building improvements.

One facility identified to be marketed for sale is an owned U.S.

Higher Education campus consisting of land, buildings, and building improvements.

The Company determined that it met all of the criteria to classify these assets as held for sale as of March 31, 2023.

No impairment charge was recorded as the carrying amount of the net assets was less than the fair value less costs to sell.

No loss was recorded as the carrying amount of the net assets was less than the fair value less costs to sell.

Fair value was determined based upon the anticipated sales price of these assets.

Upon close, the Company will record any gain related to the sale of these assets in its consolidated statements of income (loss).

During the second quarter of 2023, the Company sold the long-lived assets related to the owned U.S.

Higher Education campus noted above and recognized a $ 2.1 million gain on sale, which is included in Restructuring costs on the unaudited condensed consolidated statements of income.

Goodwill and Intangible Assets

9 unchanged sentences

Authorized Stock

The Company has authorized 32,000,000 shares of common stock, par value $ 0.01 , of which 24,402,891 and 24,591,375 shares were issued and outstanding as of December 31, 2022 and March 31, 2023, respectively.

The Company has authorized 32,000,000 shares of common stock, par value $ 0.01 , of which 24,402,891 and 24,465,671 shares were issued and outstanding as of December 31, 2022 and June 30, 2023, respectively.

The Company also has authorized 8,000,000 shares of preferred stock, none of which is issued or outstanding.

Before any preferred stock may be issued in the future, the Board of Directors would need to establish the preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends, qualifications, and the terms or conditions of the redemption of the preferred stock.

In February 2023, the Company’s Board of Directors declared a regular, quarterly cash dividend of $ 0.60 per share of common stock.

The dividend was paid on March 13, 2023.

Net Income (Loss) Per Share

Basic earnings per share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the periods.

In April 2023, the Company’s Board of Directors declared a regular, quarterly cash dividend of $ 0.60 per share of common stock.

The dividend was paid on June 5, 2023.

Net Income Per Share

Basic earnings per share is computed by dividing net income by the weighted average number of shares of common stock outstanding during the periods.

Diluted earnings per share reflects the potential dilution that could occur assuming conversion or exercise of all dilutive unexercised stock options, restricted stock, and restricted stock units.

3 unchanged sentences

Stock options, restricted stock, and restricted stock units are excluded from the computation of diluted earnings per share when their effect would be anti-dilutive.

Set forth below is a reconciliation of shares used to calculate basic and diluted earnings (loss) per share for the three months ended March 31, 2022 and 2023 (in thousands):

For the three months ended March 31,

Weighted average shares outstanding used to compute basic earnings (loss) per share 23,948 23,430

Set forth below is a reconciliation of shares used to calculate basic and diluted earnings per share for the three and six months ended June 30, 2022 and 2023 (in thousands):

For the three months ended June 30, For the six months ended June 30,

2022 2023 2022 2023

Weighted average shares outstanding used to compute basic earnings per share 23,796 23,450 23,872 23,440

Incremental shares issuable upon the assumed exercise of stock options 3 4 2 5

Unvested restricted stock and restricted stock units 264 510 215 548

Shares used to compute diluted earnings (loss) per share 24,114 23,430

Anti-dilutive shares excluded from the diluted earnings (loss) per share calculation 420 593

Shares used to compute diluted earnings per share 24,063 23,964 24,089 23,993

Anti-dilutive shares excluded from the diluted earnings per share calculation 15 272 218 190

Comprehensive Income (Loss)

Comprehensive income (loss) includes net income (loss) and all changes in the Company’s equity during a period from non-owner sources, which for the Company consists of unrealized gains and losses on available-for-sale marketable securities, net of tax, and foreign currency translation adjustments.

As of December 31, 2022 and March 31, 2023, the balance of accumulated other comprehensive loss was $ 35.1 million, net of tax of $ 0.1 million and $ 44.3 million, net of tax of $ 0.1 million, respectively.

There were no reclassifications out of accumulated other comprehensive income (loss) to net income (loss) for the three months ended March 31, 2022 and 2023.

Comprehensive income (loss) includes net income and all changes in the Company’s equity during a period from non-owner sources, which for the Company consists of unrealized gains and losses on available-for-sale marketable securities, net of tax, and foreign currency translation adjustments.

As of December 31, 2022 and June 30, 2023, the balance of accumulated other comprehensive loss was $ 35.1 million, net of tax of $ 0.1 million, and $ 51.1 million, net of tax of $ 0.1 million, respectively.

There were no reclassifications out of accumulated other comprehensive income (loss) to net income for the three and six months ended June 30, 2022 and 2023.

Use of Estimates

9 unchanged sentences

Torrens University offers the majority of its education programs on a trimester system having three primary academic terms, which all occur within the calendar year.

The following table presents the Company’s revenues from contracts with customers disaggregated by material revenue category for the three months ended March 31, 2022 and 2023 (in thousands):

For the three months ended March 31,

The following table presents the Company’s revenues from contracts with customers disaggregated by material revenue category for the three and six months ended June 30, 2022 and 2023 (in thousands):

For the three months ended June 30, For the six months ended June 30,

2022 2023 2022 2023

Higher Education Segment

Tuition, net of discounts, grants and scholarships $ 181,374 $ 195,144 $ 368,729 $ 383,924

8,652 7,535 17,063 15,650

Higher Education Segment 190,026 202,679 385,792 399,574

1 unchanged sentence

Tuition, net of discounts, grants and scholarships 65,847 63,766 113,383 104,188

1,696 1,706 2,672 2,787

Total Australia/New Zealand Segment 67,543 65,472 116,055 106,975

20 unchanged sentences

Contract Liabilities – Graduation Fund

Strayer University offers the Graduation Fund, which allows undergraduate and graduate students to earn tuition credits that are redeemable in the final year of a student’s course of study if he or she successfully remains in the program.

Students registering in credit-bearing courses in any undergraduate or graduate degree program receive one free course for every three courses that the student successfully completes.

To be eligible, students must meet all of Strayer University’s admission requirements and must be enrolled in a bachelor’s or master’s degree program.

Strayer University offers the Graduation Fund, which allows undergraduate students to earn tuition credits that are redeemable in the final year of a student’s course of study if he or she successfully remains in the program.

Students registering in credit-bearing courses in any undergraduate degree program receive one free course for every three courses that the student successfully completes.

To be eligible, students must meet all of Strayer University’s admission requirements and must be enrolled in a bachelor’s degree program.

Students who have more than one consecutive term of non-attendance lose any Graduation Fund credits earned to date, but may earn and accumulate new credits if the student is reinstated or readmitted by Strayer University in the future.

7 unchanged sentences

The table below presents activity in the contract liability related to the Graduation Fund (in thousands):

For the three months ended March 31,

For the six months ended June 30,

Balance at beginning of period $ 52,024 $ 46,842

12 unchanged sentences

Under this plan, the Company incurred severance and other employee separation costs related to voluntary and involuntary employee terminations.

The following details the changes in the Company’s severance and other employee separation costs restructuring liabilities related to the 2020 restructuring plan during the three months ended March 31, 2022 (in thousands):

The following details the changes in the Company’s severance and other employee separation costs restructuring liabilities related to the 2020 restructuring plan during the six months ended June 30, 2022 (in thousands):

Restructuring Plan

2 unchanged sentences

Payments ( 2,815 )

Balance at March 31, 2022 $ 692

Balance at June 30, 2022 $ 409

The final severance payments under the 2020 restructuring plan were made in the third quarter of 2022.

From time to time, the Company also incurs severance and other employee separation costs related to reduction in force actions that are not tied to a formal restructuring plan.

During the first quarter of 2023, the Company incurred severance and other employee separation costs related to involuntary employee terminations due to the elimination of certain positions.

As a result, the Company recorded $ 2.3 million of severance and other employee separation charges during the three months ended March 31, 2023.

Substantially all severance charges related to this action were paid during the first quarter of 2023.

The Company also incurs severance and other employee separation costs related to voluntary and involuntary employee terminations that are not tied to a formal restructuring plan.

During the three and six months ended June 30, 2023, the Company incurred $ 6.1 million and $ 8.4 million of severance and other employee separation charges related to the elimination of certain positions.

These severance and other employee separation charges are included in Restructuring costs on the unaudited condensed consolidated statements of income.

The following details the changes in the Company's severance and other employee separation costs restructuring liabilities during the six months ended June 30, 2023 (in thousands):

Severance Restructuring Liability

Balance at December 31, 2022 $ —

Restructuring and other charges 8,364

Payments ( 6,023 )

Balance at June 30, 2023 (1)

____________________________________

(1) Restructuring liabilities are included in accounts payable and accrued expenses.

The Company has also been evaluating its owned and leased real estate portfolio, which has resulted in the consolidation and sale of underutilized facilities.

During the three months ended March 31, 2023, the Company recorded right-of-use lease asset charges of approximately $ 3.6 million related to facilities that were consolidated during the quarter.

There were no right-of-use lease asset charges during the three months ended March 31, 2022.

The Company recorded fixed asset impairment charges of approximately $ 0.2 million during the three months ended March 31, 2022.

There were no fixed asset impairment charges recorded during the three months ended March 31, 2023.

All severance and other employee separation charges and right-of-use lease asset and fixed asset impairment charges are included in Restructuring costs on the unaudited condensed consolidated statements of income (loss).

The Company recorded approximately $ 1.1 million of right-of-use lease asset charges during the three and six months ended June 30, 2022, and approximately $ 1.5 million and $ 5.1 million during the three and six months ended June 30, 2023, respectively, related to facilities that were consolidated during the period.

The Company also recorded fixed asset impairment charges of approximately $ 2.2 million and $ 2.4 million during the three and six months ended June 30, 2022, respectively, and approximately $ 0.3 million during the three and six months ended June 30, 2023.

During the three and six months ended June 30, 2023, the Company recorded a $ 2.1 million gain from the sale of property and equipment of an owned campus that was previously closed.

These right-of-use lease asset and fixed asset impairment charges and gains on the sale of property and equipment are included in Restructuring costs on the unaudited condensed consolidated statements of income.

Marketable Securities

The following is a summary of available-for-sale and held-to-maturity securities as of March 31, 2023 (in thousands):

The following is a summary of available-for-sale and held-to-maturity securities as of June 30, 2023 (in thousands):

Amortized Cost Gross Unrealized Gain Gross Unrealized (Losses) Estimated Fair Value

12 unchanged sentences

The Company had no held-to-maturity securities as of December 31, 2022.

The unrealized gains and losses on the Company’s investments in corporate debt and municipal securities as of December 31, 2022 and March 31, 2023 were caused by changes in market values primarily due to interest rate changes.

As of March 31, 2023, the fair value of the Company’s securities which were in an unrealized loss position for a period longer than twelve months was $ 19.5 million.

The unrealized gains and losses on the Company’s investments in corporate debt and municipal securities as of December 31, 2022 and June 30, 2023 were caused by changes in market values primarily due to interest rate changes.

As of June 30, 2023, the fair value of the Company’s securities which were in an unrealized loss position for a period longer than twelve months was $ 16.5 million.

The Company does not intend to sell these securities, and it is not more likely than not that the Company will be required to sell these securities prior to the recovery of their amortized cost basis, which may be at maturity.

As such, no impairment charges were recorded during the three months ended March 31, 2022 and 2023.

As such, no impairment charges were recorded during the three and six months ended June 30, 2022 and 2023.

The Company has no allowance for credit losses related to its available-for-sale or held-to-maturity securities as all investments are in investment grade securities.

The following table summarizes the maturities of the Company’s marketable securities as of December 31, 2022 and March 31, 2023 (in thousands):

December 31, 2022 March 31, 2023

The following table summarizes the maturities of the Company’s marketable securities as of December 31, 2022 and June 30, 2023 (in thousands):

December 31, 2022 June 30, 2023

Available-for-sale securities Held-to-maturity securities Available-for-sale securities Held-to-maturity securities

2 unchanged sentences

Total $ 22,279 $ — $ 17,524 $ 16,553

The following table summarizes the proceeds from the maturities and sales of available-for-sale securities for the three months ended March 31, 2022 and 2023 (in thousands):

For the three months ended March 31,

The following table summarizes the proceeds from the maturities and sales of available-for-sale securities for the three and six months ended June 30, 2022 and 2023 (in thousands):

For the three months ended June 30, For the six months ended June 30,

2022 2023 2022 2023

Maturities of marketable securities $ 1,000 $ 3,000 $ 2,100 $ 4,960

1 unchanged sentence

Total $ 1,000 $ 3,000 $ 2,100 $ 4,960

The Company did not record any gross realized gains or losses in net income (loss) during the three months ended March 31, 2022 and March 31, 2023.

The Company did not record any gross realized gains or losses in net income during the three and six months ended June 30, 2022 and June 30, 2023.

Fair Value Measurement

Assets measured at fair value on a recurring basis consist of the following as of March 31, 2023 (in thousands):

Assets measured at fair value on a recurring basis consist of the following as of June 30, 2023 (in thousands):

Fair Value Measurements at Reporting Date Using

March 31, 2023 Quoted Prices in

June 30, 2023 Quoted Prices in

Active Markets

4 unchanged sentences

Money market funds $ 62,951 $ 62,951 $ — $ —

treasury bills 39,776 39,776 — —

Available-for-sale securities :

16 unchanged sentences

The Company measures the above items on a recurring basis at fair value as follows:

• Money market funds – Classified in Level 1 is excess cash the Company holds in money market funds, which are included in cash and cash equivalents in the accompanying unaudited condensed consolidated balance sheets.

• Money market funds and U.S.

treasury bills – Classified in Level 1 is excess cash the Company holds in money market funds and U.S.

treasury bills, which are included in cash and cash equivalents in the accompanying unaudited condensed consolidated balance sheets.

The Company records any net unrealized gains and losses for changes in fair value as a component of accumulated other comprehensive income (loss) in stockholders’ equity.

The Company’s cash and cash equivalents and held-to-maturity securities held at December 31, 2022 and March 31, 2023 approximate fair value and are not disclosed in the above tables because of the short-term nature of the financial instruments.

The Company’s cash and cash equivalents and held-to-maturity securities held at December 31, 2022 and June 30, 2023 approximate fair value and are not disclosed in the above tables because of the short-term nature of the financial instruments.

• Available-for-sale securities – Classified in Level 2 and valued using readily available pricing sources for comparable instruments utilizing observable inputs from active markets.

The Company does not hold securities in inactive markets.

• Deferred payments – The Company acquired certain assets and entered into deferred payment arrangements with the sellers in transactions that occurred in 2011.

The Company did not change its valuation techniques associated with recurring fair value measurements from prior periods and did not transfer assets or liabilities between levels of the fair value hierarchy during the six months ended June 30, 2022 and 2023.

The Company acquired certain assets and entered into deferred payment arrangements with the sellers in transactions that occurred in 2011.

The deferred payments were classified within Level 3 as there was no liquid market for similarly priced instruments and were valued using discounted cash flow models that encompassed significant unobservable inputs.

1 unchanged sentence

The final payment related to the deferred payment arrangements was made in the first quarter of 2022.

Changes in the fair value of the Company’s Level 3 liabilities during the three months ended March 31, 2022 are as follows (in thousands):

As of March 31, 2022

Changes in the fair value of the Company’s Level 3 liabilities during the six months ended June 30, 2022 are as follows (in thousands):

As of June 30, 2022

Balance as of the beginning of period $ 658

3 unchanged sentences

Goodwill and Intangible Assets

The following table presents changes in the carrying value of goodwill by segment for the three months ended March 31, 2023 (in thousands):

The following table presents changes in the carrying value of goodwill by segment for the six months ended June 30, 2023 (in thousands):

Higher Education Australia /

5 unchanged sentences

Adjustments to prior acquisitions — — — —

Balance as of March 31, 2023 $ 632,075 $ 511,255 $ 100,000 $ 1,243,330

Balance as of June 30, 2023 $ 632,075 $ 505,907 $ 100,000 $ 1,237,982

The Company assesses goodwill at least annually for impairment during the fourth quarter, or more frequently if events occur or circumstances change between annual tests that would more likely than not reduce the fair value of the respective reporting unit below its carrying amount.

No events or circumstances occurred in the three months ended March 31, 2023 to indicate an impairment to goodwill at any of its segments.

There were no impairment charges related to goodwill recorded during the three months ended March 31, 2022 and 2023.

No events or circumstances occurred in the three and six months ended June 30, 2023 to indicate an impairment to goodwill at any of its segments.

There were no impairment charges related to goodwill recorded during the three and six months ended June 30, 2022 and 2023.

Intangible Assets

The following table represents the balance of the Company’s intangible assets as of December 31, 2022 and March 31, 2023 (in thousands):

December 31, 2022 March 31, 2023

The following table represents the balance of the Company’s intangible assets as of December 31, 2022 and June 30, 2023 (in thousands):

December 31, 2022 June 30, 2023

Gross Carrying Amount Accumulated Amortization Net Gross Carrying Amount Accumulated Amortization Net

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Straight-line amortization expense for finite-lived intangible assets reflects the pattern in which the economic benefits of the assets are consumed over their estimated useful lives.

Amortization expense related to finite-lived intangible assets was $ 2.9 million and $ 2.7 million for the three months ended March 31, 2022 and 2023, respectively.

Amortization expense related to finite-lived intangible assets was $ 5.8 million and $ 5.4 million for the six months ended June 30, 2022 and 2023, respectively.

Indefinite-lived intangible assets not subject to amortization consist of trade names.

1 unchanged sentence

In addition, there are no legal, regulatory, contractual, economic, or other factors to limit the useful life of the trade name intangibles.

The Company assesses indefinite-lived intangible assets at least annually for impairment during the fourth quarter, or more frequently if events occur or circumstances change between annual tests that would more likely than not reduce the fair value of

the respective indefinite-lived intangible asset below its carrying amount.

No events or circumstances occurred in the three months ended March 31, 2023 to indicate an impairment to indefinite-lived intangible assets.

There were no impairment charges related to indefinite-lived intangible assets recorded during the three months ended March 31, 2022 and 2023.

No events or circumstances occurred in the three and six months ended June 30, 2023 to indicate an impairment to indefinite-lived intangible assets.

There were no impairment charges related to indefinite-lived intangible assets recorded during the three and six months ended June 30, 2022 and 2023.

Other Current Assets

Other current assets consist of the following as of December 31, 2022 and March 31, 2023 (in thousands):

December 31, 2022 March 31, 2023

Other current assets consist of the following as of December 31, 2022 and June 30, 2023 (in thousands):

December 31, 2022 June 30, 2023

Prepaid expenses $ 19,073 $ 24,652

3 unchanged sentences

Other current assets $ 43,285 $ 52,330

Other assets consist of the following as of December 31, 2022 and March 31, 2023 (in thousands):

December 31, 2022 March 31, 2023

Other assets consist of the following as of December 31, 2022 and June 30, 2023 (in thousands):

December 31, 2022 June 30, 2023

Prepaid expenses, net of current portion $ 18,192 $ 17,471

7 unchanged sentences

Long-term prepaid expenses primarily relate to payments that have been made for future services to be provided after one year.

In 2020, pursuant to the terms of the perpetual license agreement associated with the Jack Welch Management Institute, the Company made a final one-time cash payment of approximately $ 25.3 million for the right to continue to use the Jack Welch name and likeness.

As of December 31, 2022 and March 31, 2023, $ 17.7 million and $ 17.3 million, respectively, of this payment is included in the prepaid expenses, net of current portion balance, as the payment is being amortized over an estimated useful life of 15 years.

2020, pursuant to the terms of the perpetual license agreement associated with the Jack Welch Management Institute, the Company made a final one-time cash payment of approximately $ 25.3 million for the right to continue to use the Jack Welch name and likeness.

As of December 31, 2022 and June 30, 2023, $ 17.7 million and $ 16.9 million, respectively, of this payment is included in the prepaid expenses, net of current portion balance, as the payment is being amortized over an estimated useful life of 15 years.

Equity Method Investments

2 unchanged sentences

The Company’s investments range from 3 %- 5 % of any partnership’s interest and are accounted for under the equity method.

The following table illustrates changes in the Company’s limited partnership investments for the three months ended March 31, 2022 and 2023 (in thousands):

For the three months ended March 31,

The following table illustrates changes in the Company’s limited partnership investments for the three and six months ended June 30, 2022 and 2023 (in thousands):

For the three months ended June 30, For the six months ended June 30,

2022 2023 2022 2023

Limited partnership investments, beginning of period $ 13,887 $ 14,874 $ 15,582 $ 13,879

12 unchanged sentences

Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses consist of the following as of December 31, 2022 and March 31, 2023 (in thousands):

December 31, 2022 March 31, 2023

Accounts payable and accrued expenses consist of the following as of December 31, 2022 and June 30, 2023 (in thousands):

December 31, 2022 June 30, 2023

Trade payables $ 45,826 $ 53,364

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Department of Education (the “Department” or “Department of Education”) Financial Responsibility Composite Score of not less than 1.0 for any fiscal year and not less than 1.5 for any two consecutive fiscal years.

The Company was in compliance with all the terms of the Amended Credit Facility as of March 31, 2023.

As of December 31, 2022 and March 31, 2023, the Company had approximately $ 101.4 million and $ 101.3 million, respectively, outstanding under the Revolving Credit Facility.

Approximately $ 3.4 million and $ 3.3 million was denominated in Australian dollars as of December 31, 2022 and March 31, 2023, respectively.

During the three months ended March 31, 2022 and 2023, the Company paid $ 0.4 million and $ 2.4 million, respectively, of interest and unused commitment fees related to its Revolving Credit Facility.

The Company was in compliance with all the terms of the Amended Credit Facility as of June 30, 2023.

As of December 31, 2022 and June 30, 2023, the Company had approximately $ 101.4 million and $ 101.3 million, respectively, outstanding under the Revolving Credit Facility.

Approximately $ 3.4 million and $ 3.3 million was denominated in Australian dollars as of December 31, 2022 and June 30, 2023, respectively.

During the six months ended June 30, 2022 and 2023, the Company paid $ 1.2 million and $ 4.2 million, respectively, of interest and unused commitment fees related to its Revolving Credit Facility.

On June 13, 2023, the Company amended its Revolving Credit Facility to replace references to LIBOR with alternative benchmark rates, including Term SOFR with respect to loans denominated in U.S.

dollars, beginning on June 30, 2023.

There were no other significant changes to the Revolving Credit Facility related to the amendment.

Other Long-Term Liabilities

Other long-term liabilities consist of the following as of December 31, 2022 and March 31, 2023 (in thousands):

December 31, 2022 March 31, 2023

Other long-term liabilities consist of the following as of December 31, 2022 and June 30, 2023 (in thousands):

December 31, 2022 June 30, 2023

Contract liabilities, net of current portion $ 36,540 $ 33,619

8 unchanged sentences

Equity Awards

The following table sets forth the amount of stock-based compensation expense recorded in each of the expense line items for the three months ended March 31, 2022 and 2023 (in thousands):

For the three months ended March 31,

The following table sets forth the amount of stock-based compensation expense recorded in each of the expense line items for the three and six months ended June 30, 2022 and 2023 (in thousands):

For the three months ended June 30, For the six months ended June 30,

2022 2023 2022 2023

Instructional and support costs $ 1,781 $ 1,665 $ 3,388 $ 3,531

General and administration 3,748 3,732 7,209 7,498

Restructuring costs — 96 — 96

Stock-based compensation expense included in operating expense 5,529 5,493 10,597 11,125

1 unchanged sentence

Stock-based compensation expense, net of tax $ 4,073 $ 4,038 $ 7,807 $ 8,191

During the three months ended March 31, 2022 and 2023, the Company recognized shortfall tax impacts of approximately $ 1.3 million and $ 1.4 million, respectively, related to share-based payment arrangements, which were adjustments to the provision for income taxes.

During the three months ended March 31, 2022 and 2023, the Company recorded income tax expense of $ 5.2 million and $ 1.1 million, respectively.

Income tax expense for the three months ended March 31, 2022 and 2023 include shortfall tax impacts of approximately $ 1.3 million and $ 1.4 million, respectively, related to share-based payment arrangements.

The Company had $ 0.9 million of unrecognized tax benefits as of December 31, 2022 and March 31, 2023.

Interest and penalties, including those related to uncertain tax positions, are included in the provision for income taxes in the unaudited condensed consolidated statements of income (loss).

The Company paid $ 0.5 million and $ 3.8 million in income taxes during the three months ended March 31, 2022 and 2023, respectively.

During the six months ended June 30, 2022 and 2023, the Company recognized shortfall tax impacts of approximately $ 1.4 million and $ 1.3 million, respectively, related to share-based payment arrangements, which were adjustments to the provision for income taxes.

During the six months ended June 30, 2022 and 2023, the Company recorded income tax expense of $ 12.2 million and $ 6.8 million, reflecting an effective tax rate of 35.4 % and 35.9 %, respectively.

Income tax expense for the six months ended June 30, 2022 and 2023 include shortfall tax impacts of approximately $ 1.4 million and $ 1.3 million, respectively, related to share-based payment arrangements.

The Company had $ 0.9 million of unrecognized tax benefits as of December 31, 2022 and June 30, 2023.

Interest and penalties, including those related to uncertain tax positions, are included in the provision for income taxes in the unaudited condensed consolidated statements of income.

The Company paid $ 13.8 million and $ 26.7 million in income taxes during the six months ended June 30, 2022 and 2023, respectively.

The tax years since 2019 remain open for federal tax examination, the tax years since 2018 remain open to examination by certain states, and the tax years since 2017 remain open to examination by foreign taxing jurisdictions in which the Company is subject to taxation.

13 unchanged sentences

The Company’s Chief Operating Decision Maker does not evaluate operating segments using asset information.

A summary of financial information by reportable segment for the three months ended March 31, 2022 and 2023 is presented in the following table (in thousands):

For the three months ended March 31,

A summary of financial information by reportable segment for the three and six months ended June 30, 2022 and 2023 is presented in the following table (in thousands):

For the three months ended June 30, For the six months ended June 30,

2022 2023 2022 2023

Higher Education $ 190,026 $ 202,679 $ 385,792 $ 399,574

2 unchanged sentences

Consolidated revenues $ 273,564 $ 287,680 $ 532,419 $ 544,286

Income (loss) from operations

Income from operations

Higher Education $ 11,851 $ 6,741 $ 27,334 $ 16,330

4 unchanged sentences

Restructuring costs ( 3,661 ) ( 6,351 ) ( 5,519 ) ( 11,946 )

Consolidated income (loss) from operations $ 13,441 $ ( 1,349 )

Consolidated income from operations $ 21,865 $ 16,817 $ 35,306 $ 15,468

The Company is involved in litigation and other legal proceedings arising out of the ordinary course of its business.

13 unchanged sentences

Capella University contested each claim for defense to repayment in individualized responses with supporting evidence, the last of which was sent to the Department in August 2021.

Since that time, Capella University has not received any communication from the Department related to the set of borrower defense claims received in 2021, nor has Capella University received indication that any of these claims has been evaluated on the facts presented and adjudicated on the merits.

Since that time, Capella University has not received any communication from the Department related to the set of

borrower defense claims received in 2021, nor has Capella University received indication that any of these claims has been evaluated on the facts presented and adjudicated on the merits.

On June 22, 2022, in litigation in which Capella University is not a party, Sweet, et al.

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The class settlement agreement would also provide certain expedited review of borrower defense claims related to schools excluded from the automatic relief list, as well as for borrowers who applied during the period after execution of the settlement and before final approval.

The Sweet settlement received preliminary court approval on August 4, 2022.

A joint motion for final approval was filed on September 22, 2022, which multiple intervening higher education institutions and companies opposed.

Following a fairness hearing, the court granted final approval of the settlement on November 16, 2022.

Intervenors appealed the court’s order and moved to stay the court’s final judgment approving the settlement pending resolution of the appeal.

Intervenors’ attempts to stay the judgment pending full consideration of appeal have been denied.

The court granted final approval of the settlement on November 16, 2022.

Intervenors, including multiple intervening higher education institutions and companies, appealed the court’s order and moved to stay the court’s final judgment approving the settlement pending resolution of the appeal.

Intervenors’ attempts to stay the judgment pending full consideration of appeal have been denied, including by the U.S.

Supreme Court on April 13, 2023.

In a July 25, 2022 filing in the same litigation, the Department stated that providing automatic relief to such borrowers “does not constitute the granting or adjudication of a borrower defense pursuant to the Borrower Defense Regulations, and therefore provides no basis to the Department for initiating a borrower defense recoupment proceeding against any institution identified” on the list.

6 unchanged sentences

On March 27, 2020, the President signed into law the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act.

Among other things, the CARES Act suspended payments and interest accrual on federal student loans until September 30, 2020, in addition to suspending involuntary collections such as wage garnishment, tax refund reductions, and reductions of federal benefits

like Social Security benefits during the same timeframe.

On March 30, 2021, the Secretary of Education also extended student loan relief to all Federal Family Education Loans (“FFEL”) not previously covered.

Through a series of administrative actions, student loan relief has been extended, including on November 22, 2022, when the Department announced an extension to “alleviate uncertainty for borrowers” as the U.S.

Supreme Court prepared to decide the legality of broad debt relief.

In that announcement, the Department indicated that payments will resume 60 days after the Department is permitted to implement the program or the litigation is resolved.

If the litigation has not been resolved by June 30, 2023, payments will resume 60 days after that.

Supreme Court heard oral arguments on February 28, 2023 and has yet to issue a decision.

In June 2023, the Department of Education announced that student loan interest will begin accruing September 1, 2023, and student loan repayment will resume in October 2023.

American Rescue Plan Act of 2021

5 unchanged sentences

In March 2022, the Institutional and Programmatic Eligibility negotiated rulemaking committee reached consensus on changes to the 90/10 Rule.

On October 27, 2022, the Department of Education released final 90/10 regulations, which are consistent with the consensus language.

The final regulations provided for an expanded definition of “federal education assistance” that will be periodically defined by the Secretary of Education.

On December 20, 2022, the Department published guidance indicating that non-Title IV eligible programs offered in part or in whole via distance education are not eligible to be counted in the “10” side of the ratio calculation.

On December 21, 2022, the Department released a non-exhaustive list of federal agencies and federal education assistance programs that must be included as federal revenue in the 90/10 calculation.

On October 27, 2022, the Department of Education released final 90/10 regulations, which are largely consistent with the consensus language.

However, within the preamble of the regulation the Department indicated that non-Title IV eligible programs offered via distance education are not eligible to be counted in the “10” side of the ratio calculation.

The final regulations also provided for an expanded definition of “federal education assistance” that will be periodically defined by the Secretary of Education.

On December 20, 2022, the Department published guidance further indicating that non-Title IV eligible programs offered in part or in whole via distance education are not eligible to be counted in the “10” side of the ratio calculation, and has continued to issue guidance related to implementation of the new rule.

On December 21, 2022, the Department released a non-exhaustive list of federal agencies and federal education assistance programs that must be included as federal revenue in the 90/10

Such agencies include the U.S.

2 unchanged sentences

Current Negotiated Rulemaking

Improving Institutional Quality and Accountability Committee

In January 2023, the Department indicated its intention to establish one or more rulemaking committees in 2023 to propose new regulations on distance education, improving the use of deferments and forbearances, third-party servicers and related issues, cash management, return of federal funds, state authorization, accreditation and related issues, and TRIO programs.

The Department invited interested parties to comment on the topics suggested by the Department at three public hearings held from April 11-13, 2023.

The Department invited interested parties to comment on the topics suggested by the Department at public hearings held on April 11 and 12, 2023.

The Department also accepted written comments through April 24, 2023.

Section 432(a) Committee

In June 2023, the Department indicated its intention to establish a rulemaking committee related to the modification, waiver or compromise of federal student loans, as permitted in HEA Section 432(a).

The Department held a public hearing on July 18, and accepted written comments through July 20, 2023.

Following completion of negotiated rulemaking committee meetings, the Department of Education issues proposed rules for public comment.

1 unchanged sentence

Following public comment, the Department issues final regulations, which, if published by November 1, would generally take effect July 1 of the following year.

Financial Value Transparency and Gainful Employment, Financial Responsibility, Administrative Capability, Certification Procedures, and Ability to Benefit

On May 17, 2023, the Department released proposed rules on financial value transparency and gainful employment, financial responsibility, administrative capability, certification procedures, and ability to benefit.

The proposed gainful employment rule would establish two independent metrics, both of which must be passed by a program subject to the rule in order to maintain Title IV eligibility.

Any program that fails either or both metrics in a single year would be required to provide a disclosure to students, and any program that fails the same metric in two of three consecutive years would lose its access to federal financial aid.

The two metrics are 1) a debt-to-earnings ratio that compares the median earnings of graduates who received federal financial aid to the median annual payments on loan debt borrowed for the program, and 2) an earnings premium test that measures whether the typical graduate from a program that received federal financial aid is earning at least as much as a typical high school graduate in their state (or, in some cases, nationally) and within a certain age range in the labor force.

A program that fails in two out of three consecutive years, or is voluntarily discontinued by the institution, would not be eligible to have Title IV reinstated for a minimum of three years.

The proposed rule also includes the requirement that all schools provide a link to a Department of Education-hosted website that includes information on cost, earnings, and licensure information.

The Department’s proposed rules regarding financial responsibility would establish new mandatory triggers that would allow the Department to seek financial protection or recalculate the institution’s financial composite score to determine whether an institution’s financial condition has materially weakened.

The proposal would also establish new discretionary triggers that would result in the Department conducting case-by-case analysis to see if additional protection is needed.

In general, institutions would be required to report triggering events within 10 days of occurrence.

According to the proposed rule, such triggering events may result in a financial protection requirement that would most likely take the form of a letter of credit or cash escrow and provisional certification to participate in Title IV.

Additionally, the Department described that its proposed changes to administrative capability regulations would strengthen how the Department administers requirements that institutions demonstrate they are capable of administering Title IV funds.

Under the proposed rule, institutions would be required to offer adequate services to students, including financial aid counseling and career services support.

The proposed language also includes a new requirement that institutions provide students with geographically accessible clinical or externship opportunities as required for licensure.

The Department described that its proposed changes to certification procedures would strengthen the Department’s ability to assess and in some cases impose additional conditions on institutions undergoing the recertification process.

Among other things, the Department would consider withdrawal rates, gainful employment rates, licensure passage rates, and instructional and advertising spend when making institutional eligibility determinations.

The Department has also proposed that the Secretary be required to sign off on all marketing materials in cases where the institution is provisionally certified and is alleged to have engaged in misrepresentation or aggressive recruitment.

Additionally, the Department has proposed changes regarding licensure-

track programs, including limits on program length and a student’s ability to access federal financial aid funds in cases where a program doesn’t meet educational prerequisites for licensure in the state in which the student is located.

The Department accepted public comments on the proposed rules through June 20, 2023.

Borrower Defenses to Repayment

6 unchanged sentences

Accrediting Agencies and State Authorization

On July 29, 2020, the National Advisory Committee on Institutional Quality and Integrity (“NACIQI”) held a meeting to review compliance by the Higher Learning Commission (“HLC”) with Department of Education requirements for recognized accrediting agencies.

HLC is the institutional accreditor for Capella University.

On June 30, 2020, the Department released a staff report that

outlined HLC’s alleged noncompliance with its own policies and the Department’s regulations with regard to a change of ownership approval process for the acquisition of the Art Institute of Colorado and the Illinois Institute of Art, by Dream Center Educational Holdings.

The staff report noted noncompliance in the areas of due process, consistency in decision making, and proper appeals procedures.

The staff report proposed a one-year prohibition on HLC accrediting new institutions and a required compliance report on HLC’s remedial actions.

NACIQI voted 9-2 to reject the staff report’s proposed sanctions, but NACIQI’s recommendation was non-binding.

On October 26, 2020, a Senior Department Official (“SDO”) found HLC non-compliant, in part.

While the SDO required that HLC submit periodic reporting for twelve months, the SDO did not restrict HLC’s scope of accreditation or ability to accredit new institutions.

HLC did not appeal the Secretary’s decision.

Both HLC and Middle States Commission on Higher Education (“Middle States”), the institutional accreditor for Strayer University, have applied for renewal of their recognition by the Department.

Both Middle States and HLC appeared before NACIQI in February-March 2023 as part of the recognition process.

NACIQI voted to recommend renewal of recognition for five years in the case of both HLC and Middle States.

The Senior Department Official will review NACIQI’s recommendations and make final determinations on agency recognition within 90 days of the NACIQI meeting.

Capella University’s accreditor, Higher Learning Commission (“HLC”), and Strayer University’s accreditor, Middle States Commission on Higher Education (“Middle States”), must periodically be reviewed by the U.S.

Secretary of Education in order to maintain recognition as an institutional accrediting agency.

On May 31, 2023, the Department of Education, acting on the recommendation of the National Advisory Committee for Institutional Quality and Integrity, renewed its recognition of HLC for a period of five years and required it provide a monitoring report regarding one item of substantial compliance, and continued the current recognition of Middle States for one year, requiring a compliance report regarding one item of noncompliance.

State Authorization Reciprocity Agreement (SARA)

4 unchanged sentences

The forum included a discussion of 63 proposed policy changes, some of which, if adopted, would significantly alter the distance education reciprocity agreements, including a proposal that NC-SARA permit states to apply more stringent standards to for-profit institutions or to eliminate the ability of for-profit institutions to participate in the agreements altogether.

In addition to the public comment forums, written comments are accepted through May 17, 2023.

In addition to the public comment forums, written comments were accepted through May 17, 2023.

NC-SARA’s four regional compacts and the NC-SARA board of directors will vote on each proposal presented by September 1, 2023, and October 25, 2023, respectively.

5 unchanged sentences

and eliminate the requirement for live hearings at the post-secondary level.

The public comment period on the proposed rule ended on September 12, 2022, and the Department has indicated its intention to publish a final Title IX rule in May 2023.

The public comment period on the proposed rule ended on September 12, 2022, and the Department has indicated its intention to publish a final Title IX rule in October 2023.

When the Department publishes the final Title IX rule, it will indicate an effective date.

5 unchanged sentences

On February 28, 2023, the Department extended the effective date of the updated guidance and reporting requirements from May 1, 2023 to September 1, 2023.

On April 11, 2023, the Department again delayed the effective date until six months after the Department publishes a new, revised final guidance letter on the topic.

Until that time, DCLs GEN 12-08, GEN 15-01, and GEN 16-15 (as amended by the March 8, 2017, electronic announcement) remain in effect.

On April 11, 2023, the Department again delayed the effective date until six months after the Department publishes a new, revised final guidance letter on the topic, and on May 16, 2023 the Department formally rescinded its 2023 and prior guidance (DCL GEN-16-15 and the March 8, 2017 Electronic Announcement) prohibiting contracts between colleges and foreign-owned or operated servicers.

Additionally, in March 2023, the Department indicated via Federal Register publication its intention to establish a negotiated rulemaking committee in 2023 to consider new proposed regulations on third-party servicers and related issues.

There is also litigation challenging the Department’s guidance because the Department did not use the negotiated rulemaking process;

the complaint was filed on April 4, 2023.

Program Participation Agreement

4 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements