What changed in this filing

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Item 1. Business

2024-02-29 compared with 2023-02-27 · 400 added, 358 removed, 872 unchanged (47% of the section changed)

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is an education services company that provides access to high-quality education through campus-based and online post-secondary education offerings, as well as through programs to develop job-ready skills for high-demand markets.

We operate primarily through our wholly-owned subsidiaries Strayer University and Capella University, both accredited post-secondary institutions of higher education located in the United States, as well as Torrens University, an accredited post-secondary institution of higher education located in Australia.

We operate primarily through our wholly-owned subsidiaries, Capella University and Strayer University, both accredited post-secondary institutions of higher education located in the United States, and Torrens University, an accredited post-secondary institution of higher education located in Australia.

Our operations emphasize relationships through our Education Technology Services segment with employers to build employee education benefits programs that provide employees with access to affordable and industry relevant training, certificate, and degree programs.

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For more information regarding our revenues, profits, and financial condition, please refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements included in this Annual Report on Form 10-K.

Acquisition of Torrens University and associated assets in Australia and New Zealand

On November 3, 2020, we completed the acquisition of Torrens University and associated assets in Australia and New Zealand (“ANZ”).

ANZ includes Torrens University Australia, Think Education, and Media Design School, which together provide diversified student curricula to approximately 19,000 students.

As of December 31, 2023, our three reportable segments consisted of U.S.

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Higher Education (“USHE”) Segment

The USHE segment provides flexible and affordable certificate and degree programs to working adults primarily through Strayer University and Capella University (the “USHE Universities”), including the Jack Welch Management Institute MBA, which is a unit of Strayer University.

The USHE segment provides flexible and affordable certificate and degree programs to working adults primarily through Capella University and Strayer University (the “USHE Universities”), including the Jack Welch Management Institute MBA, which is a unit of Strayer University.

USHE also offers non-degree web and mobile application development courses through Hackbright Academy (“Hackbright”) and Devmountain, which are units of Strayer University.

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The following is a breakdown of students by program level enrolled in the USHE Universities as of the 2023 fall term:

Strayer University students Capella University students Total USHE

Capella University students Strayer University students Total USHE

students Percentage of

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The USHE segment has a very diverse student population.

Of the students enrolled in the USHE Universities programs as of the 2022 fall term, approximately 69% were age 31 or older, approximately 79% were engaged in part-time study, approximately 77% were female, and approximately 58% of students self-reporting their ethnicity were minorities.

Of the students enrolled in the USHE Universities programs as of the 2023 fall term, approximately 72% were age 31 or older, approximately 79% were engaged in part-time study, approximately 78% of students self-reporting their gender were female, and approximately 58% of students self-reporting their ethnicity were minorities.

The USHE business is seasonal, and as a result, its quarterly results of operations tend to vary within the year due to student enrollment patterns.

Enrollment generally is lowest in the third quarter, or summer term.

Capella University

Founded in 1993, Capella University is an online accredited institution of higher education offering a variety of undergraduate and graduate degree programs, as well as certificate programs, in business, information technology, health care administration, counseling, psychology, human services, education, social work, nursing, and health sciences, primarily delivered to working adults.

Capella University primarily focuses on master’s and doctoral degree offerings, with approximately 60% of its students enrolled in such programs.

Capella University is accredited by the Higher Learning Commission (the “Higher Learning Commission” or “HLC”), a higher education institutional accrediting agency recognized by the Department of Education.

Capella University’s educational offerings are competency-based and delivered in two online, convenient, and flexible formats known as GuidedPath and FlexPath.

Capella University designs its curricula to help working adult students develop specific competencies they can apply in their workplace.

Capella University’s GuidedPath delivery model consists of credit-hour courses offered on a quarterly academic schedule, which coincide with calendar quarters.

Capella University provides new students in most GuidedPath programs the flexibility to begin the first course in their program of study at the beginning of any month.

These students then enroll in subsequent courses on a regular quarterly course schedule.

Students enroll in one to two courses per quarter depending on the program.

Each course has a designated start date, and most courses last for ten weeks.

Capella University develops GuidedPath courses to be asynchronous, allowing students to attend each course according to their weekly schedule.

GuidedPath students demonstrate their mastery of competencies through authentic assessments.

They must participate weekly in discussions and/or respond to questions posed by the instructor and other students’ comments.

This format provides an interactive experience in which each student is encouraged and required to be actively engaged.

Faculty are also required to have substantive engagement in courses each week.

Capella University’s online format provides a digital record of student interactions for the course instructor to assess students’ engagement levels and demonstrate required competencies.

The course design also includes an assessment of course competencies.

Capella University also offers courses in a second format called FlexPath.

The FlexPath delivery model is a form of competency-based education untethered from the traditional credit hour, called direct assessment.

In FlexPath, faculty assess students’ mastery of competencies through authentic assessments upon student submission.

FlexPath students set their own deadlines, demonstrate competencies via authentic assessment, and move through courses at their speed, allowing them to accelerate or slow down to meet their learning needs and schedule demands.

The primary exception to Capella University’s online format is for specific doctoral and master’s degree programs related to professional licensure.

These students participate in periodic residencies, year-in-residencies, and supervised practica and internships as part of their programs.

Residencies typically last four to 12 days and are required, on average, yearly for students in applicable programs.

The program in which the student is enrolled determines the length of the supervised practica and internships.

Capella University also offers certificate programs, consisting of a series of courses focused on a particular area of study, for students who seek to enhance their skills and knowledge.

Online certificate courses can be taken to prepare for an undergraduate degree program, graduate degree program or on a stand-alone basis.

The duration of certificate programs ranges from two quarters to approximately two years.

Capella University hires faculty with teaching and/or practitioner experience in their discipline and appropriate academic credentials.

The faculty consists of full-time academic administrators as well as core, part-time, and adjunct faculty.

The primary responsibilities of full-time academic administrators are to monitor the quality and relevance of curricula, recruit and manage teaching faculty, and maintain accreditation standards.

School academic leaders supervise faculty.

Core, part-time, and adjunct faculty teach courses, serve on curriculum or other relevant committees, work on curriculum development in their areas of expertise, and serve as comprehensive exam readers and dissertation mentors to doctoral students in addition to other responsibilities.

None of Capella University’s employees are a party to any collective bargaining or similar agreement with Capella University.

Before offering a teaching assignment, Capella University provides significant training to new faculty members, including an online development program focused on the Capella University way of effective online teaching, its educational philosophy, teaching expectations and its online platform.

In addition, the university provides all faculty members with professional development and training opportunities on an ongoing basis.

Organization of Capella University

Overall academic and business decisions of Capella University, including review and approval of the annual financial budget, are directed by its Board of Trustees.

Capella University’s By-Laws prescribe that a majority of members be independent from Capella University and the Company to assure independent oversight of all academic programs and services.

Within the academic, strategic, and financial parameters set by the Board of Trustees, Capella University is managed daily by the Capella University President.

The President is responsible for overseeing the implementation of the policies established by the Board of Trustees and is supported in this function by senior administrative officers.

The Boards of Trustees of Capella

University and Strayer University are independent of each other and from the Board of Directors of Torrens University, and have no overlapping members.

Capella University engages in a range of relationship-based marketing activities to build the Capella brand, differentiate it from other educational providers, increase awareness and consideration with prospective students, generate inquiries for enrollment, and stimulate referrals from current students and graduates.

These marketing activities include online advertising (display, social, mobile, search, and through aggregators), television, print, radio, email, and direct mail advertising campaigns.

Other marketing activities include supportive outreach to current students, participation in seminars and trade shows, and developing key marketing relationships with corporate, healthcare, armed forces, government, and educational organizations.

Student Admissions

Capella University designs its admission process to offer access to prospective students seeking the benefits of post-secondary education while providing feedback to students regarding their ability to complete their chosen program successfully.

Generally, students must complete an orientation to online education and a skills assessment before the first course of their program of study, which helps the university understand each students’ specific needs and readiness.

Students must complete the first course in their program of study to continue their education.

Students enrolling in bachelor’s programs must have a high school diploma or a General Educational Development (“GED”) and demonstrate competence in writing and logical reasoning during the first course of their program of study.

Additionally, applicants to undergraduate programs who do not have transferable credits from an accredited higher education institution must pass assessments in writing and reading before acceptance into the program.

Students enrolling in graduate programs must have the requisite undergraduate academic degree from an accredited institution and a specified minimum grade point average.

In addition to standard admission requirements, Capella University requires applicants to some programs to provide additional application material and information and/or interview with and be approved by faculty.

Tuition and Fees

Capella University’s overall tuition rates vary by discipline, length of program, and degree level.

Students in the GuidedPath credit hour programs are charged tuition on a per course or per term basis.

Students in select doctoral programs are charged tuition at a fixed quarterly amount, regardless of the number of courses for which the student registers.

Tuition for FlexPath doctoral, master’s and bachelor’s programs is priced at a flat, fixed amount for each 12-week subscription period.

There is no maximum course load during each subscription period;

however, a maximum of two FlexPath courses can be taken at any one time.

Students in credit hour certificate programs are charged tuition on a per course basis.

Tuition rates are reviewed at least annually.

Year-over-year tuition adjustments are specific to the program or specialization and depend on market conditions, program differentiation or changes in operating costs that have an impact on price adjustments of individual programs or specializations.

Capella University offers scholarships and tuition discounts, under a variety of different programs, to members of the armed forces and in connection with various corporate, healthcare, federal and educational marketing relationships.

Throughout the past several years, Capella University has expanded and refined its offering of student success scholarships under various programs to promote affordability and encourage students to remain enrolled.

Students must meet admission requirements, enroll, and apply within certain timeframes to receive the scholarships, which are generally awarded over a period of four to eight consecutive quarters.

Career Development Services

Capella University provides all students and alumni career counseling, job search advising, and career management support.

Career counselors interact with students and alumni via email, telephone, and online seminars to assist with career-related activities such as resume development;

curriculum vitae and cover letter development;

interview preparation;

effective job search strategies;

and career advancement efforts.

The Career Center’s online iGuide resources help students gather occupational information and trends, access job postings and view sample job search documents.

Enrollment counselors also assist prospective students in selecting the Capella University program and specialization that best suits their professional aspirations.

Strayer University

Founded in 1892, Strayer University is an accredited institution of higher education that offers undergraduate and graduate degree programs in business, criminal justice, education, health services, information technology, and public administration, at physical campuses, predominantly located in the eastern United States, and online.

Founded in 1892, Strayer University is an accredited institution of higher education offering undergraduate and graduate degree programs in business, criminal justice, education, health services, information technology, and public administration, at physical campuses, predominantly located in the eastern United States, and online.

By offering its programs both online and in physical classrooms, Strayer University provides its working adult students with flexibility and convenience.

Strayer University also offers an MBA online through the Jack Welch Management Institute (“JWMI”), which was acquired in December 2011.

Strayer University also offers an MBA online through the Jack Welch Management Institute (“JWMI”).

JWMI is a Top-10 Princeton Review-ranked online MBA program.

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Academic leaders regularly review and revise Strayer University’s course offerings to improve its educational programs and respond to competitive changes in job markets.

Strayer University regularly evaluates new programs and degrees to stay current with the needs of students and their employers.

Strayer University’s academic programs are primarily offered on a quarterly academic schedule, which generally coincides with calendar quarters.

Strayer University evaluates new programs and degrees to stay current with the needs of students and their employers.

Strayer University’s academic programs are primarily offered on a quarterly academic schedule, which coincides with calendar quarters.

Although most of its programs are offered at campuses and online, Strayer University adapts its course offerings to the demands of the student population at each location.

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All course modalities have the same academic requirements and content, and are taught by Strayer University faculty.

Throughout a course, faculty assess students, respond to inquiries, and interact with students to support their learning efforts.

Throughout a course, faculty assess students performance, respond to inquiries, and interact with students to support their learning efforts.

Strayer University structures its curricula to allow students to advance sequentially from one learning level to another by applying credits earned in one program toward attainment of a more advanced degree.

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This curriculum design provides students a level of competency and a measure of attainment in the event they interrupt their education or choose to work in their field of concentration prior to obtaining their final degree.

Strayer University appoints faculty who hold appropriate academic credentials, are dedicated, active professionals in their fields, and are enthusiastic and committed to teaching working adults.

Strayer University hires faculty who hold appropriate academic credentials, are dedicated, active professionals in their fields, and are enthusiastic and committed to teaching working adults.

Strayer University’s faculty includes both full-time and part-time faculty members.

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The normal course load for a full-time faculty member is five courses per quarter for each of three quarters, or 15 courses per academic year.

Certain high-performing faculty have been promoted into what we call “10x” teaching roles where they are provided with new technology and support resources that enable them to teach much larger class cohorts than was previously possible.

Certain high-performing faculty have been promoted into what we call “10x” teaching roles where they are provided with technology and support resources that enable them to teach much larger class cohorts than was previously possible.

None of Strayer University’s employees are a party to any collective bargaining or similar agreement.

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Strayer University’s By-Laws prescribe that a majority of members be independent from Strayer University and the Company to assure independent oversight of all academic programs and services.

Within the academic, strategic and financial parameters set by the Board of Trustees, Strayer University is managed on a daily basis by the Strayer University President.

The President is charged with the responsibility of overseeing the implementation of the policies established by the Board of Trustees and is supported in this function by senior administrative officers.

The Boards of Trustees of Strayer University and Capella University are independent of each other, as well as from the Board of Directors of Torrens University, and have no overlapping members.

To identify potential students, Strayer University engages in a broad range of activities to inform working adults and their employers about the programs offered.

Within the academic, strategic, and financial parameters set by the Board of Trustees, Strayer University is managed daily by the Strayer University President.

The President is responsible for overseeing the implementation of the policies established by the Board of Trustees and is supported in this function by senior administrative officers.

The Boards of Trustees of Capella University and Strayer University are independent of each other and from the Board of Directors of Torrens University, and have no overlapping members.

Strayer University engages in a broad range of activities to inform working adults and their employers about the programs offered to identify potential students.

These activities include direct, digital, and social media marketing, marketing to existing students and graduates, print and broadcast advertising, student referrals, and corporate and government outreach activities.

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Student Admissions

Students attending Strayer University’s undergraduate programs must possess a high school diploma or a General Educational Development (“GED”) Certificate.

Students attending Strayer University’s undergraduate programs must possess a high school diploma or a GED.

Students attending Strayer University’s graduate programs must have a bachelor’s degree from an accredited institution and meet certain other requirements.

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International students applying for admission must meet the same admission requirements as other students.

Those students whose native language is not English must provide evidence that they are able to use the English language with sufficient facility to perform college-level work in an English-speaking institution.

Those students whose native language is not English must provide evidence that they are able to use the English language with sufficient proficiency to perform college-level work in an English-speaking institution.

Tuition and Fees

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In their final academic year, qualifying students will receive one free course for every three courses that the student successfully completed in prior years.

However, 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.

Career Development Services

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The services provided include career webinars, recorded seminars, career teleconferences, career advising, and resume review.

Capella University

Founded in 1993, Capella University is an online accredited institution of higher education that offers a variety of undergraduate and graduate degree programs, as well as certificate programs, in business, technology, health care administration, counseling, psychology, human services, education, social work, nursing, and health sciences, primarily delivered to working adults.

Capella University primarily focuses on master’s and doctoral degree offerings, with approximately 64% of its students enrolled in such programs.

Capella University’s academic offerings are built with competency-based curricula and are delivered in an online format that is convenient and flexible.

Capella University designs its offerings to help working adult students develop specific competencies they can apply in their workplace.

Capella University’s GuidedPath credit-hour courses are offered on a quarterly academic schedule, which generally coincides with calendar quarters.

Capella University offers new students in most GuidedPath programs the flexibility to begin the first course in their program of study at the beginning of any month.

students then enroll in subsequent courses on a regular quarterly course schedule.

Depending on the program, students generally enroll in one to two courses per quarter.

Each course has a designated start date, and the majority of courses last for ten weeks.

GuidedPath courses are developed to be taken asynchronously, so that students can attend each course as it fits their weekly schedule.

GuidedPath students are required to participate weekly in discussions and/or respond to questions posed by the instructor, as well as comments made by other students.

This format provides for an interactive experience in which each student is both encouraged and required to be actively engaged.

Faculty are also required to have substantive engagement in each course each week.

Capella University’s online format provides a digital record of student interactions for the course instructor to assess students’ levels of engagement and demonstration of required competencies.

The course design also includes assessment of course competencies.

Capella University also offers courses in the FlexPath model.

In the FlexPath model, students’ demonstration of competencies is directly assessed by faculty when the student submits an assessment.

FlexPath students set their own deadlines, demonstrate competencies via authentic assessment, and move through courses at their own speed, giving them an opportunity to accelerate or slow down to meet their learning needs and schedule demands.

The primary exception to Capella University’s online format is for certain doctoral and master’s degree programs related to professional licensure.

These students participate in periodic residencies, year-in-residencies, and supervised practica and internships as part of their programs.

Residencies typically last from four to 12 days and are required, on average, once per year for students in applicable programs.

The supervised practica and internships vary in length based on the program in which the student is enrolled.

Capella University also offers certificate programs, which consist of a series of courses focused on a particular area of study, for students who seek to enhance their skills and knowledge.

Online certificate courses can be taken to prepare for an undergraduate degree program, graduate degree program or on a stand-alone basis.

The duration of certificate programs ranges from two quarters to approximately two years.

Capella University hires faculty who have teaching and/or practitioner experience in their particular discipline and possess significant and appropriate academic credentials.

The faculty consists of full-time academic administrators, core faculty and part-time faculty.

The full-time academic administrators’ primary responsibilities are to monitor the quality and relevance of curricula, to recruit and manage teaching faculty, and to maintain standards of accreditation.

Faculty are supervised by academic leaders within their schools.

Core faculty and part-time faculty teach courses, serve on curriculum or other relevant committees, work on curriculum development in their areas of expertise, and serve as comprehensive exam readers and dissertation mentors to doctoral students in addition to other responsibilities.

None of Capella University’s employees are a party to any collective bargaining or similar agreement with Capella University.

Prior to offering a teaching assignment, Capella University provides significant training to new faculty members, including an online development program focused on the Capella University way of effective online teaching, its educational philosophy, teaching expectations and its online platform.

In addition, professional development and training is provided for all faculty members on an ongoing basis.

Organization of Capella University

Overall academic and business decisions of Capella University, including review and approval of the annual financial budget, are directed by its Board of Trustees.

Capella University’s By-Laws prescribe that a majority of members be independent from Capella University and the Company to provide independent oversight of all academic programs and services.

Within the academic, strategic and financial parameters set by the Board of Trustees, Capella University is managed on a daily basis by the Capella University President.

The Boards of Trustees of Strayer University and Capella University are independent of each other, as well as from the Board of Directors of Torrens University, and have no overlapping members.

These marketing activities include online advertising (display, social, mobile, search, and through aggregators), television, print, radio, email, and direct mail advertising campaigns.

Other marketing activities include supportive outreach to current students, participation in seminars and trade shows, and development of key marketing relationships with corporate, healthcare, armed forces, government, and educational organizations.

Student Admissions

Capella University’s admission process is designed to offer access to prospective students who seek the benefits of a post-secondary education while providing feedback to students regarding their ability to complete their chosen program successfully.

Prior to the first course in their program of study, students are generally required to complete an orientation to online education and a skills assessment, the results of which help develop an understanding of the specific needs and readiness of each individual student.

Students must successfully complete the first course in their program of study to continue their education.

Students enrolling in bachelor’s programs must have a high school diploma or a GED and demonstrate competence in writing and logical reasoning during the first course of their program of study.

Additionally, applicants to undergraduate programs who do not have transferable credits from an accredited higher education institution are required to pass assessments in writing and reading prior to acceptance into the program.

Students enrolling in graduate programs must have the requisite undergraduate academic degree from an accredited institution and a specified minimum grade point average.

Tuition and Fees

Capella University’s overall tuition rates vary by discipline, length of program, and degree level.

Students in the GuidedPath credit hour programs are charged tuition on a per course or per term basis.

Students in select doctoral programs are charged tuition at a fixed quarterly amount, regardless of the number of courses for which the student registers.

Tuition for FlexPath doctoral, master’s and bachelor’s programs is priced at a flat, fixed amount for each 12-week subscription period.

There is no maximum course load during each subscription period;

however, a maximum of two FlexPath courses can be taken at any one time.

Students in credit hour certificate programs are charged tuition on a per course basis.

Tuition rates are reviewed at least annually.

Throughout the past several years, Capella University expanded and refined its offering of student success scholarships under a variety of different programs to promote affordability and encourage students to remain enrolled.

Students must meet admission requirements, enroll and apply within certain timeframes to receive the scholarships, which are generally awarded over a period of four to eight consecutive quarters.

Career Development Services

Career counseling, job search advising, and career management support is provided by staff to all Capella University students and alumni.

Career counselors interact with students and alumni via email, telephone, and online seminars to assist with career-related activities such as resume development;

curriculum vitae and cover letter development;

interview preparation;

effective job search strategies;

and career advancement efforts.

The Career Center’s online iGuide resources help students gather occupational information and trends, access job postings and view sample job search documents.

Enrollment counselors also assist with prospective students’ selection of the Capella University program and specialization that best suits their professional aspirations.

Australia/New Zealand Segment

The Australia/New Zealand segment is comprised of Torrens University, Think Education, and Media Design School (collectively the “ANZ institutions”).

The Australia/New Zealand (“ANZ”) segment is comprised of Torrens University, Think Education, and Media Design School (collectively the “ANZ institutions”).

Founded in 2013, Torrens University is the only investor-funded University in Australia.

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Think Education is a vocational registered training organization and accredited higher education provider in Australia.

Think Education delivers education at several campuses in Sydney, Melbourne, Brisbane, and Adelaide as well as through online study.

Think Education delivers education services at several campuses in Sydney, Melbourne, Brisbane, and Adelaide as well as through online study.

Think Education and its colleges are accredited in Australia by TEQSA and the Australian Skills Quality Authority (“ASQA”), the regulator for vocational education and training organizations that operate in Australia.

Media Design School is a globally recognized private tertiary institution for creative and technology qualifications in New Zealand.

Media Design School is a private tertiary institution for creative and technology qualifications in New Zealand.

Media Design School offers industry-endorsed courses in 3D animation and visual effects, game art, game programming, graphic and motion design, digital media artificial intelligence, and creative advertising.

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The ANZ institutions have a diverse student population.

Of the students enrolled at the end of 2022, approximately 32% were age 31 or older, approximately 24% were engaged in part-time study, approximately 64% were female, and approximately 1% were Aboriginal or Torres-Strait Islanders.

Students attending the ANZ institutions primarily consist of recent high school graduates as well as working adults.

Of the students enrolled at the end of 2023, approximately 32% were age 31 or older, approximately 20% were engaged in part-time study, approximately 64% of students self-reporting their gender were female, and approximately 1% were Aboriginal or Torres-Strait Islanders.

Students attending the ANZ institutions primarily consist of recent high school graduates as well as working and non-working adults.

The student population includes domestic students, representing citizens or permanent residents of Australia and New Zealand, and international students.

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Further, a significant portion of the teaching staff also work in the industry related to the subject/discipline in which they teach and are therefore industry-connected subject matter experts.

The majority of students enrolled in ANZ institutions enroll in trimesters, lasting 12 weeks and commencing at approximately mid-February, late May and mid-September.

The majority of students enrolled in ANZ institutions enroll in trimesters, lasting 12 weeks and commencing at approximately mid-February, early June and mid-September.

Students generally enroll in one to three subjects per trimester, depending on their mode of study, and for international students, depending on minimum load requirements attached to their visa.

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Marketing and sales initiatives vary depending on the type of prospective students being targeted.

Marketing to international students is primarily delivered through international agents and events that are largely relationship-based while marketing to domestic students is primarily delivered digitally.

These marketing activities include digital paid campaigns, social media engagement as well as events such as open days for students to come learn about the institutions, seminars or webinars that are offered both in person and virtual, as well as through high school career fairs or agents’ career fairs for international students.

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All applications for postgraduate courses are assessed on an individual basis.

In addition, when applying for postgraduate study, applicants may be considered under the guidelines of Special Entry and Educational Access Schemes designed to broaden access to the university, address perceived disadvantage or encourage studies in particular disciplines.

This group includes, but is not limited to, applicants with physical disabilities, applicants from geographically isolated areas, applicants with economically disadvantaged backgrounds and Aboriginal or Torres Strait Islander applicants.

In addition, when applying for undergraduate or postgraduate study, applicants may be considered under the guidelines of Special Entry and Educational Access Schemes designed to broaden access to the university, address perceived disadvantages or encourage studies in particular disciplines.

Students enrolling in a vocational education and training program must meet minimum requirements for admission including any course specific requirements and English language requirements.

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These short experiences, developed by global industry leaders, help students gain practical work skills and receive a certificate upon completion.

In addition, each student is assigned a Success Coach upon starting their course of study to help prepare and connect the student to their chosen industry.

The Success Coach’s focus is to improve the employability of each student by using their industry knowledge to maximize the impact of the student’s application and presentation of their personal brand.

In addition, students are provided Success Coaches upon starting their course of study to help prepare and connect to the university support network.

The Success Coach team's focus is to help students successfully navigate the educational landscape and build personal and professional capability to improve employability skills.

Education Technology Services Segment

Our Education Technology Services segment is primarily focused on developing and maintaining relationships with employers to build employee education benefits programs that provide employees with access to affordable and industry relevant training, certificate, and degree programs.

The employer relationships developed by the Education Technology Services division are an important source of student enrollment for Strayer University and Capella University, and the majority of the revenue attributed to the Education Technology Services division is driven by the volume of enrollment derived from these employer relationships.

The employer relationships developed by the Education Technology Services segment are an important source of student enrollment for Capella University and Strayer University, and the majority of the revenue attributed to the Education Technology Services segment is driven by the volume of enrollment derived from these employer relationships.

Education Technology Services also supports employer partners through Workforce Edge, a platform which provides employers a full-service education benefits administration solution, and Sophia Learning, which enables education benefits programs through the use of low-cost online general education-level courses recommended by the American Council on Education for credit at other colleges and universities.

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The United States market for post-secondary education is large, fragmented, and competitive.

According to the National Center for Education Statistics, the total number of post-secondary students enrolled as of the fall of 2021 was approximately 19.0 million, reflecting a 13.4% decrease from record enrollment in the fall of 2010.

According to the National Center for Education Statistics, the total estimated number of post-secondary students enrolled as of the fall of 2022 was approximately 19.0 million.

Approximately 1.2 million of these students attended proprietary institutions.

Controversy about the cost of higher education, under-employment of many college graduates, and persistent negative media coverage have caused some prospective students to question the value proposition of higher education.

Controversy about the cost of higher education, the time commitment required to obtain a degree, under-employment of many college graduates, and persistent negative media coverage have caused some prospective students to question the value proposition of higher education.

Further, the COVID-19 pandemic significantly reduced the number of students enrolled in post-secondary education institutions in recent years.

According to the National Student Clearinghouse Research Center, college enrollments in all higher education sectors declined 2.5% and 2.7% in the fall of 2020 and 2021, respectively.

According to estimates released by the National Student Clearinghouse Research Center, total enrollments in all higher education sectors declined 0.7% and 2.5% in the fall of 2022 and 2021, respectively.

Enrollment at proprietary colleges increased 2.6% in the fall of 2022 and declined 2.1% in the fall of 2021.

The industry is heavily dependent on continued availability of funding for programs under Title IV of the Higher Education Act (“Title IV programs”), and concerns about potential reductions in such funding also could negatively affect demand for higher education.

Notwithstanding weaker demand dynamics in past years, including the more recent adverse impact from the COVID-19 pandemic, we believe that over time, demand for post-secondary education in the United States will increase as a result of

demographic, economic, and social trends.

Census Bureau has reported that approximately 64.5 million adults over the age of 25 in the United States do not have more than a high school education, and approximately 33.0 million adults over the age of 25 have some college experience but have not completed a college degree.

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Prior to the COVID-19 pandemic and the corresponding closure of Australia’s borders, the Australian higher education market experienced consistent enrollment growth.

In 2020, Australian higher education enrollments totaled approximately 1.6 million, compared to 1.2 million in 2010, resulting in a 38% increase in total enrollments over the 10 year period.

The number of international students enrolled in Australian higher education institutions grew from 0.3 million in 2010 to 0.5 million in 2020.

However, due to Australia closing its borders in response to the COVID-19 pandemic in early 2020, international enrollments declined in recent years.

With Australia’s borders now fully reopened, the Australian higher education market is expected to return to enrollment growth in the near future, with a significant share of growth expected from international students.

However, due to Australia closing its borders in response to the COVID-19 pandemic in early 2020 and visa processing delays when the borders reopened in early 2022, international enrollments have declined in recent years, resulting in overall enrollment declines in Australia.

Estimated total higher education enrollments in Australia decreased approximately 5% between 2019 and 2022, driven largely by the decline in international enrollments.

With Australia’s borders fully reopened, the Australian higher education market is expected to return to enrollment growth.

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

Strayer University, Capella University, and Torrens University (the “Universities”) compete primarily with traditional public and private degree-granting accredited colleges and universities, other proprietary degree-granting accredited schools, and alternatives to higher education.

Capella University, Strayer University, and Torrens University (the “Universities”) compete primarily with traditional public and private two-year and four-year degree-granting accredited colleges and universities, other proprietary degree-granting accredited schools, vocational education organizations, and alternatives to higher education, such as employment and military service.

In addition, we face competition from various non-traditional, credit-bearing and noncredit-bearing education programs provided by proprietary, public, and not-for-profit providers, including massive open online courses offered worldwide without charge by traditional educational institutions and other direct-to-consumer education services.

As the proportion of traditional colleges providing alternative learning modalities increases, we will face increasing competition for students from traditional colleges, including colleges with well-established reputations for excellence and colleges in states that offer various forms of “free college” programs.

As the proportion of traditional colleges providing alternative learning modalities increases, we face increasing competition for students from traditional colleges, including colleges with well-established reputations for excellence and colleges in states that offer various forms of “free college” programs.

As online learning matures as a modality for education delivery across higher education, we believe that the intensity of the competition we face will continue to increase.

We believe the key factors affecting our competitive position include the quality of our programs offered, the quality of other services provided to students, our reputation among students and in the general marketplace, the cost and perceived value of our offerings, the employment rate and terms of employment for our graduates, the ease of access to our offerings, the quality and reputation of our faculty and other employees, the quality of our campus facilities and online platforms, the time commitment required to complete our programs and obtain a degree, the quality and size of our alumni base, our partnerships with employers, and our relationship with other learning institutions.

We believe the key factors affecting our competitive position include the quality of our programs, the quality of other support services provided to students, our reputation among students and in the general marketplace, the cost and perceived value of our offerings, the employment rate and terms of employment for our graduates, the ease of access to our offerings, the quality and reputation of our faculty and other employees, the quality of our campus facilities and online platforms, the time commitment required to complete our programs and obtain a degree, the quality and size of our alumni base, our partnerships with employers, and our relationship with other learning institutions.

Company Strengths

We have a track record of providing practical and convenient education programs and solutions for working adults, employers, and recent high school graduates.

We have a strong track record of providing practical and convenient education programs and solutions for working adults, employers, and recent high school graduates.

We believe the following strengths position us to capitalize on the demand for post-secondary education:

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We value innovation and actively invest in the educational experience to improve student success and employment outcomes, while also addressing challenges including the affordability of higher education and meeting the skill requirements of employers.

Capella University’s competency-based learning infrastructure and direct assessment capabilities through the FlexPath offering, Strayer University’s video, simulation and content and student support capabilities, and Torrens University’s virtual career expo are examples of this drive to transform education delivery and learning by working adults.

The Universities leverage these transformational capabilities to provide high quality, easily accessible, and affordable educational programs to their students.

Capella University’s competency-based learning infrastructure and direct assessment capabilities through the FlexPath learning model, Strayer University’s video, simulation and content and student support capabilities, and Torrens University’s virtual career expo are examples of this drive to transform education delivery and learning by working adults.

The Universities leverage these transformational capabilities to provide high quality, easily accessible, and affordable educational programs to students.

• Consistent operating history.

Strayer University, Capella University, and Torrens University have been in continuous operation since 1892, 1993, and 2013, respectively, and all three institutions have demonstrated an ability to operate

consistently and grow profitably.

As a combined Company, we have continued and enhanced this track record, with a broader, more diversified product offering, a balanced revenue mix, financial and operational synergies, and greater scale.

As a combined global Company, we have continued and enhanced this track record, with broader, more diversified product offerings, a balanced revenue mix, financial and operational synergies, and greater scale.

• Practical and diversified programs.

We offer programs in practical areas of adult education.

In order to keep pace with a changing knowledge-based economy, we constantly strive to meet the evolving needs of our students and their current and prospective employers by regularly refining, updating, and adding to our portfolio of educational programs.

We have a diversified program portfolio that includes Strayer University’s primarily undergraduate programs in business, criminal justice, and information technology, and an online MBA program offered through the Jack Welch Management Institute;

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and career counseling.

Increasingly, we are leveraging data and analytics to create personalized experiences for our students, which are reflected in our persistence improvements and continued high student satisfaction.

We leverage data and analytics to create personalized experiences for our students, which are reflected in our persistence improvements and continued high student satisfaction.

• Flexible program offerings.

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• Attractive and convenient campus locations.

Physical presence continues to be an important strength for us, notwithstanding the fact that the vast majority of academic activity occurs online.

Physical presence is an important strength for us, notwithstanding the fact that most academic activity occurs online.

Strayer University has campuses that are attractive and modern, offer conducive learning environments in convenient locations, and provide many online students with a physical location to study and to meet with admissions officers and academic advisors.

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• Established brand names and alumni support.

Strayer University and Capella University are established brand names in post-secondary adult education.

Capella University and Strayer University are established brand names in post-secondary adult education.

Their students and graduates are effective ambassadors of both brands through their work at companies across corporate America and, along with our growing alumni networks, foster greater brand awareness and additional referral opportunities for new students.

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Thus, we make every effort to make all interactions with our students productive, and we are constantly looking for ways to serve them better.

This initiative includes leveraging technology, including

artificial intelligence and automation, to improve student support in the areas of advising, tutoring, registration, campus and online technology, and administration.

This initiative includes leveraging technology, including artificial intelligence and automation, to improve student support in the areas of advising, tutoring, registration, campus and online technology, and administration.

We measure our performance through student surveys and focus groups as well as through metrics like persistence, continuation, and return on student investment.

• Address affordability — Recognizing that affordability is a significant factor in a prospective student’s decision to further his or her education, we have implemented various initiatives to make our programs more affordable.

For example, through the Graduation Fund at Strayer University, qualifying students enrolled in a bachelor’s or master’s degree program are eligible to receive one free course for every three courses successfully completed towards a degree.

The free courses earned are redeemable in one’s final academic year.

Additionally, Capella University’s FlexPath direct assessment model provides opportunity to drive affordability through the potential for lower tuition costs, reduced time to completion, and increased flexibility.

For example, Capella University’s FlexPath direct assessment model provides opportunity to drive affordability through the potential for lower tuition costs, reduced time to completion, and increased flexibility.

Additionally, through the Graduation Fund at Strayer University, qualifying students enrolled in a bachelor’s degree program are eligible to receive one free course for every three courses successfully completed towards a degree.

The free courses earned are redeemable in a student’s final academic year.

The Universities have also instituted various other tuition reductions and scholarships.

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We continue to monitor and assess the impact of our affordability initiatives and explore other ways to make our offerings as affordable as possible.

We are also focused on deploying new, more robust technology innovations, including artificial intelligence and automation, which enable us to lower our operating costs and thus improve our ability to support lower tuition.

We are also focused on deploying more robust technology innovations, including artificial intelligence and automation, which enable us to lower our operating costs and thus improve our ability to support lower tuition.

• Establish new platforms for growth — We are continuously looking for new ways to leverage our existing resources and capabilities to accelerate growth and expand benefits to our students through our best-in-class processes and practices and through opportunistic business combinations.

We are investing in new platforms and channel capabilities to create improved access and value for students and employers.

We also continue to develop new programs and concentrations.

• Build employer relationships — We are actively building relationships with employers to create employee education benefits programs that provide employees with access to affordable and industry relevant training, certificate and degree programs.

These relationships are an important source of corporate-funded enrollment for Strayer University and Capella University.

These relationships are an important source of corporate-funded enrollment for Capella University and Strayer University.

Our Workforce Edge platform, which provides a full-service education benefits administration solution for employers, is also positioned to drive enrollment in our universities that is less reliant on federal funding.

• Build a high performing culture — In order to be a leading provider of educational services, we must have talented and motivated faculty and employees who are passionate about serving students.

• Maintain a high performing, innovative, and adaptable culture — In order to be a leading provider of educational services, we must have talented and motivated faculty and employees who are passionate about serving students.

We encourage all employees to be innovative in their way of thinking and adaptable to change.

We strive to attract the best talent and then develop and retain them.

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Human Capital Resources

As of December 31, 2022, Strategic Education employed 3,907 full-time employees worldwide, of whom 945 were based outside of the U.S.

In the U.S., the Company employed 2,962 full-time employees, including 330 full-time faculty members, and 2,632 non-faculty staff.

Outside the U.S., the Company employed 247 full-time faculty members, and 698 non-faculty staff.

In addition, the Company employed 2,521 part-time faculty members and non-faculty staff worldwide as of December 31, 2022, of whom 921 were based outside of the U.S.

and 1,600 were based in the U.S.

As of December 31, 2023, Strategic Education employed 3,774 full-time employees worldwide, of whom 864 were based outside of the United States.

In the United States, the Company employed 2,910 full-time employees, including 310 full-time faculty members, and 2,600 non-faculty staff.

Outside the United States, the Company employed 265 full-time faculty members, and 599 non-faculty staff.

In addition, the Company employed 2,648 part-time faculty members and non-faculty staff worldwide as of December 31, 2023, of whom 953 were based outside of the United States and 1,695 were based in the United States.

The following table presents the gender representation of our U.S.

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Not Declared 1 % 1 %

___________________________________________________________

* Represents less than 1%.

The following table presents the race and ethnicity representation of our U.S.

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appointed from amongst our leadership a Chief Diversity Officer for the Company;

and the presidents of Strayer and Capella Universities appointed university-level Diversity Officers.

and the presidents of Capella and Strayer Universities appointed university-level Diversity Officers.

The DEI Programs Team continues to shape and drive forward our enterprise diversity, equity, and inclusion strategy.

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SEI fosters the growth and career development of its employees by creating solutions that support employees to deliver high performance, grow their careers, and contribute to SEI’s mission to enable economic mobility of its students through education.

The Company provides opportunities for eligible employees and dependents to attain and enhance their career goals through our Tuition Assistance Program, which provides generous financial support for undergraduate and graduate courses at Strayer University, including the Jack Welch Management Institute, Capella University, and continuing education through Sophia Learning.

The Company provides opportunities for eligible employees and dependents to attain and enhance their career goals through our Tuition Assistance Program, which provides generous financial support for undergraduate and graduate courses at Capella University, Strayer University, including the Jack Welch Management Institute, and continuing education through Sophia Learning.

In addition, the Company provides support for faculty members and employees seeking to enhance their skills and knowledge through professional development opportunities and continuing education.

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In our pursuit of this mission, we maintain physical locations to support our employees and students, and are committed to managing these facilities in a manner that minimizes the environmental impact in the communities where we work and live.

strives to uphold environmental practices that reduce climate change risks from energy consumption, greenhouse gas emissions, water usage, and waste generation.

The Company strives to uphold environmental practices that reduce climate change risks from energy consumption, greenhouse gas emissions, water usage, and waste generation.

These practices include:

• Reducing the physical footprint of corporate offices and campuses reduces energy consumption, water usage, and waste generation

◦ The Company has achieved a goal of reducing the size of its overall footprint by more than 25% compared to the square footage occupied in 2020 by implementing more efficient workspace design and eliminating underused campus facilities.

◦ SEI continues to pursue a goal of reducing its physical footprint, and reduced its overall real estate by approximately 10% compared to square footage occupied in 2022 by implementing more efficient workspace design and eliminating underused campus facilities.

The Company will continue to pursue additional opportunities when appropriate.

• Reducing energy consumption, including from non-renewable energy resources

◦ Strayer University and Capella University offer robust online curriculums, with the majority of instruction delivered online at Strayer University and 100% of instruction delivered online at Capella University;

◦ Capella University and Strayer University offer robust online curriculums, with 100% of instruction delivered online at Capella University and the majority of instruction delivered online at Strayer University;

this online curriculum gives students the ability to access and complete coursework online, reducing the need for physical space and commuting, which in turn reduces energy and water usage, greenhouse gas emissions, and waste generation.

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Department of Energy focused on protecting the environment through energy efficient products and practices.

◦ Torrens University Australia is a part of the Tech Central Sustainability Collaborative Partners Group focused on developing opportunities to improve sustainability.

◦ Our Media Design School campus in Auckland, New Zealand is located in a 6 Star Green Star rated building, which represents leadership in environmentally sustainable building practices.

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occupancy sensors to reduce energy consumption in areas that are not being used;

and programmable heating and cooling systems that will run only during operating hours.

and programmable heating and cooling systems that will only run during operating hours.

◦ Within campus locations, many property management teams are equipping spaces with energy-saving features including more efficient LED lighting, motion sensor lighting, and energy efficient HVAC systems.

◦ As a provider of online education, data centers are a critical component of our business operations;

◦ As a provider of online education, data centers are a critical component of business operations;

one of SEI’s largest power usages from a data center is from a data center powered entirely by renewable wind energy.

• Reducing greenhouse gas emissions

◦ In an effort to focus on alternative, green-commuting options, employees are encouraged to consider public transportation;

◦ Public transportation is an alternative, green-commuting option.

For employees in Minneapolis, MN, SEI covers a portion of public transit costs as an employee benefit.

◦ Vehicle charging stations have been installed at the corporate office in Herndon, VA to support employees that choose to utilize or purchase alternative fuel vehicles.

◦ Vehicle charging stations have been installed at the corporate office in Herndon, VA to support employees that choose to utilize alternative fuel vehicles.

◦ Many campus city locations are located near mass transportation options.

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▪ Between January 2021 and December 2022, the Company securely recycled approximately 50 U.S.

short tons of paper resulting in significant environmental benefits, including benefits from not having to generate new paper.

short tons of paper resulting in significant environmental benefits, including benefits from not

having to generate new paper.

In 2023, the Company securely recycled another approximately 8 U.S.

short tons of paper.

• Additional efforts to reduce environmental impacts

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We also claim rights to certain marks and have obtained or have pending applications in the U.S.

and select foreign jurisdictions for registration of the marks, including the marks “STRAYER” and “CAPELLA” for educational services, and certain other distinctive logos, along with various other trademarks, service marks and domain names related to our offerings.

and select foreign jurisdictions for registration of the marks, including the marks “CAPELLA” and “STRAYER” for educational services, and certain other distinctive logos, along with various other trademarks, service marks and domain names related to our offerings.

In addition, we have the rights to trade names, logos and other intellectual property specific to our international institutions including “Torrens University Australia,” “Think Education Group,” and “Media Design School,” in the countries in which those institutions operate.

Regulatory Environment

As institutionally accredited institutions of higher education operating in multiple jurisdictions, Strayer University and Capella University are subject to accreditation rules and varying state licensing and regulatory requirements.

In addition, the Higher Education Act and the regulations promulgated thereunder require all higher education institutions that participate in the various Title IV programs, including Strayer University and Capella University, to comply with detailed substantive and reporting requirements and to undergo periodic regulatory scrutiny.

As institutionally accredited institutions of higher education operating in multiple jurisdictions, Capella University and Strayer University are subject to accreditation rules and varying state licensing and regulatory requirements.

In addition, the Higher Education Act and the regulations promulgated thereunder require all higher education institutions that participate in the various Title IV programs, including Capella University and Strayer University, to comply with detailed substantive and reporting requirements and to undergo periodic regulatory scrutiny.

The Higher Education Act mandates specific regulatory responsibility for each of the following components of the higher education regulatory triad:

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The regulations, standards, and policies of these regulatory agencies are subject to frequent change.

We cannot predict the actions that the Administration, Congress, accreditors, or states may take or their effect on Strayer University, Capella University, or the Company.

We cannot predict the actions that the Administration, Congress, accreditors, or states may take or their effect on Capella University, Strayer University, or the Company.

Among other things, Congress may reauthorize the Higher Education Act and adopt, repeal or amend other legislation affecting higher education institutions.

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Department of Education

To be eligible to participate in Title IV programs, Strayer University and Capella University must comply with specific standards and procedures set forth in the Higher Education Act and the regulations issued thereunder by the Department of

To be eligible to participate in Title IV programs, Capella University and Strayer University must comply with specific standards and procedures set forth in the Higher Education Act and the regulations issued thereunder by the Department of Education.

An institution must, among other things, be authorized to offer its educational programs by each state in which it maintains physical presence, as defined by the state, and maintain institutional accreditation by a recognized accrediting agency, as discussed below.

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On December 13, 2021, the Department and Strayer University executed a new Program Participation Agreement, approving Strayer University’s continued participation in Title IV programs with full certification through September 30, 2025.

As a result of the August 1, 2018 merger, Capella University experienced a change of ownership, with the Company as its new owner.

On January 18, 2019, consistent with standard procedure upon a Title IV institution’s change of ownership, the Department and Capella University executed a new Provisional Program Participation Agreement, approving Capella’s continued participation in Title IV programs with provisional certification through December 31, 2022.

Capella submitted its application for recertification by the September 30, 2022 deadline and, consistent with Department of Education practice, continues to operate as provisionally certified until the Department processes Capella’s recertification application.

On April 18, 2023, the Department and Capella University executed a new Program Participation Agreement, approving Capella University’s continued participation in Title IV programs with full certification through September 30, 2025.

Accreditation

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If an institution’s or program’s performance does not meet its accrediting agency’s (or possibly other regulators’) expectations or applicable standards, then its operations may be conditioned or severely constrained, or the institution’s accreditation may be withdrawn, depending on the severity of the noncompliance.

Accreditation is an important attribute of Strayer University and Capella University.

Accreditation is an important attribute of Capella University and Strayer University.

Colleges and universities depend on accreditation to evaluate transferability of credit and applications to graduate schools.

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The rule also repeals the strict geographic scope of institutional accreditors.

In January 2023, the Department indicated its intention to establish a negotiated rulemaking committee in 2023 to consider new proposed regulations on accreditation and related issues.

Beginning in January 2024, the Department convened a negotiated rulemaking committee to consider new proposed regulations on accreditation and related issues.

The Higher Education Act charges the National Advisory Committee on Institutional Quality and Integrity (“NACIQI”) with recommending to the Secretary of Education which accrediting or state approval agencies should be recognized as reliable authorities for judging the quality of post-secondary institutions and programs.

NACIQI reviewed the Middle States Commission at its February 2018 meeting and recommended that the Secretary of Education extend its recognition for five years.

NACIQI also reviewed the Higher Learning Commission at its February 2018 meeting and recommended that the Secretary of Education extend its recognition for five years.

The Secretary subsequently accepted NACIQI’s recommendations and extended the accreditors’ recognition.

Both the Higher Learning Commission and Middle States Commission on Higher Education have applied for renewal of their recognition by the Department.

NACIQI is scheduled to consider their applications at its winter 2023 meeting.

If an institutional accreditor loses recognition by the Secretary of Education, an institution may be allowed to continue its participation in Title IV programs on a provisional basis for a period not to exceed 18 months to allow the institution to seek

accreditation from another recognized accrediting agency.

On May 31, 2023, the Department of Education, acting on the recommendation of NACIQI, renewed its recognition of the Higher Learning Commission 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 the Middle States Commission on Higher Education for one year, requiring a compliance report regarding one item of noncompliance.

An institution that does not become accredited by another recognized accreditor within 18 months will lose Title IV eligibility.

Strayer University

Strayer University has been institutionally accredited since 1981 by Middle States, an institutional accrediting agency recognized by the Secretary of Education.

Middle States accredits degree-granting public and private colleges and universities in its region (including Delaware, Washington, D.C., Maryland, New Jersey, New York, Pennsylvania, Puerto Rico, and the U.S.

Virgin Islands), including distance education programs offered by those institutions.

As a result of the State Authorization and Accreditation final rules, Middle States may also conduct accrediting activities in any other geographic region within or outside of the United States without regard to its specified region.

Middle States is the same accrediting agency that accredits such universities as Georgetown University, Columbia University, the University of Maryland, and other degree-granting public and private colleges and universities.

Strayer University went through a period of reaffirmation of accreditation that began in 2015 and lasted through June 2017, when Middle States reaffirmed Strayer University’s accreditation.

Strayer University’s period of accreditation by Middle States extends into 2025.

In 2016, Middle States provided that reaccreditation for all of its institutions will be for a period of eight years (rather than ten, as previously was the case) and that institutions will be required to submit annual reports on student achievement and financial sustainability.

In accordance with Middle States’ accreditation standards, every accredited institution will undergo a periodic review at the mid-point between its eight-year evaluations.

All of Strayer University’s substantive changes require prior Middle States approval.

Such changes include, but are not limited to, educational programs at different levels or different subject areas, certain contractual arrangements with other institutions providing a portion of an educational program, establishment or closure of additional locations and branch campuses, and changes in ownership or control.

In addition to institutional accreditation, Strayer University has obtained specialized or programmatic accreditation, or professional recognition, from the following organizations for specific programs:

the Accreditation Council for Business Schools and Programs (“ACBSP”), the Society for Human Resource Management (“SHRM”), and the National Security Agency’s Committee on National Security Systems.

Capella University

Capella University has been institutionally accredited since 1997 by the Higher Learning Commission, a higher education institutional accrediting agency recognized by the Secretary of Education that accredits degree-granting public and private colleges and universities in its region (Arizona, Arkansas, Colorado, Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Nebraska, New Mexico, North Dakota, Ohio, Oklahoma, South Dakota, West Virginia, Wisconsin, and Wyoming).

As a result of the State Authorization and Accreditation final rules, the Higher Learning Commission may also conduct accrediting activities in any other geographic region within or outside of the United States without regard to its specified region.

In January 2015, Capella University’s accreditation with the Higher Learning Commission was reaffirmed.

The Higher Learning Commission is the same accrediting agency that accredits such universities as Northwestern University, the University of Chicago, the University of Minnesota and other degree-granting public and private colleges and universities.

On January 13, 2023, the Higher Learning Commission communicated that it reaffirmed and continued Capella University’s accreditation, with the next reaffirmation of accreditation set for 2032-33.

The reaffirmation enables Capella University to continue to participate in Title IV programs.

On July 29, 2020, NACIQI held a meeting to review compliance by HLC with Department of Education requirements for recognized accrediting agencies.

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.

On January 13, 2023, the Higher Learning Commission reaffirmed and continued Capella University’s accreditation, with the next reaffirmation of accreditation set for 2032-33.

The Higher Learning Commission is continuously developing new standards and approval processes under which it evaluates programs and institutions.

Consistent with that approach, the Higher Learning Commission’s current policies include giving the Commission more discretion to designate institutions to be in “financial distress” or under “government investigation.” Receipt of these designations could affect future accreditation status and eligibility for Title IV aid under the Department of Education’s “financial responsibility” triggers.

Consistent with that approach, the Higher Learning Commission’s current policies include giving HLC more discretion to designate institutions to be in “financial distress” or under “government investigation.” Receipt of these designations could affect future accreditation status and eligibility for Title IV aid under the Department of Education’s “financial responsibility” triggers.

While the Company believes its strong reputation and compliance record will continue to place Capella University in favorable standing, there is sufficient breadth and discretion within the policy that government investigation, litigation, or financial or other circumstances could result in an impact to our business from the application of the policies.

In addition, the Higher Learning Commission enacted policy changes, effective September 2019, that mandate certain recruitment, admissions and related institutional practices.

In addition to institutional accreditation, Capella University has obtained specialized or programmatic accreditation, or professional recognition, for specific programs including from the following organizations:

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Council on Social Work Education;

Council for Standards in Human Services Education;

the National Security Agency and the U.S.

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The Bachelor of Science in Nursing, Master of Science in Nursing, and Doctor of Nursing Practice degree programs at Capella University are accredited by the Commission on Collegiate Nursing Education.

Strayer University

Strayer University has been institutionally accredited since 1981 by Middle States, an institutional accrediting agency recognized by the Secretary of Education.

Middle States accredits degree-granting public and private colleges and universities throughout the United States, including distance education programs offered by those institutions.

Strayer University went through a period of reaffirmation of accreditation that began in 2015 and lasted through June 2017, when Middle States reaffirmed Strayer University’s accreditation.

Strayer University’s period of accreditation by Middle States extends into 2025.

Middle States may request supplemental information reports following receipt of an institution’s annual report.

In November 2023, Middle States requested that Strayer University provide a supplemental information report regarding graduation rates and annual enrollment in accordance with Middle States’ monitoring policies and procedures as well as 34 C.F.R.

§ 602.19(d) (related to monitoring of institutions experiencing enrollment growth).

Strayer University submitted its supplemental information report to Middle States in December 2023.

The University’s next periodic evaluation date is scheduled for 2025-2026.

All of Strayer University’s substantive changes require prior Middle States approval.

the Accreditation Council for Business

Schools and Programs (“ACBSP”), the Society for Human Resource Management (“SHRM”), and the National Security Agency’s Committee on National Security Systems.

Shared-Services Agreements

Strategic Education, Inc.

has entered into shared-services agreements with both Strayer University and Capella University to provide certain services, including but not limited to finance, legal, human resources, information technology, financial aid, and marketing.

has entered into shared-services agreements with both Capella University and Strayer University to provide certain services, including but not limited to finance, legal, human resources, information technology, financial aid, and marketing.

The services are governed by Master Services Agreements, which provide, among other things, for oversight of the services by the governing board of each University.

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Licensure of Physical Campuses

The Higher Education Act and certain state laws require Strayer University and Capella University to be legally authorized to provide educational programs in the states in which the universities are physically located or otherwise have a physical presence as defined by the state.

The Higher Education Act and certain state laws require Capella University and Strayer University to be legally authorized to provide educational programs in the states in which the universities are physically located or otherwise have a physical presence as defined by the state.

Capella University is registered as a private institution with the Minnesota Office of Higher Education pursuant to Minnesota Statute sections 136A.61-131A.71, as required for most post-secondary private institutions that grant degrees at the associate level or above in Minnesota, and as required by the Higher Education Act to participate in Title IV programs.

Capella University is also authorized to operate in Florida.

Strayer University is authorized to offer programs by the applicable educational regulatory agencies in all states where Strayer’s physical campuses are located.

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Strayer University is subject to extensive regulation in each jurisdiction in which campuses are located, including in 2023:

Alabama, Arkansas, Delaware, Florida, Georgia, Louisiana, Maryland, Mississippi, New Jersey, North Carolina, Oklahoma, Pennsylvania, South Carolina, Tennessee, Texas, Utah, Virginia, West Virginia, and Washington, D.C.

Capella University is also authorized to operate in Florida.

Strayer University and Capella University will be subject to similar extensive regulation in those additional states in which we may physically expand our operations in the future.

Alabama, Arkansas, Delaware, Florida, Georgia, Maryland, Mississippi, New Jersey, North Carolina, Oklahoma, Pennsylvania, South Carolina, Tennessee, Texas, Utah, Virginia, West Virginia, and Washington, D.C.

Capella University and Strayer University will be subject to similar extensive regulation in those additional states in which we may physically expand our operations in the future.

State laws and regulations affect our operations and may limit our ability to introduce new and existing educational programs or establish new campuses.

On October 29, 2010, the Department of Education adopted regulations, effective July 1, 2011, that set requirements on states for their authorization of schools for purposes of Title IV eligibility.

We believe that every state above in which Strayer University and Capella University are authorized has processes in place that comply with these requirements.

Licensure of Online Programs

We believe that every state above in which Capella University and Strayer University are authorized has processes in place that comply with these requirements.

Authorization of Online Programs

The increasing popularity and use of the internet and other technology for the delivery of education has led, and may continue to lead, to the adoption of new laws and regulatory practices in the United States or foreign countries or to the interpretation of existing laws and regulations to apply to such services.

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Institutions could obtain such authorization directly from the state or (except in California) through a state authorization reciprocity agreement.

The regulations defined a state authorization reciprocity agreement as an agreement between two or more states that authorizes an institution located and legally authorized in a state

covered by the agreement to provide post-secondary education through distance education or correspondence courses to students in other states covered by the agreement and does not prohibit a participating state from enforcing its own laws with respect to higher education.

The regulations defined a state authorization reciprocity agreement as an agreement between two or more states that authorizes an institution located and legally authorized in a state covered by the agreement to provide post-secondary education through distance education or correspondence courses to students in other states covered by the agreement and does not prohibit a participating state from enforcing its own laws with respect to higher education.

The regulations also required institutions to document the state process for resolving complaints from students enrolled in programs offered through distance education or correspondence courses for each state in which such students reside.

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Whereas the disclosure requirements in the 2016 rule apply only to distance education programs, the disclosure requirements in the 2019 rule apply to both campus-based and online programs.

The disclosure rules have been modified by U.S.

Department of Education regulations effective July 1, 2024, as described below.

On August 24, 2020, the Department released final regulations on distance education and innovation.

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The final rule became effective July 1, 2021, with the option for early implementation.

Both Strayer University and Capella University opted to early implement the final rules in December 2020.

In January 2023, the Department indicated its intention to establish a negotiated rulemaking committee in 2023 to consider new proposed regulations on distance education.

Both Capella University and Strayer University opted to early implement the final rules in December 2020.

Beginning in January 2024, the Department convened a negotiated rulemaking committee to consider new proposed regulations on, among other things, state authorization of distance education programs.

Beginning July 1, 2017, California required out-of-state private post-secondary educational institutions that offer distance education to California residents to register with the state’s Bureau for Private Postsecondary Education (“BPPE”).

Strayer University and Capella University have filed BPPE registration applications and received confirmation of the registration.

Capella University and Strayer University have filed BPPE registration applications and received confirmation of the registration.

State Authorization Reciprocity Agreement

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As participants in SARA, the Universities may offer online courses and other forms of distance education to students in any participating SARA state in which the Universities do not have a physical location or a physical presence as defined by the state without having to seek any new state institutional approval beyond their home states (Minnesota and Washington, D.C., respectively).

The Universities’ home states, in turn, will continually monitor the

institutions’ compliance with SARA standards.

The Universities’ home states, in turn, will continually monitor the institutions’ compliance with SARA standards.

With this initiative, the Universities are able to expand distance education offerings with increased consistency and ease.

The only state that does not now participate in SARA is California.

The reciprocity agreement does not affect university operations that constitute a physical presence in a particular state, and the Universities will continue to follow individual state regulations for on-ground campuses and activities.

SARA does not affect university operations that constitute a physical presence in a particular state, and the Universities will continue to follow individual state regulations for on-ground campuses and activities.

At this time, SARA does not deal with professional licensing board approval for programs leading to state licensing in fields such as nursing, teacher education, psychology, and the like, and the Universities must seek such approvals on a state-by-state basis, as needed.

Regulations that will take effect on July 1, 2024, will require NC-SARA-participating institutions to comply in all states in which it enrolls students with all applicable state laws related to closure, including record retention, teach-out plans or agreements, and tuition recovery funds or surety bonds.

Beginning in January 2024, the Department convened a negotiated rulemaking committee to consider new proposed regulations on, among other things, state authorization reciprocity agreements and distance education.

State Professional Licensure

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The University’s catalog and websites also describe the requirements for obtaining professional licensure, paired with specific disclaimers that reiterate student responsibility for licensure outcomes.

Capella’s licensure team works directly with licensing authorities to try to resolve barriers to licensure for its alumni.

Pursuant to new U.S.

Department of Education regulations, beginning July 1, 2024, in each state where an institution is located, students enrolled by the institution are located, or students attest that they intend to seek employment, the institution must determine that each program eligible for Title IV:

(i) is programmatically accredited if the state or a Federal agency requires such accreditation, including as a condition for employment in the occupation for which the program prepares the student;

(ii) satisfies the applicable educational requirements for professional licensure or certification requirements in the state so that a student who enrolls in the program, and seeks employment in that state after completing the program, qualifies to take any licensure or certification exam that is needed for the student to practice or find employment in an occupation that the program prepares students to enter;

and (iii) complies with all state laws related to closure, including those concerning record retention, teach-out plans, and tuition recovery funds or surety bonds.

Institutions may not enroll for Title IV purposes a student located in a state in which the program does not meet such requirements, unless at the time of initial enrollment the student attests their intent to seek employment in another state that would satisfy such requirements.

Capella University and Strayer University must determine whether, in each state where either university or a student is located in which either university offers a program leading to employment in an occupation that requires programmatic accreditation or licensure or certification, that such program meets the accreditation and professional licensure educational requirements necessary to support a student’s application for licensure in such state.

The universities may not enroll a student for Title IV purposes in a state in which the program does not meet such requirements unless at the time of initial enrollment the student attests their intent to seek employment in another state in which the program would satisfy such requirements.

Capella University’s licensure team works directly with licensing authorities to try to resolve barriers to licensure for its alumni.

The team also assists alumni with exploring alternative options to achieve licensure, including completing additional coursework at Capella or at another institution.

Capella University makes no representation, warranty or guarantee that successful completion of the course of study will result in the student obtaining the necessary licensure or certification.

Compliance with state or professional licensure or certification requirements is the student’s sole responsibility.

Strayer University and Capella University are approved by appropriate authorities for the education of active duty military personnel and qualifying family members, veterans and members of the selected reserve and their spouses and dependents, as well as for the rehabilitation of veterans.

As requirements for professional licensure or certification vary by state and are not restricted to the educational component provided by Capella University, Capella University makes no representation, warranty or guarantee that successful completion of the course of study will result in the student obtaining the necessary licensure or certification.

Capella University and Strayer University are approved by appropriate authorities for the education of active duty military personnel and qualifying family members, veterans and members of the selected reserve and their spouses and dependents, as well as for the rehabilitation of veterans.

In addition, Strayer University is authorized by the U.S.

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Department of State, has implemented a mandatory electronic reporting system for schools that enroll foreign students and exchange visitors.

Strayer University is also authorized to participate in state financial aid programs in Pennsylvania, Florida, Alabama, and Vermont.

Strayer University is also authorized to participate in state financial aid programs in Pennsylvania, Florida, and Vermont.

Capella University is authorized to participate in the Minnesota GI Bill and the Minnesota Indian Scholarship programs.

Financing Student Education

Students finance their education at Strayer University and Capella University in a variety of ways, and historically about 75% of students participated in one or more Title IV programs.

Students finance their education at Capella University and Strayer University in a variety of ways, and historically about 75% of students participated in one or more Title IV programs.

Many financial aid programs are designed to assist eligible students whose financial resources are inadequate to meet the cost of education.

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In addition, many of our working adult students finance their own education or receive full or partial tuition reimbursement from their employers.

Congress has enacted several tax credits for students pursuing higher education and has provided for a tax

deduction for interest on student loans and exclusions from income of certain tuition reimbursement amounts.

Eligible students at Strayer University or Capella University may participate in educational assistance programs administered by the U.S.

Congress has enacted several tax credits for students pursuing higher education and has provided for a tax deduction for interest on student loans and exclusions from income of certain tuition reimbursement amounts.

Eligible students at Capella University or Strayer University may participate in educational assistance programs administered by the U.S.

Department of Veterans Affairs (“VA”) (and related state agencies), the U.S.

Department of Defense (“DOD”), and various private organizations.

Eligible students at Strayer University may also participate in educational assistance programs administered by the Commonwealth of Pennsylvania, the State of Florida, and the State of Vermont.

Some Capella University students may qualify to participate in the Minnesota GI Bill program or the Minnesota Indian Scholarship program.

Under the Post-9/11 Veterans Educational Assistance Act of 2008 (as amended), sometimes referred to as the “New GI Bill,” eligible veterans may receive, among other benefits, tuition benefits up to the net cost to the student (after accounting for state and federal aid, scholarships, institutional aid, fee waivers, and similar assistance), subject to a cap of $26,381 for non-public domestic institutions for 2022-2023.

Eligible students at Strayer University may also participate in educational assistance programs administered by the Commonwealth of Pennsylvania, the State of Florida, and the State of Vermont.

Under the Post-9/11 Veterans Educational Assistance Act of 2008 (as amended), sometimes referred to as the “New GI Bill,” eligible veterans may receive, among other benefits, tuition benefits up to the net cost to the student (after accounting for state and federal aid, scholarships, institutional aid, fee waivers, and similar assistance), subject to a cap of approximately $27,120 for non-public domestic institutions for 2023-2024.

In addition, eligible students pursuing an educational program solely through distance learning are eligible to receive a housing stipend of approximately $967 per month, half the national average amount available to students attending certain classroom-based programs or programs that combine classroom learning and distance learning.

On August 16, 2017, the President signed into law the Harry W.

Colmery Veterans Educational Assistance Act of 2017, commonly known as the “Forever GI Bill”.

The law makes several changes to the administration of VA education benefits.

Colmery Veterans Educational Assistance Act of 2017, commonly known as the “Forever GI Bill.” The law makes several changes to the administration of VA education benefits.

Among other things, for service members who left the military after January 1, 2013, the bill removes the requirement that they use their Post-9/11 GI Bill benefits within 15 years after their last 90-day period of active-duty service.

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the Training in High-demand Roles to Improve Veteran Employment (“THRIVE”) Act and the Responsible Education Mitigating Options and Technical Extensions (“REMOTE”) Act.

Strayer University and Capella University participate in DOD military tuition assistance programs under Memoranda of Understanding (“MOU”).

Capella University and Strayer University participate in DOD military tuition assistance programs under Memoranda of Understanding (“MOU”).

Strayer University’s current MOU was executed on September 5, 2019.

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Service members of the United States Armed Forces are eligible to receive tuition assistance from their branch of service through the DOD military tuition assistance programs.

Under the Memorandum of Understanding, Strayer University and Capella University agree to comply with DOD rules and procedures regarding the receipt of tuition assistance on behalf of active duty military personnel (and qualifying family members) in attendance at the University.

Under the Memorandum of Understanding, Capella University and Strayer University agree to comply with DOD rules and procedures regarding the receipt of tuition assistance on behalf of active duty military personnel (and qualifying family members) in attendance at the University.

Title IV Programs

Strayer University and Capella University maintain eligibility for their students to participate in the following Title IV programs:

Capella University and Strayer University maintain eligibility for their students to participate in the following Title IV programs:

• Federal Grants.

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The campus-based Title IV programs include the Federal Supplemental Educational Opportunity Grant program, the Federal Perkins Loan, and the Federal Work-Study Program.

Neither Strayer University nor Capella University actively participates in the Federal Perkins Loan program, which expired on September 30, 2017.

Neither Capella University nor Strayer University actively participates in the Federal Perkins Loan program, which expired on September 30, 2017.

In addition, Strayer University does not actively participate in the Federal Work-Study Program.

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Undergraduate students who demonstrate financial need may qualify for a subsidized loan.

The federal government pays the interest on a subsidized loan while the student is in school and

during any approved periods of deferment, after which the student’s obligation to repay the loan begins.

The federal government pays the interest on a subsidized loan while the student is in school and during any approved periods of deferment, after which the student’s obligation to repay the loan begins.

Unsubsidized loans are available to students who do not qualify for a subsidized loan or, in some cases, in addition to a subsidized loan.

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Federal Financial Aid Regulation

To be eligible to participate in Title IV programs, Strayer and Capella Universities must comply with specific standards and procedures set forth in the Higher Education Act and the regulations issued thereunder by the Department of Education.

As part of those participation standards, the Department of Education determines whether, among other things, the institution meets certain standards of administrative capability and financial responsibility.

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On January 18, 2019, consistent with standard procedure upon a Title IV institution’s change of ownership, the Department and Capella University executed a new Program Participation Agreement, approving Capella University’s continued participation in Title IV programs with provisional certification through December 31, 2022.

Capella University filed its application for recertification in advance of the September 30, 2022 deadline and, consistent with Department of Education practice, continues to offer federal financial aid under a Provisional Program Participation Agreement until the Department acts on the recertification application.

New regulations, effective July 1, 2024, codify a current Department policy requiring signatures from entities that have direct or indirect ownership of the institution if such entities have the power to exercise control over the institution.

Co-signers agree that they are jointly and severally liable for the participating institution’s Title IV liabilities.

Provisional Certification

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If the Department of Education determines that a provisionally certified institution is unable to meet its responsibilities under its program participation agreement, it may revoke or further condition the institution’s certification to participate in Title IV programs with fewer due process protections for the institution than if it were fully certified.

Should the Department of Education revoke eligibility during the provisional period, the institution may request reconsideration, and the Secretary of Education’s decision whether or not revocation is warranted constitutes final agency action.

Strayer University is operating under full certification.

Consistent with standard procedure following a change of control, Capella University is operating under provisional certification with no conditions other than the customary conditions described above.

In 2022, the Department of Education considered as part of the Institutional and Programmatic Eligibility negotiated rulemarking new regulations regarding, among other things, requirements of institutions that are provisionally certified.

Negotiated rulemaking committee meetings completed in March 2022 with no consensus reached on the topic, and the Department has since indicated it intends to publish draft rules in spring 2023.

Department of Education revoke eligibility during the provisional period, the institution may request reconsideration, and the Secretary of Education’s decision whether or not revocation is warranted constitutes final agency action.

Pursuant to new regulations effective July 1, 2024, the Department’s certification procedures provide for heightened scrutiny of institutions that the Department believes may pose a risk to taxpayers.

The regulations also add conditions that institutions will agree to when signing program participation agreements and establish additional circumstances for which the Department may place an institution on provisional certification, including, without limitation, failing the 90/10 Rule and triggering financial responsibility events that result in a financial protection requirement.

Capella University and Strayer University are currently operating under full certification.

Administrative Capability

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In 2022, the Department of Education considered as part of the Institutional and Programmatic Eligibility negotiated rulemaking new regulations regarding, among other things, administrative capability criteria.

Negotiated rulemaking committee meetings completed in March 2022 with no consensus reached on the topic, and the Department has since indicated it intends to publish draft rules in spring 2023.

Negotiated rulemaking committee meetings completed in March 2022 with no consensus reached on the topic.

On October 23, 2023, the Department released final rules on administrative capability.

Pursuant to new regulations effective July 1, 2024, among other things, institutions will be required to offer adequate services to students, including financial aid counseling and career services support.

The regulations also include, among other requirements, a new requirement that institutions provide students with geographically accessible clinical or externship opportunities as required for licensure and that at least half of an institution’s total Title IV, HEA funds from the most recent award year must not be from programs that are “failing” under the Gainful Employment Rules.

Financial Responsibility

The Higher Education Act and Department of Education regulations establish extensive standards of financial responsibility that institutions such as Strayer and Capella Universities must satisfy in order to participate in Title IV programs.

The Higher Education Act and Department of Education regulations establish extensive standards of financial responsibility that institutions such as Capella University and Strayer University must satisfy in order to participate in Title IV programs.

These standards generally require that an institution provide the services described in its official publications and statements, properly administer Title IV programs in which it participates, and meet all of its financial obligations, including required refunds and any repayments to the Department of Education for debts and liabilities incurred in programs administered by the Department of Education.

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An institution’s financial ratios must yield a composite score of at least 1.5 for the institution to be deemed financially responsible without alternative measures and further federal oversight.

For Strayer University and Capella University, the Department evaluates financial responsibility at the parent level, based on review of SEI’s financial statements.

We have applied the financial responsibility standards to our financial statements as of and for the year ended December 31, 2022, and based on our calculated composite score and other relevant factors, we believe we meet the Department of Education’s financial responsibility standards.

For Capella University and Strayer University, the Department evaluates financial responsibility at the parent level, based on review of SEI’s financial statements.

We have applied the financial responsibility standards to our financial statements as of and for the

year ended December 31, 2023, and based on our calculated composite score and other relevant factors, we believe we meet the Department of Education’s financial responsibility standards.

On November 1, 2016, the Department of Education released a new regulation, which after a series of delays became effective as of October 16, 2018, under which an institution may no longer be considered financially responsible if one or more of a list of triggering events occurs.

The Department of Education will automatically determine that an institution is not financially responsible if, among other things, the institution receives certain warnings from the SEC, fails to file required reports in a timely manner, or has a cohort default rate of 30% or greater for each of the two most recent official calculations.

The Department of Education will automatically determine that an institution is not financially responsible if a “mandatory” triggering event occurs, which includes, among other things, the institution receives certain warnings from the SEC, fails to file required reports in a timely manner, or has a cohort default rate of 30% or greater for each of the two most recent official calculations.

The Department of Education will also determine that an institution is not financially responsible if certain triggering events, such as a lawsuit against the institution, an accrediting agency’s requirement that the institution submit a teach-out plan, or potential loss of Title IV eligibility for gainful employment programs, result in the institution’s recalculated composite score to be less than 1.0.

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Negotiated rulemaking committee meetings completed in March 2022 with no consensus reached on the topic, and the Department has since indicated it intends to publish draft rules in spring 2023.

Negotiated rulemaking committee meetings completed in March 2022 with no consensus reached on the topic.

On October 23, 2023, the Department released final rules on financial responsibility.

Pursuant to new regulations effective July 1, 2024, the Department adopted new mandatory and discretionary triggers and new reporting requirements.

New mandatory triggers include but are not limited to failing the 90/10 Rule;

receiving at least 50% of Title IV funds from programs that fail gainful employment requirements;

certain SEC or exchange actions;

and certain actions that result in an institution’s recalculated composite score to fall below 1.0, including being subject to a Department action to recover losses from approved Borrower Defense to Repayment claims.

All of the mandatory triggers constitute an automatic failure of the financial responsibility requirements and would enable the Department to seek financial protection.

The rules also establish new discretionary triggers that permit the Department to conduct a case-by-case analysis to determine if additional financial protection is needed.

Such discretionary triggers include accrediting agency and government agency actions;

certain defaults or creditor events;

high annual dropout rates;

elimination of programs or locations that enroll more than 25% of the institution’s Title IV students;

and pending Borrower Defense to Repayment claims, among other things.

In general, institutions will be required to report triggering events within 21 days of occurrence.

According to the regulation, 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.

The amount of financial protection can range from 10% up to 50% of Title IV funds per triggering event, and the Department may “stack” financial protection requirements if more than one mandatory or discretionary trigger is present.

Student Loan Defaults

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National and institutional cohort default rates for cohort years 2018, 2019, and 2020 have been impacted by the COVID-19 repayment pause.

Strayer University and Capella University’s official three-year cohort default rates for 2017, 2018, and 2019, as well as the average official three-year cohort default rates for proprietary institutions nationally, were as follows:

University Capella

Capella University’s and Strayer University’s official three-year cohort default rates for 2018, 2019, and 2020, as well as the average official three-year cohort default rates for proprietary institutions nationally, were as follows:

University Strayer

University National Average

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2020 0.0 % 0.0 % 0.0 %

As part of the compliance programs related to the cohort default rate, Strayer University and Capella University provide entrance and exit counseling to their students and engage the services of third parties to counsel students once they are in repayment status regarding their repayment obligations.

On March 27, 2020, Congress passed the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), which included a provision that established a federal student loan administrative forbearance period, pause in interest accrual, and suspension of collections activity through September 30, 2020.

Through a series of administrative actions, the Department of Education has extended these student loan flexibilities several times.

On August 24, 2022, the Department announced that it would provide student loan relief to eligible borrowers to address financial hardships in connection with the COVID-19 pandemic.

Under the relief measures, up to $10,000 in student debt will be forgiven for individual borrowers earning less than $125,000 or married couples or heads of household earning less than $250,000, and up to $20,000 will be forgiven for such borrowers who formerly received Pell Grants.

In a memorandum prepared by the Department’s General Counsel, the Department stated that it has interpreted provisions of the Higher Education Relief Opportunities for Students Act of 2003 to authorize the Secretary to exercise broad discretion in granting student loan relief.

Since the Department’s student loan relief announcement, multiple lawsuits have been filed against the Department challenging its authority to grant such relief.

Supreme Court has granted petitions to review injunctions issued by two federal courts that blocked implementation of the student loan relief program, with oral arguments scheduled for February 28, 2023.

On November 22, 2022, the Department announced further extension of the pause on student loan repayment and noted that payments will resume 60 days following implementation of the relief program or resolution of the litigation.

If the Department has not implemented the relief program or the litigation has not resolved by June 30, 2023, the Department has stated that payments would resume 60 days thereafter.

As part of the compliance programs related to the cohort default rate, Capella University and Strayer University provide entrance and exit counseling to their students and engage the services of third parties to counsel students once they are in repayment status regarding their repayment obligations.

In June 2023, the Department of Education announced that student loan interest would begin to accrue on September 1, 2023, and student loan repayment resumed in October 2023.

As part of the return to repayment, the Department has also announced a 12 month “on-ramp” during which time delinquent borrowers will not be reported to credit bureaus or be counted as in default for the purpose of cohort default rate calculations.

On January 10, 2023, the Department proposed regulations to create a new income-driven repayment plan to reduce future monthly payments for lower- and middle-income borrowers.

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The 90/10 Rule

A requirement of the Higher Education Act, commonly referred to as the 90/10 Rule, applies only to proprietary institutions of higher education, which include Strayer University and Capella University.

A requirement of the Higher Education Act, commonly referred to as the 90/10 Rule, applies only to proprietary institutions of higher education, which include Capella University and Strayer University.

Under this rule, a proprietary institution is prohibited from deriving more than 90% of its revenues (as revenues are computed under the Department of Education’s methodology) from federal funds on a cash accounting basis (except for certain institutional loans) for any fiscal year.

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A proprietary institution of higher education that violates the 90/10 Rule for any fiscal year will be placed on provisional certification for up to two fiscal years.

Proprietary institutions of higher education that violate the 90/10 Rule for two consecutive fiscal years will become ineligible to participate in Title IV programs for at least two fiscal years and will be required to demonstrate compliance with Title IV eligibility and certification requirements for at least two fiscal years prior to resuming Title IV program participation.

resuming Title IV program participation.

In addition, the Department of Education discloses on its website any proprietary institution of higher education that fails to meet the 90/10 requirement, and reports annually to Congress the relevant ratios for each proprietary institution of higher education.

Using the statutory formula under the definition of federal funds included within the 90% metric then in effect, Strayer University derived approximately 82.95% of its cash-basis revenues from Title IV program funds in 2021.

Capella University derived approximately 67.06% of its cash-basis revenues from Title IV program funds in 2021.

Our computation for 2022 has not yet been finalized and audited;

Using the statutory formula under the definition of federal funds included within the 90% metric then in effect, Capella University derived approximately 65.30% of its cash-basis revenues from Title IV program funds in fiscal year 2022.

Strayer University derived approximately 80.57% of its cash-basis revenues from Title IV program funds in fiscal year 2022.

Our computation for 2023, which will be the first year under the new 90/10 Rule requirements, has not yet been finalized and audited;

however, we believe we will remain in compliance with the 90/10 Rule requirement.

The key components of non-Title IV revenue for Strayer University and Capella University are individual student payments, employer tuition reimbursement payments, veterans’ education benefits, military tuition assistance, vocational rehabilitation funds, private loans, state grants, and scholarships.

The key components of non-Title IV revenue for Capella University and Strayer University are individual student payments, employer tuition reimbursement payments, veterans’ education benefits, military tuition assistance, vocational rehabilitation funds, private loans, state grants, and scholarships.

On March 11, 2021, President Biden signed the American Rescue Plan Act of 2021, which included a change to the 90/10 methodology to include all federal funding.

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Restrictions on Incentive Compensation

payment based in any part, directly or indirectly, upon success in securing enrollments or awarding financial aid to any person or entity engaged in any student recruitment, admissions, or financial aid-awarding activity.

As a part of an institution’s program participation agreement with the Department of Education and in accordance with the Higher Education Act and Title IV regulations, the institution may not provide any commission, bonus, or other incentive payment based in any part, directly or indirectly, upon success in securing enrollments or awarding financial aid to any person or entity engaged in any student recruitment, admissions, or financial aid-awarding activity.

The rule applies to all institutional employees and service providers who are engaged in or responsible for any student recruitment or admission activity or making decisions regarding the award of financial aid.

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A program became Title IV-ineligible for three years if it failed both metrics for two out of three consecutive years or failed to pass at least one metric for four consecutive award years.

On January 8, 2017, Strayer and Capella Universities received their final 2015 debt-to-earnings measures.

On January 8, 2017, Capella University and Strayer University received their final 2015 debt-to-earnings measures.

None of their programs failed the debt-to-earnings metrics.

Two active Strayer University programs, the Associate in Arts in Accounting and Associate in Arts in Business Administration, were “in the zone,” and one active Capella University program, the Masters of Science in Marriage and Family Counseling/Therapy, was “in the zone.” Each of those three programs remained fully eligible.

One active Capella University program, the Masters of Science in Marriage and Family Counseling/Therapy, was “in the zone” and two active Strayer University programs, the Associate in Arts in Accounting and Associate in Arts in Business Administration, were “in the zone.” Each of those three programs remained fully eligible.

The Department has not released any subsequent debt-to-earnings measures under the 2015 Regulations.

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Meetings of the negotiated rulemaking committee occurred in spring 2022 with the committee failing to reach consensus.

The Department has since indicated it intends to publish draft gainful employment rules in spring 2023.

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.

On September 27, 2023, the Department released final regulations on financial value transparency and gainful employment, which are largely consistent with the proposed rule.

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

Any gainful employment program that fails either or both metrics in a single year would be required to provide a disclosure to current and prospective students, and any such program that fails the same metric in two out of three consecutive years for which the program’s metrics are calculated 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, which must be less than or equal to 8% of annual earnings or 20% of discretionary earnings, and 2) an earnings premium test that measures whether the typical graduates from a program that received federal financial aid earn more than 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 the program or launch and receive Title IV for a “substantially similar program” (generally defined as a program with the same four-digit CIP code) for a minimum of three years.

The final rule describes that the Department will now measure earnings six years after graduation (instead of the proposed rule’s three years after graduation) for certain qualifying graduate programs such as clinical psychology, marriage and family therapy, clinical social work, and clinical counseling.

The final rule also includes the requirement that, beginning July 1, 2026, all schools provide a link to a Department of Education-hosted website that includes information on cost, earnings, and licensure information, and the gainful employment metrics.

The final gainful employment regulations will take effect July 1, 2024.

The Department has indicated that it will release metrics beginning in the 2025 financial aid award year.

Beginning July 1, 2026, if a program fails a metric, an institution must provide warnings to students and prospective students meeting certain minimum requirements to be specified by the Department;

programs that fail the same metric in the first two years the rates are issued will lose eligibility in 2026.

On December 22, 2023, a lawsuit was filed against the Department in the United States District Court for the Northern District of Texas alleging that the rulemaking process and final rule were based on arbitrary and capricious decisions made by the Department, and that the rule violates constitutional rights related to speech, equal protection, and due process.

Capella University and Strayer University are not parties to the lawsuit.

The Company is unable to predict the ultimate outcome of the litigation.

Return of Federal Funds

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In order to determine if funds should be returned, the institution must first determine the amount of Title IV program funds that the student earned.

If the student attends the institution, but withdraws during the first 60% of any period of enrollment or payment period, the amount of Title IV program funds that the student earned is equal to a pro rata portion of the funds for which the student would otherwise be eligible.

If the student withdraws after the 60% point, then the student has

earned 100% of the Title IV program funds.

Strayer University and Capella University are required to measure the last day of attendance based on official attendance records, and “attendance” for online classes must include participation in an academically-related activity.

Strayer University’s and Capella University’s systems allow for measurement on this basis.

If the student attends the institution, but withdraws during the first 60% of any period of

enrollment or payment period, the amount of Title IV program funds that the student earned is equal to a pro rata portion of the funds for which the student would otherwise be eligible.

If the student withdraws after the 60% point, then the student has earned 100% of the Title IV program funds.

Capella University and Strayer University are required to measure the last day of attendance based on official attendance records, and “attendance” for online classes must include participation in an academically-related activity.

Capella University’s and Strayer University’s systems allow for measurement on this basis.

The institution must return to the appropriate Title IV programs, in a specified order, the lesser of the unearned Title IV program funds or the institutional charges incurred by the student for the period multiplied by the percentage of unearned Title IV program funds.

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If late returns of Title IV program funds constitute 5% or more of students sampled in the institution’s annual compliance audit for either of its two most recently completed fiscal years, an institution generally must submit such a letter of credit payable to the Secretary of Education.

In January 2023, the Department indicated its intention to establish a negotiated rulemaking committee in 2023 to consider new proposed regulations on the return of federal funds.

Beginning in January 2024, the Department convened a negotiated rulemaking committee to consider new proposed regulations on, among other things, return of Title IV funds.

Misrepresentation

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Misrepresentation also includes the dissemination of a student endorsement or testimonial that a student gives either under duress or because the institution required such an endorsement or testimonial to participate in a program.

The final rule will become effective July 1, 2023.

Borrower Defenses to Repayment

Pursuant to the Higher Education Act and following negotiated rulemaking, on November 1, 2016, the Department of Education released a final regulation specifying the acts or omissions of an institution that a borrower may assert as a defense to repayment of a loan made under the Direct Loan Program and the consequences of such borrower defenses for borrowers, institutions, and the Secretary of Education (the “2016 BDTR Rule”).

institutions, and the Secretary of Education (the “2016 BDTR Rule”).

Under the 2016 BDTR Rule, for Direct Loans disbursed after July 1, 2017, a student borrower may assert a defense to repayment if:

(1) the student borrower obtained a state or federal

court judgment against the institution;

(1) the student borrower obtained a state or federal court judgment against the institution;

(2) the institution failed to perform on a contract with the student;

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In addition, the closed school discharge window is expanded from 120 days to 180 days prior to the school’s closure, though the final rule does not allow for an automatic closed school loan discharge.

Institutions are required to accept responsibility for the repayment of amounts discharged by the Secretary pursuant to the borrower defense to repayment, closed school discharge, false certification discharge, and unpaid refund discharge regulations.

Institutions are required to accept responsibility for the repayment of amounts discharged by the Secretary pursuant to the borrower defense to repayment, closed school discharge (associated with closure of a school or an additional location or branch campus), false certification discharge, and unpaid refund discharge regulations.

If the Secretary discharges a loan in whole or in part, the Department of Education may require the school to repay the amount of the discharged loan.

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defines the types of misconduct that could lead to borrower defense discharges, including substantial misrepresentations, substantial omissions of fact, breaches of contract, aggressive and deceptive recruitment, and state or federal judgments or final Department of Education actions that could give rise to a Borrower Defense to Repayment claim;

establishes a presumption that borrowers reasonably relied upon misrepresentations or omissions;

establishes a presumption that

borrowers reasonably relied upon misrepresentations or omissions;

establishes a reconsideration process for borrowers whose claims are not approved for a full discharge, including based on a state law standard;

and creates a process for the adjudication

of group claims based on common facts.

and creates a process for the adjudication of group claims based on common facts.

The final rule permits nonprofit legal assistance organizations to request group claims.

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In addition, the final rule prohibits institutions from requiring borrowers to sign mandatory pre-dispute arbitration agreements or class action waivers for claims related to the making of a Federal Direct Loan or the provision of educational services for which the loan was obtained.

The final rule will become effective July 1, 2023.

The rule also modified the closed school discharge rule to provide an automatic discharge one year after an institution or location’s closure date for borrowers who were enrolled at the time of closure or left 180 days before closure and who do not accept an approved teach-out agreement or continuation of the program at another location of the school.

Those who accept but do not complete a teach-out agreement or program continuation will receive a discharge one year after their last date of attendance.

The final rule became effective July 1, 2023.

On August 7, 2023, the U.S.

Court of Appeals for the Fifth Circuit granted a nationwide emergency injunction preventing the Department of Education’s enforcement of the final BDTR and closed school discharge rules.

The matter was heard by the Fifth Circuit panel on November 6, 2023, and the previous versions of the BDTR and closed school discharge rules remain in effect until further determination.

The Department has stated that it will not adjudicate any borrower defense applications under the latest rule unless and until the effective date is reinstated;

the Department will continue to adjudicate borrower defense applications using an earlier version of the regulations where required under a court settlement (the Sweet case discussed below).

The Company is unable to predict the ultimate outcome of the litigation.

Third-Party Servicers

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An institution must report to the Department of Education new contracts or any significant modifications to contracts with third-party servicers as well as other matters related to third-party servicers.

Strayer University and Capella University have written contracts with third-party servicers to perform activities related to Strayer University’s and Capella University’s participation in Title IV programs.

On February 15, 2023, the Department released updated guidance regarding third-party servicer definitions and activities, requiring institutions to be in compliance with the new guidance by May 1.

The Company and the Universities are in the process of reviewing the guidance and intend to comply with the Department’s May 1 reporting deadline.

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

Capella University and Strayer University have written contracts with third-party servicers to perform activities related to Capella University’s and Strayer University’s participation in Title IV programs.

On February 15, 2023, the Department released a Dear Colleague Letter (“DCL”) (GEN 23-03) with updated guidance expanding the definition of third-party servicers and covered activities to include vendors providing student recruitment and retention services, software products and services related to Title IV administration activities, and educational content and instruction, initially requiring institutions to be in compliance with the new guidance by May 1, 2023.

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 March 24, 2023 the Department announced that it planned to convene one or more negotiated rulemakings to address, among other things, third-party servicers and related issues.

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.

In a November 2023 press release, the Department indicated it intends to issue updated guidance in early 2024.

Lender Relationships

As part of an institution’s program participation agreement with the Department of Education, the institution must adopt a code of conduct pertaining to student loans.

Strayer University and Capella University have a code of conduct that we believe complies with the provisions of the Higher Education Act in all material respects.

Capella University and Strayer University have a code of conduct that we believe complies with the provisions of the Higher Education Act in all material respects.

Additionally, Strayer University complies with all private lender requirements.

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Restrictions on Adding Locations and Educational Programs

State requirements and accrediting agency standards can limit, slow, or halt the ability of Strayer University and Capella University to establish legally authorized additional locations and programs.

State requirements and accrediting agency standards can limit, slow, or halt the ability of Capella University and Strayer University to establish legally authorized additional locations and programs.

Most states require approval before institutions can add new programs, campuses, or teaching locations.

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All new Strayer University locations require Middle States approval before students are enrolled, and the Higher Education Act requires Middle States to monitor institutions with significant enrollment growth.

The Higher Learning Commission, the Minnesota Office of Higher Education, and other state educational regulatory agencies that license or authorize Capella University and its degree programs require institutions to notify them in advance of implementing new programs and, upon notification, may undertake a review of the institution’s licensure, authorization or accreditation.

The Higher Learning Commission, the Minnesota Office of Higher Education, and other state educational regulatory agencies that license or authorize Capella University and its

degree programs require institutions to notify them in advance of implementing new programs and, upon notification, may undertake a review of the institution’s licensure, authorization or accreditation.

The Higher Education Act requires proprietary institutions of higher education to be in full operation for two years before qualifying to participate in Title IV programs.

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The new location must satisfy all other applicable requirements for institutional eligibility, including approval of the additional location by the relevant state authorizing agency and the institution’s accrediting agency.

Any Strayer University or Capella University expansion plans assume its continued ability to establish new campuses as additional locations under such applicable regulations and thereby avoid incurring the two-year delay in participation in Title IV programs.

Any Capella University or Strayer University expansion plans assume its continued ability to establish new campuses as additional locations under such applicable regulations and thereby avoid incurring the two-year delay in participation in Title IV programs.

Department of Education regulations require institutions to report to the Department of Education a new additional location at which at least 50% of an eligible program may be offered, if the institution wants to disburse Title IV program funds to students enrolled at that location.

Under its Program Participation Agreement with the Department of Education, Strayer University must notify the Department of Education of the addition of any such location within ten days of opening, but need

not seek prior approval.

Under Capella University’s provisional certification, the Department of Education must approve any new campus locations, level of academic offerings, and non-degree and degree programs before Capella University may award or disburse Title IV aid to students enrolled at any such location or in any such program.

Under their Program Participation Agreements with the Department of Education, the Universities must notify the Department of Education of the addition of any such location within ten days of opening, but need not seek prior approval.

Institutions are responsible for knowing whether they need approval, and institutions that add locations and disburse Title IV program funds without having obtained any necessary approval may be subject to administrative repayments and other sanctions.

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If the Department of Education determines that an institution is out of compliance with the credit hour definition, the Department of Education could impose liabilities or other sanctions.

We believe that both Strayer University and Capella University are in compliance with the credit hour rules.

We believe that both Capella University and Strayer University are in compliance with the credit hour rules.

In addition to the credit hour model, the Department of Education has granted approvals for a small number of institutions to operate direct assessment academic programs.

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The Department issued several guidance documents outlining and interpreting these changes.

Additionally, the CARES Act established a $12.6 billion Higher Education Emergency Relief Fund (“HEERF”).

While the Department allocated CARES Act HEERF funding for Strayer, the university did not accept its allocation.

On December 27, 2020, Congress passed the omnibus Consolidated Appropriations Act, 2021 (“CAA”), which included several education-related provisions.

Relevant provisions of the CAA increased the maximum Pell Grant for the 2021-2022 award year, restored quarters/semesters of Pell eligibility to students who have successfully asserted a borrower defense to repayment;

repealed the limitation on lifetime subsidized loan eligibility (known as “Subsidized Usage Limit Applies,” or SULA), and simplified the Free Application for Federal Student Aid.

The CAA also appropriated an additional $22.7 billion for the HEERF to be distributed to higher education institutions.

In January 2021, the Department released a table of institutional allocation of funds which indicated that Capella University was eligible for $328,602 and Strayer University was eligible for $5,831,606, all of which was disbursed to students with the highest need, in the form of direct grants in spring 2021.

On March 11, 2021, President Biden signed the American Rescue Plan Act of 2021 (“ARP”), which included $40 billion in emergency funding for higher education.

Capella University disbursed $184,323 to students of the highest need in June 2021, and Strayer University disbursed $2,554,682 to students of the highest need in July 2021.

ARP also included an adjustment to the tax code by making any student loan debt discharged through 2025 tax-free, and an adjustment to the 90/10 rule.

On March 11, 2021, President Biden signed the American Rescue Plan Act of 2021 (“ARP”), which included an adjustment to the tax code by making any student loan debt discharged through 2025 tax-free, and an adjustment to the 90/10 rule.

The change includes all federal funding – not just Title IV funds – in the 90/10 calculation.

ARP’s 90/10 changes require the Department to issue regulations, with an effective date no earlier than institutional fiscal years beginning January 1, 2023.

On December 8, 2021 the Department of Education announced its intention to establish a rulemaking committee to develop proposed regulations on, among other things, the 90/10 rule via the Institutional and Programmatic Eligibility rulemaking and the committee reached consensus on the topic in March 2022.

the committee reached consensus on the topic in March 2022.

The Department released final regulations in October 2022.

The regulatory changes require proprietary institutions to count all “federal education assistance funds” as federal revenue in the

90/10 calculation for fiscal years beginning on or after January 1, 2023.

The regulatory changes require proprietary institutions to count all “federal education assistance funds” as federal revenue in the 90/10 calculation for fiscal years beginning on or after January 1, 2023.

Such funds include not only Title IV funds but also certain funds from the U.S.

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The CARES Act initially suspended payments and interest accrual for Federal Family Education Loans and Direct Loans until September 30, 2020.

Through a series of administrative actions, student loan relief has been extended several times with the Department of Education announcing on August 24, 2022, that it would provide student loan relief to eligible borrowers to address financial hardships in connection with the COVID-19 pandemic.

Since the Department’s student loan relief announcement, multiple lawsuits have been filed against the Department challenging its authority to grant such relief.

Supreme Court has granted petitions to review injunctions issued by two federal courts that that blocked implementation of the Department’s student loan relief program, with oral arguments scheduled for February 28, 2023.

If the Department has not implemented the relief program or the litigation has not resolved by June 30, 2023, the Department has stated that payments would resume 60 days thereafter.

The Department of Education extended student loan relief several times and announced on August 24, 2022, that it would provide student loan relief to eligible borrowers to address financial hardships in connection with the COVID-19 pandemic.

Under the relief measures, the Department proposed forgiving up to $10,000 in student debt for individual borrowers earning less than $125,000 or married couples or heads of household earning less than $250,000, and forgiving up to $20,000 for such borrowers who formerly received Pell Grants.

In a memorandum prepared by the Department’s General Counsel, the Department stated that it interpreted provisions of the Higher Education Relief Opportunities for Students Act of 2003 (“HEROES Act”) to authorize the Secretary to exercise broad discretion in granting student loan relief.

Following the Department’s student loan relief announcement, multiple lawsuits were filed against the Department challenging its authority to grant such relief.

Supreme Court granted petitions to review injunctions issued by two federal courts that blocked implementation of the Department’s student loan relief program and on June 30, 2023, the Supreme Court held that the HEROES Act did not authorize the Secretary to establish the student loan forgiveness program.

The Department subsequently established a negotiated rulemaking committee to develop proposed student loan forgiveness plans under the Higher Education Act.

Negotiations occurred in October-December 2023, with negotiators reaching consensus on some language including waiver of student loan debt in circumstances of repayment plans, program and institution closures, and gainful employment failures.

The Department has not yet released proposed rules for public comment.

Other Regulations Governing Title IV Programs

The Department of Education has enacted a comprehensive set of regulations governing an institution’s participation in Title IV programs.

If either Strayer University or Capella University were not to continue to comply with these regulations, such noncompliance might affect the operations of the University and its ability to participate in Title IV programs.

If either Capella University or Strayer University were not to continue to comply with these regulations, such noncompliance might affect the operations of the University and its ability to participate in Title IV programs.

The Clery Act and Title IX

Strayer and Capella Universities must comply with the campus safety and security reporting requirements as well as other requirements in the Jeanne Clery Disclosure of Campus Security Policy and Campus Crime Statistics Act (the “Clery Act”).

Capella University and Strayer University must comply with the campus safety and security reporting requirements as well as other requirements in the Jeanne Clery Disclosure of Campus Security Policy and Campus Crime Statistics Act (the “Clery Act”).

In addition, the Department has interpreted Title IX of the Education Amendments of 1972 (“Title IX”) to categorize sexual violence as a form of prohibited sex discrimination and to require institutions to follow certain disciplinary procedures with respect to such offenses.

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The final rules became effective August 14, 2020.

On August 24, 2021, the Department of Education Office for Civil Rights issued guidance indicating it would cease enforcement of the rules’ prohibition against consideration of statements made by individuals failing to submit to cross-examination at a live hearing.

On August 24, 2021, the Department of Education Office for Civil Rights (“OCR”) issued guidance indicating it would cease enforcement of the rules’ prohibition against consideration of statements made by individuals failing to submit to cross-examination at a live hearing.

The Department of Education conducted public hearings concerning its Title IX regulations and on June 23, 2022, the Department of Education released proposed Title IX regulations for public comment.

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

On October 4, 2022, OCR released a resource document for students and institutions in which it reinforced that current Title IX regulations prohibit discrimination based on pregnancy, childbirth, false pregnancy, termination of pregnancy or recovery therefrom.

medical benefits, services, plans, and policies, and detailed requirements for leave and reinstatement for both students and employees.

On October 4, 2022, the OCR released a resource document for students and institutions in which it reinforced that current Title IX regulations prohibit discrimination based on pregnancy, childbirth, false pregnancy, termination of pregnancy or recovery therefrom.

The resource document further emphasized that Title IX requires institutions to treat pregnancy, childbirth, false pregnancy, termination of pregnancy and recovery therefrom the same as other temporary disabilities with respect to medical benefits, services, plans, and policies, and detailed requirements for leave and reinstatement for both students and employees.

Students with Disabilities

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Compliance Reviews

Strayer University and Capella University are subject to announced and unannounced compliance reviews and audits by various external agencies, including the Department of Education, its Office of Inspector General, state licensing agencies, guaranty agencies, and accrediting agencies.

Capella University and Strayer University are subject to announced and unannounced compliance reviews and audits by various external agencies, including the Department of Education, its Office of Inspector General, state licensing agencies, guaranty agencies, and accrediting agencies.

The Higher Education Act and Department of Education regulations also require an institution to submit annually to the Secretary of Education a compliance audit of its administration of Title IV programs conducted by an independent certified public accountant in accordance with Generally Accepted Government Auditing Standards and applicable audit guides of the Department of Education’s Office of Inspector General (“ED OIG”).

For fiscal years beginning after June 30, 2016, Strayer University and Capella University must submit such audits that have been conducted in accordance with a guide for audits of proprietary schools that was issued by the ED OIG in September 2016.

For fiscal years beginning after June 30, 2023, Capella University and Strayer University must submit such audits that have been conducted in accordance with a guide for audits of proprietary schools that was issued by ED OIG in March 2023.

The 2023 audit guide includes a number of updates, including related to the new 90/10 rule.

In addition, to enable the Secretary of Education to make a determination of financial responsibility, an institution must submit annually to the Secretary of Education audited financial statements prepared in accordance with Department of Education regulations.

For Strayer University and Capella University, financial responsibility is determined at the SEI parent level.

For Capella University and Strayer University, financial responsibility is determined at the SEI parent level.

In June 2019, the Department conducted an announced, on-site program review at Capella University, focused on Capella University’s FlexPath program.

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Administrative Actions and Appeals Services Group, Borrower Defense Group, Investigations Group, and Resolution and Referral Management Group.

The Department intends the Office of Enforcement to coordinate with other state and federal

partners, including the Department of Justice, Consumer Financial Protection Bureau, Federal Trade Commission, and state attorneys general.

The Department intends the Office of Enforcement to coordinate with other state and federal partners, including the Department of Justice, Consumer Financial Protection Bureau, Federal Trade Commission, and state attorneys general.

Potential Effect of Regulatory Violations

If either Strayer University or Capella University fails to comply with the regulatory standards governing Title IV programs, the Department of Education could impose one or more sanctions, including transferring the University from the advance payment method to the reimbursement or cash monitoring system of payment, seeking to require repayment of certain Title IV funds, requiring the University to post a letter of credit in favor of the Department of Education as a condition for continued Title IV certification, taking emergency action against the University, or referring the matter for criminal prosecution or initiating proceedings to impose a fine or to limit, condition, suspend, or terminate the University’s participation in Title IV programs.

Although there are no such sanctions currently in force against Strayer University or Capella University, if such sanctions or proceedings were imposed and resulted in a substantial curtailment, or termination, of that University’s participation in Title IV programs or resulted in substantial fines or monetary liabilities, that University and the Company could be materially and adversely affected.

If Strayer University or Capella University lost its eligibility to participate in Title IV programs, or if Congress reduced the amount of available federal student financial aid, the University would seek to arrange or provide alternative sources of revenue or financial aid for students.

If either Capella University or Strayer University fails to comply with the regulatory standards governing Title IV programs, the Department of Education could impose one or more sanctions, including transferring the University from the advance payment method to the reimbursement or cash monitoring system of payment, provisional certification, seeking to require repayment of certain Title IV funds, requiring the University to post a letter of credit in favor of the Department of Education as a condition for continued Title IV certification, taking emergency action against the University, or referring the matter for criminal prosecution or initiating proceedings to impose a fine or to limit, condition, suspend, or terminate the University’s participation in Title IV programs.

Although there are no such sanctions currently in force against Capella University or Strayer University, if such sanctions or proceedings were imposed and resulted in a substantial curtailment, or termination, of that University’s participation in Title IV programs or resulted in substantial fines or monetary liabilities, that University and the Company could be materially and adversely affected.

If Capella University or Strayer University lost its eligibility to participate in Title IV programs, or if Congress reduced the amount of available federal student financial aid, the University would seek to arrange or provide alternative sources of revenue or financial aid for students.

Although the Universities believe that one or more private organizations would be willing to provide financial assistance to students attending the Universities, there is no assurance that this would be the case, and the interest rate and other terms of such student financial aid are unlikely to be as favorable as those for Title IV program funds.

The Universities may be required to guarantee all or part of such alternative assistance in a manner that complies with rules governing schools’ relationships with lenders or might incur other additional costs in connection with securing alternative sources of financial aid.

Accordingly, the loss of eligibility of Strayer University or Capella University to participate in Title IV programs, or a reduction in the amount of available federal student financial aid, would be expected to have a material adverse effect on Strayer University or Capella University, even if it could arrange or provide alternative sources of revenue or student financial aid.

Accordingly, the loss of eligibility of Capella University or Strayer University to participate in Title IV programs, or a reduction in the amount of available federal student financial aid, would be expected to have a material adverse effect on Capella University or Strayer University, even if it could arrange or provide alternative sources of revenue or student financial aid.

In addition to the actions that may be brought against us as a result of our participation in Title IV programs, we also may be subject, from time to time, to complaints and lawsuits relating to regulatory compliance brought not only by our regulatory agencies, but also by other government agencies and third parties.

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Among other things, the final rule lowered the threshold for reportable changes in ownership percentages from 25% to 5% for changes in ownership that do not result in a change in control, introduced a new timeline for reporting such changes, and created a requirement that for a planned change in ownership that results in a change in control, an institution is now required to notify students at least 90 days prior to the anticipated transaction date.

The final rule will become effective July 1, 2023.

The final rule became effective July 1, 2023.

Change in Ownership Resulting in a Change of Control

Many states and accrediting agencies require institutions of higher education to report or obtain approval of certain changes in ownership or other aspects of institutional status, but the types of and triggers for such reporting or approval vary among states and accrediting agencies.

Both Strayer University’s accrediting agency, Middle States, and Capella University’s

accrediting agency, the Higher Learning Commission, require institutions that they accredit to inform them in advance of any substantive change, including a change that significantly alters the ownership or control of the institution.

Both Capella University’s accrediting agency, the Higher Learning Commission, and Strayer University’s accrediting agency, Middle States, require institutions that they accredit to inform them in advance of any substantive change, including a change that significantly alters the ownership or control of the institution.

Examples of substantive changes requiring advance notice to, and approval by, the agency include changes in the legal status, ownership, or form of control of the institution, such as the sale of a proprietary institution.

Both agencies must approve a substantive change in advance in order to include the change in the institution’s accreditation status.

Additionally, both Middle States and the Higher Learning Commission will undertake a site visit to an institution that has undergone a change in ownership or control no later than six months after the change.

Additionally, both the Higher Learning Commission and Middle States will undertake a site visit to an institution that has undergone a change in ownership or control no later than six months after the change.

Each state in which the institution operates may also have its own change in ownership approval processes.

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A controlling stockholder is a stockholder who holds, or controls through agreement, at least 25% of the total outstanding voting stock of the corporation and more shares of voting stock than any other stockholder.

Additionally, the Department of Education regulations require institutions to make certain notice filings with the agency should a shareholder acquire 25% or more of the outstanding voting stock of the corporation.

Institutions must notify the Department of Education and students of a planned change in ownership that results in a change in control at least 90 days in advance.

Additionally, the Department of Education regulations require institutions to make certain notice filings with the agency should a shareholder acquire 5% or more ownership interest (direct or indirect).

Department of Homeland Security, working with the U.S.

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Strayer University currently is authorized by the U.S.

Department of Homeland Security to admit foreign students for study in the United States subject to applicable requirements (because Capella is on-line only, and foreign students must take a portion of their classes on-ground, Capella University does participate).

Department of Homeland Security to admit foreign students for study in the United States subject to applicable requirements (because Capella University is online only, and foreign students must take a portion of their classes on-ground, Capella University does participate).

In certain circumstances, the U.S.

Department of Homeland Security may require an institution to obtain approval for a change in ownership and control.

Pursuant to federal law providing benefits for veterans and reservists, some of the programs offered by Strayer University and Capella University are approved by state approving agencies for the enrollment of persons eligible to receive U.S.

Pursuant to federal law providing benefits for veterans and reservists, some of the programs offered by Capella University and Strayer University are approved by state approving agencies for the enrollment of persons eligible to receive U.S.

Department of Veterans Affairs educational benefits.

In 2022, Strayer University had such approval in Alabama, Arkansas, Delaware, Florida, Georgia, Maryland, Mississippi, New Jersey, North Carolina, Pennsylvania, South Carolina, Tennessee, Texas, Virginia, West Virginia, and Washington, D.C.

In 2023, Capella University had such approval in Minnesota, and because all of its programs are online only, this approval allows it to extend VA education benefits to students in all states and abroad.

In 2023, Strayer University had such approval in Alabama, Arkansas, Delaware, Florida, Georgia, Maryland, Mississippi, New Jersey, North Carolina, Pennsylvania, South Carolina, Tennessee, Texas, Virginia, West Virginia, and Washington, D.C.

In certain circumstances, state approving agencies may require an institution to obtain approval for a change in ownership and control.

If Strayer University or Capella University underwent a change of control that required approval by any state authority, accrediting agency, or any federal agency, and such approval were significantly delayed, limited, or denied, there could be a material adverse effect on the University’s ability to offer certain educational programs, award certain degrees, diplomas, or certificates, operate one or more of its locations, admit certain students, or participate in Title IV programs, which in turn, could materially and adversely affect the University’s operations.

A change that required approval by a state regulatory authority, an accrediting agency, or a federal agency could also delay the University’s ability to establish new campuses or educational programs and may have other adverse regulatory effects.

If Capella University or Strayer University underwent a change of control that required approval by any state authority, accrediting agency, or any federal agency, and such approval were significantly delayed, limited, or denied, there could be a material adverse effect on the University’s ability to offer certain educational programs, award certain degrees, diplomas, or certificates, operate one or more of its locations, admit certain students, or participate in Title IV programs, which in turn, could materially and adversely affect the University’s operations.

A change that required approval by a state regulatory authority, an

accrediting agency, or a federal agency could also delay the University’s ability to establish new campuses or educational programs and may have other adverse regulatory effects.

Furthermore, the suspension from Title IV programs and the necessity of obtaining regulatory approvals in connection with a change of control could materially limit the University’s flexibility in future financing or acquisition transactions.

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Congress reviews and determines appropriations for Title IV programs on an annual basis.

On February 18, 2022, the President signed the “Further Additional Extending Government Funding Act,” which provides fiscal year 2022 appropriations to Federal agencies through March 11, 2022.

On January 19, 2024, the President signed the “Further Additional Continuing Appropriations and Other Extensions Act, 2024,” which provides staggered fiscal year 2024 appropriations to Federal agencies through March 1, 2024 for some Departments and March 8, 2024 for others, including the Department of Education.

A future government shutdown, particularly one that includes the Department of Education or appropriations for Title IV programs, could have a material adverse effect on our operations and financial condition.

An elimination of certain Title IV programs, a reduction in federal funding levels of such programs, material changes in the requirements for participation in such programs, or the substitution of materially different programs could reduce the ability of certain students to finance their education.

Such reductions, in turn, could lead to lower enrollments at Strayer University or Capella University or require us to increase our reliance upon alternative sources of student financial aid.

Given the significant percentage of our revenues that are derived indirectly from Title IV programs, the loss of, or a significant reduction in, Title IV program funds available to our students could have a material adverse effect on Strayer University, Capella University, and the Company.

Such reductions, in turn, could lead to lower enrollments at Capella University or Strayer University or require us to increase our reliance upon alternative sources of student financial aid.

Given the significant percentage of our revenues that are derived indirectly from Title IV programs, the loss of, or a significant reduction in, Title IV program funds available to our students could have a material adverse effect on Capella University, Strayer University, and the Company.

Consumer Financial Protection Bureau

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Department of Education

Title IV regulations applicable to Strayer University and Capella University have been subject to frequent revisions, many of which have increased the level of scrutiny to which higher education institutions are subjected and have raised applicable standards.

Title IV regulations applicable to Capella University and Strayer University have been subject to frequent revisions, many of which have increased the level of scrutiny to which higher education institutions are subjected and have raised applicable standards.

Current Federal Rulemaking

On August 10, 2021, the Department announced its intention to establish the Affordability and Student Loans committee, to prepare proposed regulations to address the following topics:

borrower defense to repayment, misrepresentation, closed

school discharges, discharges for borrowers with a total and permanent disability, discharges for false certification of student eligibility, loan repayment plans, interest capitalization, mandatory pre-dispute arbitration and prohibition of class action lawsuits provisions in institutions’ enrollment agreements and associated counseling about such arrangements, Pell Grant eligibility or prison education programs, and the Public Service Loan Forgiveness program.

borrower defense to repayment, misrepresentation, closed school discharges, discharges for borrowers with a total and permanent disability, discharges for false certification of student eligibility, loan repayment plans, interest capitalization, mandatory pre-dispute arbitration and prohibition of class action lawsuits provisions in institutions’ enrollment agreements and associated counseling about such arrangements, Pell Grant eligibility or prison education programs, and the Public Service Loan Forgiveness program.

The Department also announced the formation of a Prison Education Program Subcommittee.

Negotiations occurred in October-December 2021, with negotiators reaching consensus on total and permanent disability discharge, eliminating interest capitalization for nonstatutory capitalization events, false certification discharge and Pell Grant eligibility for prison education programs.

Negotiations occurred in October-December 2021, with negotiators reaching consensus on total and permanent disability discharge, eliminating interest capitalization for non-statutory capitalization events, false certification discharge and Pell Grant eligibility for prison education programs.

The committee did not reach consensus on the remainder of the topics.

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and a discretionary trigger for when institutions close most or all on-ground locations but maintain an online presence.

The Department also proposed as part of the negotiated rulemaking process the reestablishment of gainful employment regulations, which would apply to all programs (including non-degree programs) at proprietary institutions and non-degree programs at public and private nonprofit institutions.

Among other items, the Department proposed to use the first four digits of the CIP (Classification of Instructional Program) code to identify gainful employment programs;

to remove the “zone” concept pertaining to debt-to-earnings rates;

and to establish that a program would fail the debt-to-earnings rate measure if, among other measures, its debt-to-earnings rate is greater than 8 percent and its discretionary earnings rate is greater than 20 percent.

The Department also proposed including Parent PLUS loans when determining student debt load, and included a new “earnings threshold” measure comparing the median annual earnings for students who completed the program to the median earnings for a working adult aged 25-34 with only a high school diploma in the state in which the institution is located (or nationally based on the percentage of students located in the same state as the institution).

The Department’s proposal would deem a program ineligible for Title IV funding if the program failed either metric (debt-to-earnings or earnings threshold) two out of three consecutive years.

Among other topics, the Department proposed a number of additional changes to regulations regarding administrative capability, change of control and certification issues, none of which reached consensus.

In June 2022, the Department indicated its intention to publish proposed rules regarding gainful employment, ability to benefit, financial responsibility, administrative capability, and certification procedures in April 2023.

In January 2023, the

Department indicated its intention to establish one or more negotiated rulemaking committees in 2023 to consider new proposed 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.

On September 27, 2023, the Department released final regulations on financial value transparency and gainful employment, which are largely consistent with the proposed rule.

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

calculated would lose its access to federal financial aid.

The final gainful employment regulations will take effect July 1, 2024.

The Department has indicated that it will release metrics beginning in the 2025 financial aid award year.

Beginning July 1, 2026, if a program fails a metric, an institution must provide warnings to students and prospective students meeting certain minimum requirements to be specified by the Department;

programs that fail the same metric in the first two years the rates are issued will lose eligibility in 2026.

On October 23, 2023, the Department released final rules on financial responsibility, administrative capability, certification procedures, and ability to benefit.

The Department’s final rules regarding financial responsibility establish new mandatory triggers—including but not limited to failing 90/10, receiving at least 50% of funds from programs that are failing gainful employment, or being subject to a Department action to recover losses from approved Borrower Defense to Repayment claims that would cause a recalculated composite score to fall below 1.0—that 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 rules also establish new discretionary triggers that will result in the Department conducting case-by-case analysis to see if additional protection is needed.

In general, institutions will be required to report triggering events within 21 days of occurrence.

Under the final administrative capability rule, institutions will be required to, among other things, offer adequate services to students, including financial aid counseling and career services support.

The final language also includes a new requirement that institutions provide students with geographically accessible clinical or externship opportunities as required for licensure and that at least half of an institution’s total Title IV, HEA funds from the most recent award year must not be from programs that are “failing” under the Gainful Employment Rules.

In final rules regarding certification procedures, the Department indicates, among other things, that it will consider withdrawal rates, gainful employment rates, licensure passage rates, and instructional and advertising spend when making institutional eligibility determinations.

The regulation also provides the Secretary authority to require institutions to submit all marketing materials in cases where the institution is provisionally certified and is found to have engaged in substantial misrepresentation, aggressive recruitment, or a failure to comply with incentive compensation rules.

The final regulation also makes changes regarding licensure-track programs, including preventing an institution from offering Title IV aid to a student enrolled in a program that does not meet educational prerequisites for licensure in the state in which the student is located.

The Department’s final regulation also requires institutions to comply with all State laws related to closure, including record retention, teach-out plans or agreements and tuition recovery funds or surety bonds for each state in which the institution is located and in each state in which students enrolled by the institution in distance education courses are located.

Beginning January 2023, the Department convened a negotiated rulemaking committee to consider new proposed regulations on distance education, cash management, return of federal funds, state authorization, accreditation and related issues, and TRIO programs.

We cannot predict the outcome of the negotiated rulemaking process.

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The Department of Education also posts lists of the top 10% of institutions in each of the four categories with lowest tuition and fees or the lowest net price for the most recent academic year.

Under the Higher Education Act, net price means average yearly price actually charged to first-time, full-time undergraduate students who receive student aid at a higher education institution after such aid is deducted.

Under the Higher Education Act, net price means average yearly price actually charged to first-time, full-time undergraduate students who receive

student aid at a higher education institution after such aid is deducted.

On January 11, 2023, the Department published a request for information regarding how to best identify low-financial-value educational programs.

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The Department has indicated its intention to publish draft FERPA rules in April 2023 that would update, clarify, and improve the current regulations by addressing outstanding policy issues and implementing statutory amendments.

Institutions that participate in Title IV also agree to comply with the Gramm-Leach-Bliley Act Safeguards Rule.

On June 9, 2023, amendments to the Safeguards Rule took effect, which updated certain definitions and amended certain requirements.

Recently, legislatures in a number of states have sought to enact privacy bills.

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Torrens is also registered with ASQA as an RTO and is thus entitled to offer vocational and training courses.

Torrens is currently undergoing an ordinary course re-registration process with TEQSA.

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

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The information on our website is not incorporated by reference in this Annual Report on Form 10-K and our web address is included as an inactive textual reference only.

We make available free of charge on our website our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC.

We make available free of charge on our website our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K,

and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC.

The SEC maintains a website that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC;

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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-K

Item 1. Business