What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2026-02-27 compared with 2025-02-27 · 382 added, 303 removed, 1169 unchanged (37% of the section changed)

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Strategic Education, Inc.

Report of Independent Registered Public Accounting Firm (PCAOB ID:

Report of Deloitte & Touche LLP, Independent Registered Public Accounting Firm (PCAOB ID:

Report of Pricewaterhouse Coopers LLP, Independent Registered Public Accounting Firm (PCAOB ID:

Consolidated Balance Sheets as of December 31, 202 4 and 202 5

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the stockholders and the Board of Directors of Strategic Education, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheet of Strategic Education, Inc.

and subsidiaries (the “Company”) as of December 31, 2025, the related consolidated statements of income, comprehensive income, stockholders’ equity, and cash flows, for the year then ended, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025, and the results of its operations and its cash flows for the year ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 27, 2026, expressed an unqualified opinion on the Company’s internal control over financial reporting.

Basis for Opinion

These financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s financial statements based on our audits.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Learn and Earn Scholarship Liability related to Undergraduate Degree Programs — Refer to Note 3 to the financial statements

Critical Audit Matter Description

The Company offers the Learn and Earn Scholarship (formerly known as the Graduation Fund), which allows undergraduate students to earn tuition credits that are redeemable in the final year of a student’s course of study if he or she successfully remains in the program.

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

The Company defers the value of the related performance obligation associated with the credits estimated to be redeemed in the future based on the underlying revenue transactions that result in progress by the student toward earning the benefit.

The Company’s estimate of the benefits that will be redeemed in the future is based on its historical experience of student persistence toward completion of a course of study within this program and similar programs.

The portion of the Learn and Earn Scholarship liability balance related to students enrolled in undergraduate degree programs was $ 37.8 million as of December 31, 2025.

We identified the Learn and Earn Scholarship liability as a critical audit matter because estimating credits to be redeemed in the future involves significant estimation by management using a high volume of historical information.

This required an increased audit effort due to the volume of historical information when performing audit procedures to evaluate whether the Learn and Earn Scholarship liability was appropriately recorded as of December 31, 2025.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the Learn and Earn Scholarship liability for undergraduate degree programs included the following, among others:

• We tested the effectiveness of controls over management’s estimation of the Learn and Earn Scholarship liability for undergraduate degree programs, including those related to management’s methodology and the deferred value of credits estimated to be redeemed in the future.

• We evaluated the appropriateness of the methodology used by management to determine the Learn and Earn Scholarship liability for undergraduate degree programs.

• We tested the completeness and accuracy of the underlying information used to determine the Learn and Earn Scholarship liability for undergraduate degree programs.

• We recalculated the deferred value of credits estimated to be redeemed in the future used to determine the Learn and Earn Scholarship liability for undergraduate degree programs.

/s/ Deloitte & Touche LLP

McLean, Virginia

February 27, 2026

We have served as the Company’s auditor since 2025.

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of Strategic Education, Inc.

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheets of Strategic Education, Inc.

and its subsidiaries (the “Company”) as of December 31, 2024 and 2023, and the related consolidated statements of income, of comprehensive income, of stockholders’ equity and of cash flows for each of the three years in the period ended December 31, 2024, including the related notes (collectively referred to as the “consolidated financial statements”).

We also have audited the Company's internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024 in conformity with accounting principles generally accepted in the United States of America.

Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

Basis for Opinions

The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Report on Internal Control over Financial Reporting appearing under Item 9A.

Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits.

Opinion on the Financial Statements

We have audited the consolidated balance sheet of Strategic Education, Inc.

and its subsidiaries (the “Company”) as of December 31, 2024, and the related consolidated statements of income, of comprehensive income, of stockholders’ equity and of cash flows for each of the two years in the period ended December 31, 2024, including the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2024 in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

We conducted our audits of these consolidated financial statements in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.

Our audits also included performing such other procedures as we considered necessary in the circumstances.

We believe that our audits provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that (i) relate to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Goodwill Impairment Assessment – Australia/New Zealand (ANZ) Reporting Unit

As described in Note 9 to the consolidated financial statements, the Company’s consolidated goodwill balance was $1,206.9 million as of December 31, 2024, of which $474.8 million relates to the ANZ reporting unit.

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

In 2024, the Company elected to bypass a qualitative annual impairment assessment for goodwill assigned to the ANZ reporting unit and proceeded directly to a quantitative impairment assessment using the first day of the fourth quarter of 2024 as the assessment date.

Management used an income-based approach which consisted of a discounted cash flow model to determine the fair value of the ANZ reporting unit.

The assumptions and estimates used in determining the estimated fair value of the ANZ reporting unit include, but are not limited to, the amounts and timing of expected future cash flows, revenue growth, operating margins, the discount rate, and the terminal growth rate.

The principal considerations for our determination that performing procedures relating to the goodwill impairment assessment of the ANZ reporting unit is a critical audit matter are (i) the significant judgment by management when developing the fair value estimate of the ANZ reporting unit;

(ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumptions related to revenue growth, operating margins, the discount rate, and the terminal growth rate;

and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included testing the effectiveness of controls relating to management’s goodwill impairment assessment, including controls over the valuation of the ANZ reporting unit.

These procedures also included, among others (i) testing management’s process for developing the fair value estimate of the ANZ reporting unit;

(ii) evaluating the appropriateness of the discounted cash flow model used by management;

(iii) testing the completeness and accuracy of the underlying data used in the discounted cash flow model;

and (iv) evaluating the reasonableness of the significant assumptions used by management related to revenue growth, operating margins, the discount rate, and the terminal growth rate.

Evaluating management’s assumptions related to revenue growth and operating margins involved evaluating whether the assumptions used by management were reasonable considering (i) the current and past performance of the ANZ reporting unit;

(ii) the consistency with external market and industry data;

and (iii) whether these assumptions were consistent with evidence obtained in other areas of the audit.

Professionals with specialized skill and knowledge were used to assist in evaluating (i) the appropriateness of the discounted cash flow model and (ii) the reasonableness of the discount rate and terminal growth rate assumptions.

Strayer University Graduation Fund Liability – Undergraduate Degree Programs

As described in Note 3 to the consolidated financial statements, the Company’s consolidated Strayer University Graduation Fund liability was $37.1 million as of December 31, 2024, of which $35.3 million related to students enrolled in undergraduate degree programs.

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

The Company defers the value of the related performance obligation associated with the credits estimated to be redeemed in the future.

Management’s estimate of the benefits that will be redeemed in the future is based on the Company’s historical experience of student persistence toward completion of a course of study within this program and similar programs.

The principal considerations for our determination that performing procedures relating to the Strayer University graduation fund liability for undergraduate degree programs is a critical audit matter are a high degree of auditor effort in performing procedures and evaluating audit evidence related to the liability.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included testing the effectiveness of controls relating to the determination of the Strayer University graduation fund liability for undergraduate degree programs.

These procedures also included, among others (i) evaluating the appropriateness of the methodology used by management to determine the Strayer

University graduation fund liability for undergraduate degree programs;

(ii) recalculating the Strayer University graduation fund liability for undergraduate degree programs;

and (iii) testing the completeness and accuracy of the underlying data used in determining the Strayer University graduation fund liability for undergraduate degree programs by testing, on a sample basis, certain underlying data related to current and historical students.

We believe that our audits provide a reasonable basis for our opinion.

/s/ PricewaterhouseCoopers LLP

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February 27, 2025

We have served as the Company’s auditor since 1993.

We served as the Company’s auditor from 1993 to 2024.

STRATEGIC EDUCATION, INC.

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Tuition receivable, net 76,127 78,202

Income taxes receivable — 2,511

Other current assets 44,793 49,090

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Marketable securities, non-current 14,981 5,000

Intangible assets, net 251,623 245,098

Intangible assets 245,098 249,243

Goodwill 1,206,883 1,242,413

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Total current liabilities 216,460 217,943

Long-term debt 61,400 —

Deferred income tax liabilities 27,586 35,835

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Income from operations 95,321 155,628 174,231

Other income (expense) ( 1,191 ) 5,405 5,804

Other income 5,405 5,804 3,162

Income before income taxes 100,726 161,432 177,393

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Foreign currency translation adjustment — — — — 533 533

Unrealized losses on marketable securities, net of tax — — — — ( 846 ) ( 846 )

Unrealized gains on marketable securities, net of tax — — — — 288 288

Net income — — — 69,791 — 69,791

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Foreign currency translation adjustment — — — — 42,669 42,669

Unrealized gains on marketable securities, net of tax — — — — 246 246

Unrealized losses on marketable securities, net of tax — — — — ( 219 ) ( 219 )

Net income — — — 126,614 — 126,614

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

Gain on early termination of operating leases, net ( 1,187 ) ( 141 ) ( 6,166 )

Gain on early termination of operating leases ( 141 ) ( 6,166 ) ( 2,196 )

Amortization of deferred financing costs 557 674 425

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Cash paid for acquisition, net of cash acquired ( 530 ) ( 177 ) ( 36 )

Net cash used in investing activities ( 31,360 ) ( 48,545 ) ( 64,360 )

Net cash provided by (used in) investing activities ( 48,545 ) ( 64,360 ) 8,506

Cash flows from financing activities:

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Effect of exchange rate changes on cash, cash equivalents, and restricted cash ( 496 ) ( 3,468 ) 2,306

Net decrease in cash, cash equivalents, and restricted cash ( 51,758 ) ( 45,529 ) ( 35,269 )

Net increase (decrease) in cash, cash equivalents, and restricted cash ( 45,529 ) ( 35,269 ) 2,855

Cash, cash equivalents, and restricted cash — beginning of period 227,454 181,925 146,656

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Higher Education (“USHE”), which is primarily comprised of Capella University and Strayer University and is focused on providing flexible and affordable certificate and degree programs to working adults;

(2) Education Technology Services, which primarily develops and maintains relationships with employers to build employee education benefits programs that provide employees access to affordable and industry-relevant training, certificate, and degree programs;

and (3) Australia/New Zealand, which through Torrens University and associated assets, provides certificate and degree programs in Australia and New Zealand.

(2) Education Technology Services (“ETS”), which primarily develops and maintains relationships with employers to build education benefits programs that provide employees access to affordable and industry-relevant training, certificate, and degree programs, including through Workforce Edge, a full-service education benefits administration solution for employers, and Sophia Learning, which offers low-cost online general education-level courses;

and (3) Australia/New Zealand (“ANZ”), which through Torrens University and associated assets, provides certificate and degree programs in Australia and New Zealand.

The Company’s reportable segments are discussed further in Note 20.

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

Certain amounts in the prior periods have been reclassified to conform to the current period’s presentation.

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

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Amortization of intangible assets consists of amortization and depreciation expense related to intangible assets and software assets acquired through the Company’s acquisition of Torrens University and associated assets in Australia and New Zealand (“ANZ”).

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

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

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

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

See Note 4 for additional information.

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

For any transaction that is in a currency different from the entity’s functional currency, the Company records a net gain or loss based on the difference between the exchange rate at the transaction date and the exchange rate at the transaction settlement

date (or rate at period end, if unsettled) in the consolidated statements of income.

Cash and Cash Equivalents

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higher education institution during the academic term.

The Company had approximately $ 1.8 million of these unpaid obligations as of December 31, 2023 and 2024.

The Company had approximately $ 1.8 million and $ 0.3 million of these unpaid obligations as of December 31, 2024 and 2025, respectively.

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

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treasury securities, and corporate debt securities, which are carried at amortized cost.

The Company’s available-for-sale marketable securities consist of tax-exempt municipal securities and corporate debt securities, which are carried at fair value as determined by quoted market prices or other inputs either directly or indirectly observable in the marketplace for identical or similar assets, with unrealized gains and losses, net of tax, recognized as a component of accumulated other comprehensive income (loss) within stockholders’ equity.

The Company’s available-for-sale marketable securities consisted of corporate debt securities, which were carried at fair value as determined by quoted market prices or other inputs either directly or indirectly observable in the marketplace for identical or similar assets, with unrealized gains and losses, net of tax, recognized as a component of accumulated other comprehensive income (loss) within stockholders’ equity.

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

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

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

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

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

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The cost of securities sold is based on the specific identification method.

Amortization of premiums, accretion of discounts, interest, dividend income and realized gains and losses are included in other income (loss).

Amortization of premiums, accretion of discounts, interest, dividend income and realized gains and losses are included in other income.

The contractual maturity date of available-for-sale securities is based on the days remaining to the effective maturity.

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An allowance for credit losses is established based upon historical collection rates by age of receivable and adjusted for reasonable expectations of future collection performance, net of estimated recoveries.

These collection rates incorporate historical performance based on a student’s current enrollment status, likelihood of future enrollment, degree mix trends and changes in the overall economic environment.

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

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Depreciation and amortization expense of property and equipment was $ 48.4 million, $ 44.4 million and $ 48.4 million for the years ended December 31, 2023, 2024, and 2025, respectively.

Included in the 2022 and 2023 depreciation and amortization expense amount is $ 3.2 million and $ 2.6 million of depreciation expense,

respectively, related to content acquired in the ANZ acquisition, which is included in Amortization of intangible assets on the consolidated statements of income.

Included in the 2023 depreciation and amortization expense amount is $ 2.6 million of depreciation expense related to content acquired in the ANZ acquisition, which is included in Amortization of intangible assets on the consolidated statements of income.

Repairs and maintenance costs are expensed as incurred.

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

The Company sold one owned U.S.

Higher Education campus in both 2022 and 2023.

The Company sold the long-lived assets, consisting of land, buildings, and building improvements, related to these owned campuses and recognized a $ 2.9 million and $ 2.1 million gain on sale during the years ended December 31, 2022 and 2023, respectively, which is included in Restructuring costs on the consolidated statements of income.

Construction in progress includes costs of computer software developed for internal use, which is accounted for in accordance with ASC 350-40, Internal-Use Software .

In recent years, the Company has evaluated its owned and leased real estate portfolio to identify underutilized facilities to either downsize or exit.

As a result of this evaluation, the Company sold one owned U.S.

Higher Education campus in 2023 and one in 2025.

The Company sold the related long-lived assets, consisting of land, buildings, and building improvements, and recognized a $ 2.1 million gain on sale during the year ended December 31, 2023 and a $ 0.3 million loss on sale during the year ended December 31, 2025.

These amounts are included in Restructuring costs on the consolidated statements of income.

Property and equipment includes costs of computer software developed for internal use, which is accounted for in accordance with ASC 350-40, Internal-Use Software .

Computer software development costs that are incurred in the preliminary project stage are expensed as incurred.

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The Company’s assets and liabilities that are subject to fair value measurement are categorized in one of the three levels above.

Fair values are based on the inputs available at the measurement dates, and may rely on certain assumptions that may

affect the valuation of fair value for certain assets or liabilities.

Fair values are based on the inputs available at the measurement dates, and may rely on certain assumptions that may affect the valuation of fair value for certain assets or liabilities.

Goodwill and Intangible Assets

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If the carrying value of the net assets of the reporting unit exceeds the fair value of the reporting unit, an impairment loss is recognized to the extent the fair value of the reporting unit is less than the carrying value of the reporting unit’s net assets.

Finite-lived intangible assets that are acquired in business combinations are recorded at fair value on their acquisition dates and are amortized on a straight-line basis over the estimated useful life of the asset.

Finite-lived intangible assets consist of student relationships.

Finite-lived intangible assets acquired in business combinations are recorded at fair value on their acquisition dates and are amortized on a straight-line basis over the estimated useful life of the asset.

The Company reviews its finite-lived intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

If such assets are not recoverable, a potential impairment loss is recognized to the extent the carrying amount of the assets exceeds the fair value of the assets.

Finite-lived intangible assets consisted of student relationships, which were all fully amortized by the end of 2023.

Authorized Stock

The Company has authorized 32,000,000 shares of common stock, par value $ 0.01 , of which 24,502,385 and 22,968,860 shares were issued and outstanding as of December 31, 2024 and 2025, respectively.

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

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

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

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Stock-Based Compensation

In accordance with ASC 718, Stock Compensation , the Company measures and recognizes compensation expense for all share-based payment awards made to employees and directors, including employee stock options, restricted stock, restricted stock units, performance stock units, and employee stock purchases related to the Company’s Employee Stock Purchase Plan, based on estimated fair values.

based on estimated fair values.

The fair value of restricted stock awards granted is measured using the fair value of the Company’s common stock on the date of grant or the most recent modification date, whichever is later.

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Comprehensive Income

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

As of December 31, 2022, 2023, and 2024, the balance of accumulated other comprehensive loss was $ 35.1 million, net of tax of $ 0.1 million, $ 34.2 million, net of tax of $ 0.1 million, and $ 88.6 million, net of tax of $ 0.1 million, respectively.

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

As of December 31, 2023, 2024, and 2025, the balance of accumulated other comprehensive loss was $ 34.2 million, net of tax of $ 0.1 million, $ 88.6 million, net of tax of $ 0.1 million, and $ 46.1 million, respectively.

There were no reclassifications out of accumulated other comprehensive income (loss) to net income for the years ended December 31, 2023 and 2024.

During the year ended December 31, 2025, approximately $ 0.2 million, net of tax of $ 0.1 million, of unrealized gains (losses) on marketable securities was reclassified out of accumulated other comprehensive income (loss) to Other income on the consolidated statements of income.

The Company provides for deferred income taxes based on temporary differences between financial statement and income tax bases of assets and liabilities using enacted tax rates in effect in the year in which the differences are expected to reverse.

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Uncertain tax positions are recognized when a tax position, based solely on its technical merits, is determined more likely than not to be sustained upon examination.

Upon determination, uncertain tax positions are measured to determine the amount of benefit that is greater than 50% likely to be realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information.

Upon determination, uncertain tax positions are measured to determine the amount of benefit that is greater than 50% likely to be realized upon ultimate settlement with a taxing authority

that has full knowledge of all relevant information.

A tax position is derecognized if it no longer meets the more likely than not threshold of being sustained.

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In December 2021, the Organization for Economic Cooperation and Development (“OECD”) introduced Pillar Two Model Rules to establish a global minimum tax rate of 15% on a per-country basis.

Countries where the Company operates, such as

Australia and New Zealand, have enacted domestic legislation to implement these global corporate minimum tax rules for fiscal years beginning after January 1, 2024, and January 1, 2025, respectively.

Countries where the Company operates, such as Australia and New Zealand, have enacted domestic legislation to implement these global corporate minimum tax rules for fiscal years beginning after January 1, 2024, and January 1, 2025, respectively.

The Company has evaluated the impact of the OECD’s Pillar Two framework on its financial statements and determined that Pillar Two did not have a material impact on its 2025 financial statements.

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Recently Adopted Accounting Pronouncements

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07 , Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures (“ASU 2023-07”), which requires disclosure of significant segment expenses that are regularly provided to the Chief Operating Decision Maker (“CODM”) and included within each reported measure of segment profit or loss.

The standard also requires disclosure of the title and position of the individual identified as the CODM and an explanation of how the CODM uses the reported measures of segment profit or loss in assessing segment performance and deciding how to allocate resources.

Additionally, ASU 2023-07 requires all segment disclosures to be provided on an annual and interim basis.

The Company adopted ASU 2023-07 for its annual reporting period ended on December 31, 2024 and applied the amendments retrospectively.

See Note 20 for the required segment disclosures.

Recently Issued Accounting Standards Not Yet Adopted

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures (“ASU 2023-09”), which requires disclosure of specific categories in the effective tax rate reconciliation.

Further, the standard requires certain disclosures of state versus federal income tax expense and taxes paid.

ASU 2023-09 is effective for fiscal years beginning after December 15, 2024.

Early adoption is permitted and the amendments should be applied on a prospective basis although retrospective application is permitted.

The Company is currently evaluating the impact that ASU 2023-09 will have on its consolidated financial statement disclosures.

The Company adopted ASU 2023-09 for its annual reporting period ended on December 31, 2025 and applied the amendments prospectively.

See Note 19 for the required income tax disclosures.

Recently Issued Accounting Standards Not Yet Adopted

In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40):

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The Company is currently evaluating the impact that ASU 2024-03 will have on its consolidated financial statement disclosures.

In September 2025, the FASB issued ASU 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40):

Targeted Improvements to the Accounting for Internal-Use Software (“ASU 2025-06”).

ASU 2025-06 eliminates the existing guidance that categorizes software development into distinct project stages and replaces it with a recognition threshold based on management’s authorization and commitment to fund the project, along with the probability of completion and intended use.

ASU 2025-06 is effective for fiscal years beginning after December 15, 2027, and for interim periods within those annual periods.

Early adoption is permitted, and the amendments can be applied prospectively or retrospectively.

The Company is currently evaluating the impact that ASU 2025-06 will have on its consolidated financial statements and related disclosures.

Other ASUs recently issued by the FASB but not yet effective are not expected to have a material effect on the Company’s consolidated financial statements.

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Tuition revenue is deferred and recognized ratably over the period of instruction, which varies depending on the course format and chosen program of study.

Capella University’s GuidedPath classes and

Strayer University’s educational programs typically are offered on a quarterly basis, and such periods coincide with the Company’s quarterly financial reporting periods, while Capella University’s FlexPath courses are delivered over a twelve-week subscription period.

Capella University’s GuidedPath classes and Strayer University’s educational programs typically are offered on a quarterly basis, and such periods coincide with the Company’s quarterly financial reporting periods, while Capella University’s FlexPath courses are delivered over a twelve-week subscription period.

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

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(1) Other revenue is primarily comprised of academic fees, sales of course materials, placement fees and other non-tuition revenue streams.

(2) Education Technology Services revenue is primarily derived from tuition revenue.

(2) Education Technology Services revenue is primarily derived from tuition revenue and administrative fees.

Revenues are recognized when control of the promised goods or services is transferred to customers in an amount that reflects the consideration the Company expects to be entitled to receive in exchange for those goods and services.

The Company applies the five-step revenue model under ASC 606 to determine when revenue is earned and recognized.

The Company applies the five-step revenue model under ASC 606, Revenue Recognition (“ASC 606”) to determine when revenue is earned and recognized.

Arrangements with students may have multiple performance obligations.

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Revenues also include certain academic fees recognized within the quarter of instruction, and certificate revenue and licensing revenue, which are recognized as the services are provided.

Contract Liabilities - Graduation Fund

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

Contract Liabilities – Learn and Earn Scholarship

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

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

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

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

Revenue from students participating in the Graduation Fund is recorded in accordance with ASC 606.

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

Revenue from students participating in the Learn and Earn Scholarship is recorded in accordance with ASC 606.

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The remainder is expected to be redeemed within two to four years .

The table below presents activity in the contract liability related to the Graduation Fund for the years ended December 31, 2023 and 2024 (in thousands):

The table below presents activity in the contract liability related to the Learn and Earn Scholarship for the years ended December 31, 2024 and 2025 (in thousands):

December 31, 2024 December 31, 2025

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Balance at end of period $ 37,118 $ 38,125

The portion of the Graduation Fund balance related to students enrolled in undergraduate degree programs was $ 40.6 million and $ 35.3 million as of December 31, 2023 and 2024, respectively.

The remaining Graduation Fund balance related to students enrolled in master’s degree programs.

The portion of the Learn and Earn Scholarship balance related to students enrolled in undergraduate degree programs was $ 35.3 million and $ 37.8 million as of December 31, 2024 and 2025, respectively.

The remaining Learn and Earn Scholarship balance related to students enrolled in master’s degree programs.

Contract Liabilities – Tuition Cap

Students in certain programs at Capella University and Strayer University may be eligible for tuition cap pricing, wherein their tuition is waived once the student has reached the designated dollar cap threshold for their program.

Students in certain programs at Capella University may be eligible for tuition cap pricing, wherein their tuition is waived once the student has reached the designated dollar cap threshold for their program.

The Company defers the value of the related performance obligation associated with this tuition benefit estimated to be redeemed in the future based on the underlying revenue transactions that result in progress by the student towards reaching the tuition cap.

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The amount estimated to be redeemed in the next 12 months is $ 7.4 million and is included as a current contract liability in the consolidated balance sheets.

Unbilled Receivables – Student Tuition

Academic materials may be shipped to certain new undergraduate students in advance of the term of enrollment.

Under ASC 606, the materials represent a performance obligation to which the Company allocates revenue based on the fair value of the materials relative to the total fair value of all performance obligations in the arrangement with the student.

When control of the materials passes to the student in advance of the term of enrollment, an unbilled receivable and related revenue are recorded.

Costs to Obtain a Contract

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

During the years ended December 31, 2023 and 2024, the Company incurred $ 12.0 million and $ 4.9 million, respectively, of severance and other employee separation charges related to the elimination of certain positions.

During the years ended December 31, 2023, 2024, and 2025, the Company incurred $ 12.0 million, $ 4.9 million and $ 13.3 million, respectively, of severance and other employee separation charges related to the elimination of certain positions.

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

The following details the changes in the Company’s severance and other employee separation costs restructuring liabilities for the year ended December 31, 2024 (in thousands):

The following details the changes in the Company’s severance and other employee separation costs restructuring liabilities for the years ended December 31, 2023, 2024, and 2025 (in thousands):

Severance Restructuring Liability

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Balance as of December 31, 2024 (1)

Restructuring and other charges 13,326

Payments ( 13,000 )

Balance as of December 31, 2025 (1)

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The Company evaluates its owned and leased real estate portfolio on an ongoing basis, which has resulted in the consolidation and sale of underutilized facilities.

During the years ended December 31, 2022, 2023, and 2024, the Company recorded right-of-use lease asset charges of approximately $ 1.2 million, $ 5.1 million, and $ 0.7 million, respectively, related to facilities that were consolidated during the period.

During the years ended December 31, 2023, 2024, and 2025, the Company recorded right-of-use lease asset impairment charges of approximately $ 5.1 million, $ 0.7 million, and $ 4.7 million, respectively, related to facilities that were consolidated during the period.

The Company also recorded fixed asset impairment charges of approximately $ 0.4 million, $ 0.2 million and $ 2.6 million during the years ended December 31, 2023, 2024, and 2025, respectively.

The Company recorded net benefits related to the early termination and related extinguishment of lease liabilities of approximately $ 1.2 million, $ 0.1 million and $ 6.2 million during the years ended December 31, 2022, 2023, and 2024, respectively.

During the years ended December 31, 2022 and 2023 the Company recorded gains from the sale of property and equipment of owned campuses that were previously closed of approximately $ 2.9 million and $ 2.1 million, respectively.

These right-of-use lease asset and fixed asset impairment charges, net benefits from early lease terminations, and gains on the sale of property and equipment are included in Restructuring costs on the consolidated statements of income.

In the third quarter of 2020, the Company began implementing a restructuring plan in an effort to reduce the ongoing operating costs of the Company to align with changes in enrollment following the COVID-19 pandemic.

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

The following details the changes in the Company’s severance and other employee separation costs restructuring liabilities related to the 2020 Restructuring Plan for the year ended December 31, 2022 (in thousands):

Restructuring Plan

Balance at December 31, 2021 $ 1,612

Restructuring and other charges 1,241

Payments ( 2,853 )

Balance at December 31, 2022 —

The final severance payments under the 2020 Restructuring Plan were made in the third quarter of 2022.

The Company recorded net benefits related to the early termination of leases of approximately $ 0.1 million, $ 6.2 million and $ 0.4 million during the years ended December 31, 2023, 2024, and 2025, respectively.

These net benefits reflect the reduction of the lease liability for payments that will no longer be required and the corresponding adjustment to the related right‑of‑use asset, if any, net of cash payments made in connection with the early termination.

During the year ended December 31, 2023, the Company recorded a $ 2.1 million gain from the sale of property and equipment at an owned campus, and during the year ended December 31, 2025, the Company recorded a $ 0.3 million loss related to the sale of property and equipment at its last remaining owned campus.

These right-of-use lease asset impairments, fixed asset impairments, net benefits from early lease terminations, and gains and losses on the sale of property and equipment are included in Restructuring costs on the consolidated statements of income.

Marketable Securities

The following is a summary of available-for-sale securities, which are carried at fair value, as of December 31, 2023 and 2024 (in thousands):

The following is a summary of available-for-sale securities, which are carried at fair value, as of December 31, 2024 (in thousands):

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

Balance as of December 31, 2024

Tax-exempt municipal securities $ 10,055 $ 2 $ ( 144 ) $ 9,913

Corporate debt securities $ 500 $ — $ ( 1 ) $ 499

Total $ 500 $ — $ ( 1 ) $ 499

Balance as of December 31, 2024

Corporate debt securities $ 500 $ — $ ( 1 ) $ 499

Total $ 500 $ — $ ( 1 ) $ 499

The Company did not have any marketable securities classified as available-for-sale as of December 31, 2025.

The following is a summary of held-to-maturity securities, which are carried at amortized cost, as of December 31, 2024 and 2025 (in thousands):

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Term deposits $ 21,653 $ — $ — $ 21,653

treasury securities 19,778 18 — 19,796

Corporate debt securities 20,000 — ( 26 ) 19,974

Total $ 61,431 $ 18 $ ( 26 ) $ 61,423

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The unrealized gains and losses on the Company’s investments in marketable securities as of December 31, 2024 and 2025 were caused by changes in market values primarily due to interest rate changes.

As of December 31, 2024, the fair value of the Company’s securities which were in an unrealized loss position for a period longer than twelve months was $ 0.5 million.

As of December 31, 2025, there were no securities which were in an unrealized loss position for a period longer than twelve months.

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

As such, no impairment charges were recorded during the years ended December 31, 2023, 2024, and 2025.

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

The Company has no allowance for credit losses related to its marketable securities as all investments are in investment grade securities.

The following table summarizes the maturities of the Company’s marketable securities as of December 31, 2024 and 2025 (in thousands):

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Purchases of marketable securities

Purchases of available-for-sale securities $ — $ — $ —

Purchases of held-to-maturity securities 26,905 54,117 28,094

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(1) During the years ended December 31, 2023 , 2024, and 2025, operating lease cost includes $ 5.1 million, $ 0.7 million, and $ 4.7 million of right-of-use lease asset impairment charges, respectively, related to redundant leased space that was vacated during the year.

During the years ended December 31, 2022 , 2023 and 2024, operating lease cost includes $ 1.2 million, $ 0.1 million, and $ 6.2 million, respectively, of net benefits related to the early termination and related extinguishment of lease liabilities.

During the years ended December 31, 2023 , 2024 and 2025, operating lease cost includes $ 0.1 million, $ 6.2 million, and $ 0.4 million, respectively, of net benefits related to the early termination of leases.

These net benefits reflect the reduction of the lease liability for payments that will no longer be required and the corresponding adjustment to the related right-of-use asset, if any, net of cash payments made in connection with the early termination.

The following table provides a summary of the Company’s average lease term and discount rate as of December 31, 2024 and 2025:

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Present value of lease liabilities $ 109,121

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(1) Excludes approximately $ 4.3 million of legally binding minimum lease payments for leases that were signed but had not yet commenced as of December 31, 2025.

Fair Value Measurement

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Fair Value Measurements at Reporting Date Using

2023 Quoted Prices in

December 31, 2024 Quoted Prices in

Active Markets

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Money market funds $ 92,416 $ 92,416 $ — $ —

treasury bills 5,000 5,000 — —

Available-for-sale securities :

Tax-exempt municipal securities 9,913 — 9,913 —

Corporate debt securities 499 — 499 —

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Fair Value Measurements at Reporting Date Using

2024 Quoted Prices in

December 31, 2025 Quoted Prices in

Active Markets

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Money market funds $ 88,239 $ 88,239 $ — $ —

Available-for-sale securities :

Corporate debt securities 499 — 499 —

Total assets at fair value on a recurring basis $ 88,239 $ 88,239 $ — $ —

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

• Money market funds and U.S.

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

treasury bills with original maturities of three months or less, which are included in cash and cash equivalents in the accompanying consolidated balance sheets.

The Company’s cash and cash equivalents at December 31, 2023 and 2024 approximate fair value and are not disclosed in the above tables because of the short-term nature of the financial instruments.

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

The Company’s other cash and cash equivalents as of December 31, 2024 and 2025 approximate fair value and are not disclosed in the above tables because of the short-term nature of the financial instruments.

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

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In 2024, the Company performed a qualitative impairment assessment of goodwill assigned to all reporting units, except for the goodwill assigned to the ANZ reporting unit, using the first day of the fourth quarter of 2024 as the assessment date.

The Company evaluated the likelihood of impairment by considering qualitative factors relevant to the reporting units, such as macroeconomic conditions, industry and market considerations, cost factors, overall financial performance, and any other factors that have a significant bearing on fair value.

Based on the results of its qualitative impairment analysis, the Company determined that no impairment indicators existed for these reporting units as of the assessment date.

Due to potential adverse financial impacts of proposed international student enrollment cap regulations in Australia, in 2024 the Company elected to bypass a qualitative annual impairment assessment for goodwill assigned to the ANZ reporting unit and proceeded directly to a quantitative impairment assessment using the first day of the fourth quarter of 2024 as the assessment date.

The Company used an income-based approach to determine the fair value of the ANZ reporting unit.

The income approach consisted of a discounted cash flow model that included projections of future cash flows for the reporting unit, calculating a terminal value, and discounting such cash flows by a risk adjusted rate of return.

The determination of fair value consists of using unobservable inputs under the fair value measurement standards.

The Company believes that the most critical assumptions and estimates used in determining the estimated fair value of the ANZ reporting unit include, but are not limited to, the amounts and timing of expected future cash flows, revenue growth, operating margins, the discount rate, and the terminal growth rate.

The assumptions used in determining the expected future cash flows consider various factors such as historical operating trends, particularly in student enrollment and pricing, anticipated economic and regulatory conditions, reasonable expectations for planned business expansion opportunities, and long-term operating strategies and initiatives.

The discount rate is based on the Company’s assumption of a prudent investor’s required rate of return for assuming the risk of investing in a particular company.

The terminal growth rate reflects the sustainable operating income a reporting unit could generate in a perpetual state as a function of revenue growth, inflation, and future margin expectations.

The Company believes that these assumptions are consistent with a reasonable market participant view while employing the concept of highest and best use of the asset.

Based on the results of its quantitative impairment assessment, the Company concluded that the fair value of its ANZ reporting unit exceeded its carrying value.

Accordingly, no goodwill impairment charges were recorded during the years ended December 31, 2022, 2023, and 2024.

In 2025, the Company performed a qualitative impairment assessment of goodwill assigned to its reporting units using the first day of the fourth quarter of 2025 as the assessment date.

Based on the results of this qualitative impairment analysis, the Company concluded that no impairment indicators existed for its reporting units as of the assessment date.

There were no goodwill impairment charges recorded during the years ended December 31, 2023, 2024, and 2025.

Intangible Assets

The Company’s finite-lived intangible assets are comprised of approximately $ 200.0 million of student relationships, which were amortized on a straight-line basis over a three-year useful life.

Straight-line amortization expense for finite-lived intangible assets reflected the pattern in which the economic benefits of the assets were consumed over their estimated useful

The Company’s finite-lived intangible assets were comprised of approximately $ 200.0 million of student relationships, which were amortized on a straight-line basis over a three-year useful life.

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

All finite-lived intangible assets were fully amortized by the end of 2023.

Amortization expense related to finite-lived intangible assets was $ 11.1 million and $ 8.9 million for the years ended December 31, 2022 and 2023, respectively.

Amortization expense related to finite-lived intangible assets was $ 8.9 million for the year ended December 31, 2023.

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

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Balance as of December 31, 2025 $ 249,243

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(1) In the second quarter of 2024, the Company recorded a $ 0.8 million indefinite-lived intangible asset impairment charge, which is included in Restructuring costs on the consolidated statements of income.

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

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

In 2024, the Company performed a qualitative impairment assessment related to its indefinite-lived intangible assets, except for the ANZ trade name, using the first day of the fourth quarter of 2024 as the assessment date.

The Company evaluated the likelihood of impairment by considering qualitative factors, such as macroeconomic conditions, industry and market considerations, cost factors, overall financial performance, and any other factors that have a significant bearing on fair value.

Based on the results of its qualitative impairment analysis, the Company determined that no impairment indicators existed for these indefinite-lived intangible assets as of the assessment date.

In 2024, the Company elected to perform a quantitative impairment assessment for indefinite-lived intangible assets related to the ANZ trade name using the first day of the fourth quarter of 2024 as the assessment date.

The Company used an income-based approach to determine the fair value of the ANZ trade name.

The income approach consisted of a discounted cash flow model, using the relief from royalty method, which included a projection of future revenues for ANZ, identifying a royalty rate, calculating a terminal value, and discounting such cash flows by a risk adjusted rate of return.

The determination of fair value of the ANZ trade name primarily consists of using unobservable inputs under the fair value measurement standards.

The Company believes that the most critical assumptions and estimates used in determining the estimated fair value of the ANZ trade name include, but are not limited to, the amounts and timing of future revenue growth rates, the royalty rate, the discount rate, and the terminal growth rate.

The assumptions used in determining the expected future revenue growth rates consider various factors such as historical operating trends, particularly in student enrollment and pricing, anticipated economic and regulatory conditions, reasonable expectations for planned business expansion opportunities, and long-term operating strategies and initiatives.

The royalty rate is based on the Company’s assumption of what a reasonable market participant would pay to license the ANZ trade name, expressed as a percentage of revenues.

The discount rate is based on the Company’s assumption of a prudent investor’s required rate of return for assuming the risk of investing in a particular company.

The terminal growth rate reflects the sustainable revenue growth the business could generate in a perpetual state as a function of inflationary expectations.

The Company believes that these assumptions are consistent with a reasonable market participant view while employing the concept of highest and best use of the asset.

Based on the results of its quantitative impairment assessment, the Company concluded that the fair value of the ANZ trade name exceeded its carrying value.

In 2025, the Company performed a qualitative impairment assessment of its indefinite-lived intangible assets using the first day of the fourth quarter of 2025 as the assessment date.

Based on the results of this qualitative impairment analysis, the Company concluded that no impairment indicators existed for its indefinite-lived intangible assets as of the assessment date.

There were no impairment charges related to indefinite-lived intangible assets recorded during the year ended December 31, 2023.

During the years ended December 31, 2024 and 2025, the Company recorded indefinite-lived intangible asset impairment charges of $ 0.8 million and $ 0.4 million, respectively, which are included in Restructuring costs on the consolidated statements of income.

Other Current Assets

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Restricted cash 9,082 8,254

Deferred contract costs 3,258 4,714

Other 2,210 2,078

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Other investments 2,786 2,786

Deferred contract costs, net of current portion 808 2,149

Other 4,842 4,976

Other assets $ 62,910 $ 65,514

Cloud Computing Arrangements

The Company defers implementation costs incurred in cloud computing arrangements and amortizes these costs over the term of the arrangement.

Prepaid Expenses

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The Company has commitments to invest up to an additional $ 1.7 million across these partnerships through 2031.

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

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

The following table illustrates changes in the Company’s limited partnership investments for the years ended December 31, 2024 and 2025 (in thousands):

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Limited partnership investments, end of period $ 13,428 $ 9,472

Cloud Computing Arrangements

The Company defers implementation costs incurred in cloud computing arrangements and amortizes these costs over the term of the arrangement.

Tuition Receivable

Non-current tuition receivable, net, represents tuition that the Company expects to collect, but not within the next 12 months.

Other Investments

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These investments are accounted for at cost less impairment as they do not have readily determinable fair value.

Tuition Receivable

Non-current tuition receivable, net, represents tuition that the Company expects to collect, but not within the next 12 months.

Other is comprised primarily of deferred financing costs associated with the Company’s credit facility, deferred contract costs related to commissions paid in the Australia/New Zealand segment to third party international recruitment agents, and refundable security deposits associated with the Company’s leased campus and office space.

Deferred Contract Costs

The Company defers certain commissions paid in the Australia/New Zealand segment to third-party international recruitment agents and amortizes these costs over the period of benefit.

Other is comprised primarily of deferred financing costs associated with the Company’s credit facility, deferred accreditation costs associated with the Australia/New Zealand segment, and refundable security deposits associated with the Company’s leased campus and office space.

Accounts Payable and Accrued Expenses

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Long-Term Debt

On October 18, 2024, the Company entered into an amended credit facility (“Amended Credit Facility”), which provides for a senior secured revolving credit facility (the “Revolving Credit Facility”) in an aggregate principal amount of up to $ 250 million.

On October 18, 2024, the Company entered into an amended credit facility (the “Amended Credit Facility”), which provides for a senior secured revolving credit facility (the “Revolving Credit Facility”) in an aggregate principal amount of up to $ 250 million.

The Amended Credit Facility provides the Company with an option, subject to obtaining additional loan commitments and satisfaction of certain conditions, to increase the commitments under the Revolving Credit Facility or establish one or more incremental term loans (each, an “Incremental Facility”) in the future in an aggregate amount of up to the sum of (x) the greater of (A) $ 300 million and (B) 100 % of the Company’s consolidated EBITDA (earnings before interest, taxes, depreciation, amortization, and noncash charges, such as stock-based compensation) calculated on a trailing four-quarter basis and on a pro forma basis, and (y) if such Incremental Facility is incurred in connection with a permitted acquisition or other permitted investment, any amounts so long as the Company’s leverage ratio (calculated on a trailing four-quarter basis) on a pro forma basis will be no greater than 1.75 :1.00.

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Coverage ratio is defined as the ratio of trailing four-quarter EBITDA and rent expense to trailing four-quarter interest and rent expense.

The Company was in compliance with all covenants of the Amended Credit Facility as of December 31, 2024.

As of December 31, 2023, the Company had approximately $ 61.4 million outstanding under the Revolving Credit Facility, of which approximately $ 3.4 million was denominated in Australian dollars.

During the third quarter of 2024, the Company repaid the remaining $ 61.3 million outstanding balance under the Revolving Credit Facility.

The Company had no borrowings outstanding under the Revolving Credit Facility as of December 31, 2024.

As of December 31, 2024 and 2025, the Company was in compliance with all covenants of the Amended Credit Facility and had no borrowings outstanding under the Revolving Credit Facility.

During the years ended December 31, 2023, 2024 and 2025, the Company paid $ 6.8 million, $ 3.2 million and $ 0.5 million, respectively, of interest and unused commitment fees related to its Revolving Credit Facility.

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Contract Liabilities

In connection with its student tuition contracts, the Company has an obligation to provide free classes in the future should certain eligibility conditions be maintained.

In connection with its student tuition contracts, the Company has an obligation to provide free tuition in the future should certain eligibility conditions be maintained.

Long-term contract liabilities represent the amount of revenue under these arrangements that the Company expects will be realized after one year.

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Subsequent to the shareholders approval of the First Amendment, all equity-based awards are granted under the 2018 Plan.

On April 23, 2025, the Company’s shareholders approved the Second Amendment to the 2018 Plan, which increased the total number of shares of common stock available for issuance under the 2018 Plan by 700,000 shares.

As of December 31, 2025, 983,727 shares were available for issuance under the 2018 Plan.

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The amount of intrinsic value will change based on the fair market value of the Company’s common stock.

The Company received $ 14 thousand, $ 0.2 million, and $ 0.5 million of net cash proceeds related to stock options exercised during the years ended December 31, 2022, 2023, and 2024, respectively.

The aggregate intrinsic value of the stock options exercised during the years ended December 31, 2022, 2023, and 2024 was $ 15 thousand, $ 0.1 million, and $ 0.3 million, respectively.

The Company received $ 0.2 million, $ 0.5 million, and $ 0.3 million of net cash proceeds related to stock options exercised during the years ended December 31, 2023, 2024, and 2025, respectively.

The aggregate intrinsic value of the stock options exercised during the years ended December 31, 2023, 2024, and 2025 was $ 0.1 million, $ 0.3 million, and $ 0.1 million, respectively.

Valuation and Expense Information under ASC 718, Stock Compensation

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Stock-based compensation expense, net of tax $ 14,616 $ 18,747 $ 16,942

During the years ended December 31, 2022, 2023, and 2024, the Company recognized shortfall tax impacts of approximately $ 1.5 million, $ 1.4 million, and $ 1.2 million, respectively, related to share-based payment arrangements, which were adjustments to the provision for income taxes.

During the years ended December 31, 2023 and 2024, the Company recognized shortfall tax impacts of approximately $ 1.4 million and $ 1.2 million, respectively, related to share-based payment arrangements, which were adjustments to the provision for income taxes.

During the year ended December 31, 2025, the Company recognized windfall tax benefits of approximately $ 0.4 million.

Other Employee Benefit Plans

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In November 2003, the Company’s Board of Directors authorized the Company to repurchase up to an aggregate of $ 15 million in value of common stock in open market purchases from time to time at the discretion of the Company’s management depending on market conditions and other corporate considerations.

The Company’s Board of Directors amended the program on various dates, increasing the repurchase amount authorized and extending the expiration date.

The Company’s Board of Directors amended the program

on various dates, increasing the repurchase amount authorized and extending the expiration date.

At December 31, 2025, $ 213.5 million of the Company’s share repurchase authorization was remaining for repurchases through December 31, 2026.

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Total income before income taxes $ 100,726 $ 161,432 $ 177,393

The Company is making an assertion that all earnings generated by its foreign subsidiaries are permanently reinvested in non-U.S.

business or are distributable to the United States without material tax implications.

As such, income taxes have not been accrued in the United States with respect to foreign subsidiary earnings.

The Company intends to continue to reinvest the earnings outside of the United States for which there would be a material tax implication to distributing, such as withholding tax, for the foreseeable future and, as a result, have not recognized additional tax expense on these earnings.

The Company intends to indefinitely reinvest its foreign earnings and cash unless such repatriation results in no or minimal tax costs.

State income taxes associated with the foreign earnings that the Company intends to repatriate in the future are not material.

As such, no deferred tax liabilities have been recorded in the United States with respect to foreign subsidiary earnings.

The tax effects of the principal temporary differences that give rise to the Company’s net deferred tax liability are as follows as of December 31, 2024 and 2025 (in thousands):

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Contract liabilities 8,972 9,201

Other 4,715 4,189

Loss carryforward 3,088 3,977

Other 5,297 7,899

Other facility-related costs 1,033 938

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Right-of-use lease assets ( 9,397 ) ( 8,256 )

Prepaid expenses ( 1,108 ) ( 6,775 )

Valuation allowance ( 2,991 ) ( 3,889 )

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The Company will continue to evaluate its ability to realize its net deferred tax assets on a quarterly basis.

As of December 31, 2023, the Company’s liabilities for unrecognized tax benefits are included in other long-term liabilities in the consolidated balance sheets.

As of December 31, 2024, the Company has no unrecognized tax benefits recorded on its consolidated balance sheets.

As of December 31, 2024 and 2025, the Company had no unrecognized tax benefits recorded on its consolidated balance sheets.

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

The Company recognized approximately $ 47 thousand of expense and $ 107 thousand of benefit related to interest and penalties in 2023 and 2024, respectively.

The total amount of interest and penalties included in the consolidated balance sheets was approximately $ 107 thousand as of December 31, 2023.

The Company had no interest and penalties included in the consolidated balance sheets as of December 31, 2024.

The Company had no interest and penalties included in the consolidated balance sheets as of December 31, 2024 and 2025.

The following table summarizes changes in unrecognized tax benefits, excluding interest and penalties, for the respective periods (in thousands):

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Ending unrecognized tax benefits $ — $ —

The Company does not anticipate significant changes to unrecognized tax benefits within the next 12 months.

During the year ended December 31, 2024, the Company did not record any unrecognized tax benefits.

A reconciliation between the Company’s statutory tax rate and the effective tax rate for the years ended December 31, 2022, 2023, and 2024 is as follows:

2022 2023 2024

During the years ended December 31, 2024 and 2025, the Company did not record any unrecognized tax benefits.

As stated in Note 2, the Company adopted ASU 2023-09 for its annual reporting period ended on December 31, 2025.

The Company applied the standard prospectively.

Accordingly, the comparative disclosures below for the years ended December 31, 2023 and 2024 continue to be presented under previous ASC 740 disclosure requirements, whereas the disclosures for the year ended December 31, 2025 reflect the enhanced disaggregation requirements under ASU 2023-09.

A reconciliation between the Company’s statutory tax rate and the effective tax rate for the years ended December 31, 2023 and 2024, prior to the adoption of ASU 2023-09, is as follows:

Statutory federal rate 21.0 % 21.0 %

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Effective tax rate 30.7 % 30.2 %

Cash payments for income taxes were $ 26.8 million, $ 42.9 million, and $ 49.2 million in 2022, 2023, and 2024, respectively.

A reconciliation between the Company’s statutory tax rate and the effective tax rate for the year ended December 31, 2025, after the adoption of ASU 2023-09, is as follows (amounts in thousands):

Amount Percent

Statutory federal rate 37,252 21.0 %

State income taxes, net of federal benefits (1)

Change in valuation allowance (state) 761 0.4 %

Impact of foreign operations

Statutory tax rate difference between Australia and US 3,302 1.9 %

Change in valuation allowance 136 0.1 %

Other foreign jurisdictions 81 — %

Nontaxable or nondeductible items

Nondeductible compensation 3,084 1.7 %

Excess tax benefit on share-based compensation ( 306 ) ( 0.2 ) %

Other 439 0.3 %

Effective tax rate 50,779 28.6 %

___________________________________________________________

(1) State taxes in Virginia, California, Pennsylvania, Georgia, New York, Florida, South Carolina, and Maryland made up the majority (greater than 50 percent) of the tax effect in this category

Cash payments for income taxes were $ 42.9 million and $ 49.2 million for the years ended December 31, 2023 and 2024, respectively.

Cash payments (net of refunds) for income taxes by jurisdiction for the year ended December 31, 2025 are summarized below (in thousands):

Federal $ 24,459

Foreign 16,561

Total cash payments (net of refunds) for income taxes $ 48,847

The jurisdictions in which income taxes paid (net of refunds) exceeded 5 percent of total income taxes paid (net of refunds) for the year ended December 31, 2025 are as follows (in thousands):

Australia $ 15,817

On July 4, 2025, President Trump signed the One Big Beautiful Bill Act (“OBBBA”), which includes significant tax-related provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions.

The Company accounted for the impacts of OBBBA in 2025, which had no material impact on its annual effective tax rate in 2025.

Segment and Geographic Information

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Higher Education, Education Technology Services, and Australia/New Zealand.

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

USHE also operates non-degree web and mobile application development courses through Hackbright Academy and Devmountain, which are units of Strayer University.

USHE also operates non-degree web and mobile application development courses through Hackbright Academy and Devmountain, which are offerings of Strayer University.

The Education Technology Services segment primarily develops and maintains relationships with employers to build employee education benefits programs that provide employees access to affordable and industry-relevant training, certificate, and degree programs.

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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 offers low-cost online general education-level courses recommended by the American Council on Education for credit at other colleges and universities.

The Australia/New Zealand segment is comprised of Torrens University, Think Education and Media Design School in Australia and New Zealand, which collectively offer certificate and degree programs in business, design, education, hospitality, healthcare, and technology through campuses in Australia, New Zealand, and online.

The ANZ segment is comprised of Torrens University, Think Education, and Media Design School at Strayer (“MDS”) in Australia and New Zealand, which collectively offer certificate and degree programs in business, design, education, hospitality, healthcare, and technology through campuses in Australia, New Zealand, and online.

On September 8, 2025, MDS became a wholly owned subsidiary and international additional location of Strayer University and is included within Strayer University’s Middle States Commission on Higher Education accreditation.

The New Zealand Qualification Authority approved the transaction and MDS continues to operate as a New Zealand private training establishment.

MDS continues to be part of the ANZ reportable segment.

The Company’s Chief Operating Decision Maker (“CODM”) is the Chief Executive Officer.

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Consolidated income from operations $ 95,321

Other expense ( 1,191 )

Other income 5,405

Consolidated income before income taxes $ 100,726

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Unallocated expenses

Amortization of intangible assets ( 11,457 )

Merger and integration costs ( 1,544 )

Restructuring costs ( 1,648 )

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Unallocated expenses

Amortization of intangible assets —

Merger and integration costs —

Restructuring costs ( 21,909 )

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adjudicate the applications by January 28, 2026, it will provide the applicants “Full Settlement Relief” (i.e., federal student loan(s) associated with the borrower’s attendance at the school will be discharged, the Department will refund any amounts paid to the Department on those loans, and the credit tradeline for those loans will be deleted from the borrower’s credit report).

In December 2025, the Department requested an 18-month extension of the January 28, 2026 deadline, which was denied;

the Department requested reconsideration in January 2026 and is awaiting the court’s decision.

In 2023, the Department informed institutions that:

it would be notifying most schools of all applications received by the Department from June 23, 2022 to November 15, 2022 (constituting Sweet Post-Class Applicants) in a single send (and anticipates completing notification to all schools by approximately April 2024).

it would be notifying most schools of all applications received by the Department from June 23, 2022 to November 15, 2022 (constituting Sweet Post-Class Applicants) in a single send (and anticipated completing notification to all schools by approximately April 2024).

On January 25, 2024, Capella University received notice that the Department received approximately 6,700 borrower defense to repayment applications with claims for forgiveness of loans taken out at the university and filed between June 23, 2022 and November 15, 2022.

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

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

One Big Beautiful Bill Act

On July 4, 2025, President Trump signed OBBBA, which includes, among other things, amendments to portions of the Higher Education Act of 1965 and the Internal Revenue Code of 1986, as amended.

OBBBA makes a variety of changes to federal student aid programs, including loan limits, accountability measures for programs based on low earning outcomes, loan repayment, Pell Grant eligibility, and regulatory changes.

OBBBA eliminates, effective July 2026, Federal Direct PLUS loans for graduate and professional students, with some limited grandfathering for current graduate and professional student borrowers.

The law also sets new annual and aggregate loan limits for such borrowers, with some limited grandfathering.

For graduate students, OBBBA maintains existing loan limits of $20,500 annually for unsubsidized loans in the Direct Loan Program;

for professional students enrolled on or after July 1, 2026, OBBBA raises the annual limits to $50,000.

For graduate students who are not and have not been professional students, the new aggregate graduate loan limit is $100,000, irrespective of any undergraduate borrowing.

With respect to graduate

students who are or have been professional students, the aggregate graduate loan limit is generally $200,000 minus the amounts borrowed for the professional degree program.

With respect to professional students, the aggregate graduate loan limit is generally $200,000 minus certain other previously borrowed amounts, including certain subsidized loans and amounts borrowed as a graduate student, if applicable.

OBBBA also created a lifetime maximum aggregate amount for Title IV loans that a student may borrow of $257,500 (other than a loan made to the student as a parent borrower on behalf of a dependent student).

OBBBA provides institutions the opportunity to limit the amount of loans a student may borrow in an academic year as long as any such limit is applied consistently to all students enrolled in such program of study.

Additionally, OBBBA requires that the amount of loan funds available under a student’s annual loan eligibility must be reduced in direct proportion to the degree to which that student is not enrolled on a full-time basis during an academic year.

The Department initially indicated in July 2025 that it planned to release a schedule of reductions for public comment later in 2025, which institutions would be required to use for students who enrolled less than full-time for academic years 2026-27 and beyond.

However, in connection with negotiated rulemaking, consensus was reached in November 2025 on regulatory text that would establish loan eligibility at the time of disbursement using an agreed calculation for less than full-time students, and proposed regulations were released in January 2026.

OBBBA creates an accountability framework, effective July 2026, that institutions must satisfy at the program level in order for students to continue to receive Federal Direct Loans for such programs.

OBBBA requires that an undergraduate program become ineligible for Federal Direct Loans if, in two out of three consecutive years, the median earnings of a cohort of program completers are less than the median earnings of working adults aged 25-34 with only a high school diploma, either in the state where the institution is located or, if fewer than 50% of students at the institution reside in the institution’s state, the national average.

OBBBA requires that a graduate or professional program become ineligible for Federal Direct Loans if, in two out of three consecutive years, the median earnings of a cohort of program completers are less than the median earnings of working adults aged 25–34 with only a bachelor’s degree.

Comparator median earnings for graduate or professional programs will be calculated based on Bureau of the Census data for working adults aged 25-34 with only a bachelor’s degree, and will be the lesser of:

(i) working adults in the same field of study in the state where the institution is located, (ii) working adults in the same field of study in the United States, or (iii) all working adults in the state where the institution is located.

If fewer than 50% of students at the institution reside in the institution’s state, then the median earnings will be calculated based on the lesser of the national average for (i) all working adults or (ii) working adults in the same field of study.

Both the undergraduate and graduate/professional accountability provisions apply to the cohort of students who completed the program four years prior, are working, are not enrolled at any institution, and who received Federal Direct Loan funds for enrollment in the program.

If a cohort is less than 30 students, the Secretary of Education may aggregate additional years of programmatic data.

If a program fails the earnings test for one year, institutions must notify students that the program is at risk of losing Federal Direct Loan eligibility.

OBBBA requires that an institutional appeals process be established by the Secretary of Education, and a program’s Federal Direct Loan eligibility will continue during such appeal.

Programs that lose eligibility under the accountability framework may reapply for eligibility after two years, consistent with requirements that will be established by the Secretary of Education.

Among other things related to loan repayment plans, OBBBA requires that for new loans issued on or after July 2026, borrowers choose between two plans:

a Standard Repayment Plan (with fixed monthly payments and fixed terms ranging from 10-25 years) or a new Income-Based Repayment Assistance Plan.

Current borrowers repaying loans under existing repayment options may, depending on the loan repayment type:

(i) continue to repay under the selected plan or choose a new plan within a prescribed period;

or (ii) be required to select from a limited set of plans as of a date certain.

For example, borrowers currently on an Income-Contingent Repayment (“ICR”) plan must transition to a different plan by July 1, 2028.

OBBBA also eliminates unemployment and economic hardship deferments for loans issued on or after July 1, 2027, and reduces the permitted forbearance period to 9 months per 24-month period.

Additionally, borrowers will be permitted to rehabilitate defaulted loans twice beginning July 2027, rather than only once under the current rule.

Effective July 1, 2026, students with a Student Aid Index that equals or exceeds twice the maximum Pell Grant amount will be ineligible for Pell Grants.

A student will also be ineligible for a Federal Pell Grant during any period for which the student receives grant aid from a non-federal source (including states, institutional aid, or private sources) in an amount that equals or exceeds the student’s cost of attendance.

Additionally, OBBBA creates Workforce Pell Grants effective July 2026 for students enrolled in eligible workforce programs.

Eligible workforce programs must meet a specific definition, including that they are accredited, short-term, career-focused programs (150 to 600 clock hours of instruction over 8 to 15 weeks), which prepare students to pursue one or more certificate or degree programs.

In addition, they must be approved by the state governor, aligned with high-demand, high-skill or high-wage jobs, have at least 70% completion and job placement rates, and tuition must be less than the value-added earnings of graduates who received the Workforce Pell Grant.

Workforce Pell Grants may not be combined with a regular Pell grant.

OBBBA amends the Higher Education Act to delay the effective date of the 2022 borrower defense to repayment rules, including the closed school discharge provisions, until July 1, 2035.

The 2019 version of those rules, which took effect July 1, 2020, is instead reinstated.

The Department of Education convened two negotiated rulemaking committees to meet to consider regulations to implement provisions of OBBBA and related Trump administration priorities, as detailed in the “Negotiated Rulemaking” section below.

Title IV Programs

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

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

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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.

PLUS loans, including Graduate PLUS loans, are unsubsidized loans available in amounts up to the total cost of attendance less any other financial aid.

Unsubsidized loans are available to undergraduate students who do not qualify for a subsidized loan or, in some cases, in addition to a subsidized loan, as well as graduate students (subject to certain limitations).

Federal Financial Aid Regulation

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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 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.

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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The financial responsibility changes became effective July 1, 2020.

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

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.

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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.

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 BDTR claims.

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

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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.

and pending BDTR claims, among other things.

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

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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 July 10, 2023, the Department issued final 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 SAVE Plan was scheduled to be fully implemented in July 2024, but a federal appeals court paused implementation of the entire SAVE Plan pending resolution of legal challenges brought by several states.

Meanwhile, the Department published an interim final rule to allow borrowers to enroll in the Income-Contingent Repayment (ICR) and Pay As You Earn (PAYE) repayment plans, designated for early implementation on December 16, 2024, through July 1, 2027, while the SAVE Plan is paused.

Meanwhile, the Department published an interim final rule to allow borrowers to enroll in the ICR and Pay As You Earn (PAYE) repayment plans, designated for early implementation on December 16, 2024, through July 1, 2027.

Although it is too early to know the entirety of the impact that COVID and COVID-related repayment flexibility will have on the cohort default rate, the Company expects that the next one or more cohort years will be affected.

On December 9, 2025, the Department announced a proposed joint settlement to resolve the legal challenges, resulting in termination of the SAVE Plan;

the settlement is pending court approval.

The 90/10 Rule

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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 preamble to the final rule and subsequent sub-regulatory guidance further prohibit inclusion of non-Title IV eligible programs offered in part or in full through distance education in the 10% calculation.

The preamble to the final rule and subsequent sub-regulatory guidance

prohibited the inclusion of non-Title IV eligible programs offered in part or in full through distance education or at unapproved locations in the 10% calculation, but this language was effectively rescinded by new interpretive guidance published by the Department on July 7, 2025.

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

Such agencies include the U.S.

Department of Defense (military tuition assistance) and the Department of Veterans Affairs (veterans education benefits).

DOD (military tuition assistance) and the VA (veterans education benefits).

The Department indicated that it will publish periodic updates to the list as needed.

In addition, certain members of Congress have proposed to revise the 90/10 Rule to reduce the limit on federal funding to 85% of total revenue.

In addition, from time to time certain members of Congress have proposed to revise the 90/10 Rule to reduce the limit on federal funding to 85% of total revenue.

In the context of Higher Education Act reauthorization, defense bills and appropriations bills, other members of Congress have proposed legislation that would eliminate the 90/10 Rule.

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Gainful Employment

Under the Higher Education Act, a proprietary institution offering programs of study other than a baccalaureate degree in

liberal arts (for which there is a limited statutory exception) must prepare students for gainful employment in a recognized occupation.

Under the Higher Education Act, a proprietary institution offering programs of study other than a baccalaureate degree in liberal arts (for which there is a limited statutory exception) must prepare students for gainful employment in a recognized occupation.

On October 31, 2014, the Department of Education published final regulations related to gainful employment.

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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

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.

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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.

On March 20, 2024, another lawsuit was filed against the Department in the United States District Court for the Northern District of Texas seeking a preliminary and permanent injunction enjoining the Department from enforcing the final rule on the grounds that the rule exceeds the Department’s statutory authority, and is arbitrary, capricious, an

abuse of discretion, and otherwise is not in accordance with law, and the motion for preliminary injunction was denied on June 20, 2024.

On July 2, 2024, the court consolidated the two Gainful Employment cases into one.

On July 2, 2024, the court consolidated the two Gainful Employment cases into one, and in October 2025, the court granted summary judgment in favor of the Department, upholding the rule.

Plaintiffs filed a notice of appeal in November 2025.

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

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In a March 29, 2024 Electronic Announcement (GE-24-01), the Department released additional information and updates to help institutions prepare for complying with the Financial Value Transparency (“FVT”) and Gainful Employment (“GE”) Regulations, including that the deadline for initial institutional data reporting was extended from July 31, 2024 to October 1, 2024.

The Department indicated that in early 2025, it plans to publish the FVT/GE metrics and notify institutions of failing GE programs, as well as provide additional information on the program eligibility effects of the metrics on failing GE programs.

In a September 13, 2024 Electronic Announcement (GE-24-08), the Department announced the deadline for initial institutional data reporting was further extended from October 1, 2024 to January 15, 2025.

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On February 14, 2025, the Department announced that it would further extend the deadline for all reporting data associated with FVT/GE to September 30, 2025;

it does not plan to produce any FVT/GE metrics prior to the new deadline and will take no enforcement or other punitive actions against institutions that had not completed reporting to date;

and it anticipates that there will be no additional extensions of the reporting deadline beyond September 30, 2025.

it further announced that there would be no additional extensions of the reporting deadline beyond September 30, 2025, it did not plan to produce any FVT/GE metrics prior to the new deadline, and that it would take no enforcement or other punitive actions against institutions that had not completed reporting to date.

On January 9, 2026 the negotiated rulemaking committee reached consensus on changes to the current gainful employment regulation.

The consensus language includes, among other things, elimination of the debt-to-earnings ratio as an accountability metric for gainful employment programs, changes to generally align the gainful employment earnings premium test with the accountability measure codified in OBBBA, and changes to the reporting requirements that currently exist under the gainful employment regulation.

The Department’s proposed changes to gainful employment will be subject to public comment and are expected to be effective as early as July 1, 2027.

Misrepresentation

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The rule specifies the types of statements that can subject the institution to liability for misrepresentation, as well as the nature and form of misleading statements.

As part of the Department’s 2016 promulgation of the Borrower Defenses to Repayment regulation, the Department changed the definition of misrepresentation for Title IV regulations to include any statement that “has the likelihood or tendency to mislead under the circumstances.” The expanded definition included “any statement that omits information in such a way as to make the statement false, erroneous, or misleading.” This regulation was published on November 1, 2016 and, after a series of delays, went into effect as of October 16, 2018.

On August 30, 2019, the Department released final Borrower Defense to Repayment regulations that included a new definition of “misrepresentation,” which became effective July 1, 2020.

As part of the Department’s 2016 promulgation of the BDTR regulation, the Department changed the definition of misrepresentation for Title IV regulations to include any statement that “has the likelihood or tendency to mislead under the circumstances.” The expanded definition included “any statement that omits information in such a way as to make the statement false, erroneous, or misleading.” This regulation was published on November 1, 2016 and, after a series of delays, went into effect as of October 16, 2018.

On August 30, 2019, the Department released final BDTR regulations that included a new definition of “misrepresentation,” which became effective July 1, 2020.

The final rule defines a “misrepresentation” as:

a statement, act, or omission by an eligible school to a borrower (a) that is false, misleading, or deceptive, (b) that was made with knowledge of its false, misleading, or deceptive nature or with a reckless disregard for the truth, and (c) that directly and clearly relates to either (1) enrollment or continuing enrollment at the institution, or (2) the provision of educational services for which the loan was made.

On August 10, 2021, the Department of Education announced its intention to establish a rulemaking committee to prepare proposed regulations on, among other things, Borrower Defense to Repayment, including a new definition of misrepresentation.

Negotiated rulemaking committee meetings completed in December 2021 with no consensus reached on the topic.

(1) enrollment or continuing enrollment at the institution, or (2) the provision of educational services for which the loan was made.

On October 31, 2022, the Department released final Borrower Defense to Repayment regulations, which include among other defenses to repayment substantial misrepresentation, with a significantly expanded definition of misrepresentation.

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On September 25, 2024, the Department issued a Federal Student Aid Enforcement Bulletin (Electronic Announcement GENERAL-24-115) with examples of “conduct that creates a risk of engaging in a substantial misrepresentation” which could form the basis of a BDTR complaint or otherwise result in adverse administrative action by the Department, including a fine or limitation of an institution’s participation in the Title IV programs.

Topics identified included certain claims related to general

salary information (including use of Bureau of Labor Statistics salary data), job placement rates, rankings, licensure, faculty qualifications, for- or non-profit status, and cost of attendance or price.

Topics identified included certain claims related to general salary information (including use of Bureau of Labor Statistics salary data), job placement rates, rankings, licensure, faculty qualifications, for- or non-profit status, and cost of attendance or price.

On January 16, 2025, the Department issued a Federal Student Aid Notice of Interpretation (Dear Colleague Letter GEN-25-01) reminding institutions that misrepresentation requirements “apply with equal force to statements made by a third-party entity engaged by the eligible institution” and that “institutions may be responsible for the consequences of any misrepresentation committed by any external service provider that they engage.” The Department gave examples of statements that are “likely” to qualify as a misrepresentation, including inaccurately identifying an individual employed by an external servicer provider as being employed by the eligible institution;

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Under the 2019 BDTR Rule, an individual borrower can assert a defense to repayment and be eligible for relief if she or he establishes, by a preponderance of the evidence, that (1) the institution at which the borrower enrolled made a misrepresentation of material fact upon which the borrower reasonably relied in deciding to obtain a Direct Loan or a loan repaid by a Direct Consolidation Loan;

(2) the misrepresentation directly and clearly related to the borrower’s enrollment or continuing enrollment at the institution or the institution’s provision of education services for which the loan was made;

(2) the misrepresentation directly and clearly related to the borrower’s enrollment or continuing enrollment

at the institution or the institution’s provision of education services for which the loan was made;

and (3) the borrower was financially harmed by the misrepresentation.

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The 2019 BDTR Rule permits the usage of pre-dispute arbitration agreements as a condition of enrollment, so long as the institution provides plain-language disclosures to students and the disclosure is placed on the institution’s website.

The regulations also allow for a borrower to choose whether to apply for a closed school

loan discharge or accept a teach-out opportunity.

The regulations also allow for a borrower to choose whether to apply for a closed school loan discharge or accept a teach-out opportunity.

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.

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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.

On August 10, 2021, the Department of Education announced its intention to establish a rulemaking committee to develop proposed regulations on, among other things, Borrower Defense to Repayment.

Negotiated rulemaking committee meetings completed in December 2021 with no consensus reached on the topic.

On July 6, 2022, the Department released proposed Borrower Defense to Repayment regulations for public comment and subsequently published a final rule on October 31, 2022 (the “2022 BDTR Rule”).

On October 31, 2022, the Department of Education published a final Borrower Defense to Repayment Rule (the “2022 BDTR Rule”).

Among other things, the 2022 BDTR Rule sets a single standard and streamlined process for relief that will apply to all future and pending Borrower Defense to Repayment claims as of July 1, 2023, regardless of the date of a borrower’s loan disbursement;

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On August 7, 2023, in the matter of Career Colleges and Schs.

Dep’t of Educ.

Dep’t of Educ., et al.

23-50491), the U.S.

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On April 4, 2024, the Fifth Circuit reversed the underlying district court decision denying injunctive relief and remanded the case to the district court with instructions to enjoin and postpone the effective date of the 2022 BDTR Rule pending final judgment.

The Department petitioned the Fifth Circuit for panel rehearing, which the Fifth Circuit denied on June 12, 2024.

On October 10, 2024, the Department timely filed a petition for a writ of certiorari, seeking review by the Supreme Court of the United States.

The Respondent’s (i.e., Career Colleges and Schools of Texas) filed a response to the Department’s petition on December 12, 2024, and the Department filed a reply on December 23, 2024.

On January 10, 2025, the Supreme Court agreed to hear arguments on the Department’s appeal, and on February 6, 2025, at the Department’s request, the Supreme Court agreed to pause the briefing schedule.

The Department has previously 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, including where required under a court settlement (the Sweet case discussed above).

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

On August 8, 2025, on the parties’ joint stipulation, the U.S.

Supreme Court dismissed the Department’s appeal.

In stipulating to dismissal of the appeal, the Department referenced the effect of OBBBA.

The case remains with the federal district court on remand.

The OBBBA, signed into law on July 4, 2025, amends the Higher Education Act to delay the effective date of the 2022 BDTR Rule, including their closed school discharge provisions, until July 1, 2035.

The OBBBA reinstated the 2019 version of those rules, which took effect July 1, 2020.

In connection with litigation challenging the 2022 BDTR Rule that resulted in an injunction delaying its effective date, the Department indicated it would not adjudicate BDTR applications under the 2022 BDTR Rule unless the rule was reinstated.

State Authorization Reciprocity Agreement (SARA)

Capella University and Strayer University participate in the State Authorization Reciprocity Agreement (“SARA”), which allows the universities to enroll students in distance education programs in each SARA member state, including 49 states, the District of Columbia, Puerto Rico, and the U.S.

Virgin Islands.

Each of the universities applies separately to non-SARA member states (i.e., California) for authorization to enroll students, if such authorization is required by the state.

On January 16, 2024, SARA’s coordinating entity, the National Council for State Authorization Reciprocity Agreements (“NC-SARA”), initiated its 2024 policy manual modification process with a call for proposals for SARA policy changes.

The call for proposals ended February 2, 2024 and yielded 50 proposed changes to NC-SARA policies, some of which, if adopted, could significantly alter the distance education reciprocity agreements.

Such proposals included that an institution may be denied participation in SARA if it violates any requirement related to state authorization, accreditation, or participation in federal Title IV financial aid programs;

and that an institution may be denied participation in SARA or have its participation limited as a result of adverse actions against it related to the institution’s academic quality, financial stability, or student consumer protection issues.

On April 26, 2024, NC-SARA held its public comment forum to seek input on these potential changes.

In addition to the public

comment forum, NC-SARA accepted written comments between April 15, 2024 and May 17, 2024.

On September 10, 2024, NC-SARA announced that the four regional compacts/regional steering committees approved 10 policy change proposals, which include proposed changes related to when an institution may be placed on provisional status and when a state must deny or may exercise its discretion to deny an institution’s participation in SARA.

The NC-SARA board of directors approved the proposals on October 23-25, 2024, concluding the 2024 policy modification process.

The adoption of certain proposals, including those described above to the extent they affect the ability of institutions to participate in the agreements, could have a material adverse effect on Capella University, Strayer University, and the Company.

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

In December 2024, the Department terminated the state authorization negotiated rulemaking process, prior to issuing any draft regulations.

Capella University and Strayer University participate in the State Authorization Reciprocity Agreement (“SARA”), enabling enrollment of distance education students in SARA member states.

The universities apply separately to non-SARA states (e.g., California) for required authorization.

Failure to comply with SARA requirements or state licensing for distance education in non-SARA states could result in loss of SARA participation or state authorization for distance education there.

The National Council for State Authorization Reciprocity Agreements (“NC-SARA”) considers potential policy changes each year.

Past proposals, including more stringent standards for participation of for-profit institutions or exclusion of for-profit institutions from participation, were not adopted, but illustrate the risk that future changes could materially adversely affect Capella University, Strayer University, and the Company.

For example, exclusion from SARA would require seeking authorization in each state, increasing costs and risking denials in some jurisdictions.

NC-SARA began its 2025 policy modification process in January 2025 with a call for proposals.

In September 2025, NC-SARA announced approval of nine policy changes by all four regional compacts, later adopted by the NC-SARA board.

The next modification process is expected to begin in January 2026.

Adoption of proposals affecting institutional participation could have a material adverse effect on Capella University, Strayer University, and the Company.

Negotiated Rulemaking

Beginning January 2024, the Department convened negotiated rulemaking committee meetings to consider new proposed regulations on distance education, cash management, return of federal funds, state authorization, accreditation and related issues, and TRIO programs.

On December 30, 2024, the Department released final regulations on distance education, return of federal funds and the TRIO program, which all make modest changes to existing regulatory language requiring additional data collection and reporting, or, in the case of the TRIO program, make technical changes.

Also in December 2024, the Department officially terminated the negotiated rulemaking process for cash management, state authorization and accreditation, prior to releasing any draft rules.

On April 4, 2025, the Department announced its intention to host public hearings and convene one or more negotiated rulemaking committees to prepare proposed Title IV regulations.

The Department hosted public hearings on April 29, 2025 and May 1, 2025 and accepted written comments through May 5, 2025.

The Department held negotiated rulemaking on proposed changes to the Public Service Loan Forgiveness program June 30 through July 2, 2025.

The negotiating committee did not reach consensus on changes.

As a result the Department proposed its own regulatory language on August 18, 2025, and issued final regulations on October 31, 2025 which, among other things, amends the definition of a “qualifying employer” to exclude employers that engage in activities that have a “substantial illegal purpose” as described in the regulation.

On July 24, 2025, the Department of Education announced its intention to establish two negotiated rulemaking committees to prepare proposed regulations implementing OBBBA and related Trump administration priorities.

One committee, the Reimagining and Improving Student Education (“RISE”) Committee, addressed federal student loan-related changes and met for two multi-day sessions between September 2025 and November 2025;

the committee reached consensus on draft regulatory language, and the Department released proposed regulations on January 29, 2026 consistent with the consensus language.

Specifically, the proposed regulations implement the statutory loan-related changes reflected in OBBBA (described in the OBBBA section above) which among other things includes, with limited grandfathering, new annual, aggregate and lifetime loan limits for graduate students and professional students, proportional adjustment of annual loan limits for students enrolled less than full time, and the phasing out of Federal Direct PLUS loans for graduate students and professional students.

The proposed regulations define “graduate student” and “professional student” for purposes of such changes.

“Graduate student” is defined as “[a] student enrolled in a program of study that is above the baccalaureate level and awards a graduate credential (other than a professional degree) upon completion of the program.” “Professional student” is defined as “[a] student enrolled in a program of study that awards a professional degree upon completion of the program,” and the proposed regulations clarify that a professional degree is a degree that:

(1) signifies both completion of the academic requirements for beginning practice in a given profession and a level of professional skill beyond that normally required for a bachelor’s degree;

(2) is generally at the doctoral level, and that requires at least six academic years of postsecondary education coursework for completion, including at least two years of post-baccalaureate level coursework;

(3) generally requires professional licensure to begin practice;

and (4) includes a four-digit program CIP code in certain specified fields (pharmacy, dentistry, veterinary medicine, chiropractic, law, medicine, optometry, osteopathic medicine, podiatry, theology, and clinical psychology).

The Department is accepting public comment on the proposed rule through March 2, 2026.

A second committee, the Accountability in Higher Education and Access through Demand-driven Workforce Pell (“AHEAD”) Committee, addressed Workforce Pell, institutional and programmatic accountability, and other issues, and met for two multi-day sessions between December 2025 and January 2026;

the committee reached consensus on the Workforce Pell and accountability packages.

Because the committees reached consensus, the Department must publish a notice of proposed rulemaking that generally aligns with the consensus language.

Notwithstanding consensus on draft regulatory language, the Company is unable to predict the ultimate outcome of the rulemaking process or what guidance the Department may issue regarding how schools are to implement OBBBA’s legislative changes.

On January 26, 2026, the Department announced its intent to establish the Accreditation, Innovation, and Modernization negotiated rulemaking committee to develop proposed regulations on accreditation-related topics;

the Department anticipates the committee will convene April-May 2026.

On April 19, 2024, the U.S.

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and eliminates the requirement for live hearings with an opportunity for cross-examination at the post-secondary level.

Multiple states have joined lawsuits against the Department challenging the new rules, and federal district courts have granted preliminary injunctions enjoining the Department from enforcing the final rule in Alabama, Alaska, Arkansas, Florida, Georgia, Idaho, Indiana, Iowa, Kansas, Kentucky, Louisiana, Mississippi, Missouri, Montana, Nebraska, North Dakota, Ohio, Oklahoma, South Carolina, South Dakota, Tennessee, Texas, Utah, Virginia, West Virginia, and Wyoming.

Multiple states have joined lawsuits against the Department challenging the 2024 Title IX Rule, and federal district courts have granted preliminary injunctions enjoining the Department from enforcing the final rule in Alabama, Alaska, Arkansas, Florida, Georgia, Idaho, Indiana, Iowa, Kansas, Kentucky, Louisiana, Mississippi, Missouri, Montana, Nebraska, North Dakota, Ohio, Oklahoma, South Carolina, South Dakota, Tennessee, Texas, Utah, Virginia, West Virginia, and Wyoming.

Certain courts have issued orders expanding the injunction to named schools, irrespective of where those schools are located;

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District Court for the Eastern District of Kentucky granted summary judgment against the U.S.

Department of Education, vacating the 2024 Title IX Rule as unlawful.

On February 4, 2025, the Department’s Office for Civil Rights issued a Dear Colleague Letter confirming that it will enforce Title IX under the 2020 Title IX Rule, and that open investigations initiated under the 2024 Title IX Rule should be reevaluated for consistency with the 2020 Title IX Rule.

Department of Education, vacating the 2024 Title IX Rule as unlawful nationwide.

On February 4, 2025, the Department’s Office for Civil Rights issued a Dear Colleague Letter (“DCL”) confirming that it will enforce Title IX under the 2020 Title IX Rule, and that open investigations initiated under the 2024 Title IX Rule should be reevaluated for consistency with the 2020 Title IX Rule.

On January 20, 2025, President Trump issued Executive Order 14168 “Defending Women From Gender Ideology Extremism and Restoring Biological Truth to the Federal Government” ordering, among other matters, all agencies to enforce laws governing sex-based rights, protections, opportunities, and accommodations consistent with definitions provided in the executive order.

The executive order defines “sex” as a binary classification that does not include “gender identity” and requires agencies to take various actions consistent with that position.

On April 4, 2025, the Department and the U.S.

Department of Justice jointly announced a “Title IX Special Investigations Team” (the “Title IX SIT”) in response to what the agencies describe as a “staggering” volume of Title IX complaints.

The Title IX SIT is intended to streamline Title IX investigations conducted by the federal government by leveraging teams with personnel from both agencies to coordinate on investigation and enforcement.

Under Title VI of the Civil Rights Act of 1964, institutions receiving federal financial assistance are prohibited from discriminating on the basis of race, color, or national origin.

On January 21, 2025, President Trump issued Executive Order 14173 “Ending Illegal Discrimination and Restoring Merit-Based Opportunity” ordering, among other matters, all agencies to enforce civil rights laws and combat illegal private sector Diversity, Equity, and Inclusion (“DEI”) preferences, mandates, policies, programs and activities.

The executive order further directed the U.S.

Attorney General and the Secretary of Education to issue guidance to all institutions of higher education that receive federal financial assistance regarding measures and practices required to comply with the U.S.

Supreme Court’s decision in Students for Fair Admissions, Inc.

President and Fellows of Harvard College , 600 U.S.

181 (2023) (“SFFA”), in which the Court significantly altered the existing legal framework relevant to race-conscious admissions to achieve student body diversity.

On February 5, 2025, the U.S.

Attorney General issued a memorandum to all Department of Justice employees stating that the Department of Justice’s Civil Rights Division will investigate, eliminate, and penalize illegal DEI as well as diversity, equity, inclusion and accessibility (“DEIA”) preferences, mandates, policies, programs and activities in the private sector and educational institutions that receive federal funds.

The Attorney General further stated that by March 1, 2025, the Civil Rights Division and Office of Legal Policy would jointly prepare a report containing recommendations for enforcement and address:

key sectors of concern within the Department of Justice’s jurisdiction;

the most egregious illegal DEI/DEIA practitioners in each sector of concern;

plans to deter the use of illegal DEI/DEIA, including proposals for criminal investigations and up to nine potential civil compliance investigations of publicly traded corporations and certain other organizations;

potential litigation activities, regulatory actions, and sub-regulatory guidance;

and other strategies to end illegal DEI and DEIA discrimination and preferences and ensure compliance with federal civil rights laws.

On July 29, 2025, the Attorney General released “Guidance for Recipients of Federal Funding Regarding Unlawful Discrimination,” which describes “the significant legal risks of initiatives that involve discrimination based on protected characteristics” and provides “non-binding best practices to help entities avoid the risk of violations.” Various

litigation challenging Executive Order 14173 was brought in federal district court;

after a preliminary injunction was granted by a Maryland district court enjoining portions of the executive order, the appeals court stayed the injunction pending appeal.

On February 14, 2025, the Department of Education issued a DCL setting forth the anti-discrimination obligations of institutions that receive federal financial assistance.

The DCL asserts that the SFFA decision applies more broadly to prohibit using race in decisions related to admissions, hiring, promotion, compensation, financial aid, scholarships, prizes, administrative support, discipline, housing, graduation ceremonies, and all other aspects of student, academic, and campus life.

The DCL further states that programs and activities that treat students differently on the basis of race to achieve “nebulous” diversity, racial balancing, social justice, or equity goals are illegal.

The Department informed institutions that the Department intended to take appropriate measures to assess compliance with the applicable statutes and regulations beginning February 28, 2025.

The DCL further noted that institutions that fail to comply with federal civil rights law may, consistent with applicable law, face potential loss of federal funding.

On February 28, 2025, the Department issued additional guidance in a Frequently Asked Questions (“FAQs”) document clarifying aspects of the DCL.

Multiple lawsuits have been filed seeking to enjoin and vacate the DCL and FAQs alleging that they are unconstitutional, violate the Administrative Procedure Act, and are vague and disrupt educational practices, including by limiting academic freedom.

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

In August 2025, the U.S.

District Court for the District of Maryland vacated the DCL, FAQs, and a related certification requirement.

The Department subsequently confirmed it would not take any enforcement action or otherwise implement the guidance until further notice.

On October 15, 2025, the Department filed a notice of appeal to the U.S.

Court of Appeals for the Fourth Circuit;

and on January 21, 2026, the parties filed a joint motion to dismiss the appeal.

On March 14, 2025, the Department announced that its Office for Civil Rights has opened investigations into dozens of higher education institutions for alleged Title VI violations;

the Department has continued to initiate additional Title VI investigations.

Australian and New Zealand Regulation

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

qualifications include certificates, diplomas and advanced diplomas.

VET qualifications include certificates, diplomas and advanced diplomas.

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

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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.

On September 3, 2025, Torrens completed its re-registration process with TEQSA and received a registration renewal from TEQSA for the maximum period of seven years , with two conditions.

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

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

On May 16, 2024, the Education Services for Overseas Students Amendment (Quality and Integrity) Bill 2024 , which would amend the Education Services for Overseas Students Act 2000 , was introduced into the House of Representatives of the Australian Parliament.

On August 15, 2024, the Bill was introduced into the Senate of the Australian Parliament.

The Bill contained several measures that would authorize the Minister for Education to regulate the provision of education to overseas students, including, among other things, by limiting the enrollments of overseas students.

These limits would apply to Torrens and to Think.

The Bill has not passed the Senate;

however, on December 19, 2024, the Australian Federal Government introduced Ministerial Direction 111, which, like the Bill, seeks to limit the number of international students, and is expected to draw student allocations determined by the Government on a prioritization approach.

The Company operates a post-secondary educational institution in New Zealand, Media Design School Limited (“MDS”).

MDS is a Private Training Establishment, a private organization offering education or training.

On December 19, 2024, the Australian Federal Government introduced Ministerial Direction 111, which seeks to limit the number of international students, and is expected to draw student allocations determined by the Government on a prioritization approach.

On August 4, 2025, the Australian Federal Government announced that the National Planning Level for international students for 2026 would be increased over 2025, contingent upon institutions fulfilling certain conditions, and that Ministerial Direction 111 would be replaced with an updated ministerial direction to reflect 2026 arrangements.

On October 9, 2025, the Education Legislation Amendment (Integrity and Other Measures) Bill 2025 was introduced into the House of Representatives of the Australian Parliament, and passed both houses of Parliament on November 28, 2025.

The legislation, which does not address numerical limits on international students, contains several measures to reform key legislative frameworks for education providers and aims to strengthen the integrity and regulation of the international education sector within Australia as well as transnational education and offshore delivery.

The Company operates a private training establishment in New Zealand, Media Design School at Strayer (“MDS”).

It is a globally renowned and specialist provider of design and creative technology education with qualifications ranging from diplomas to postgraduate degrees.

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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 8. Financial Statements and Supplementary Data