What changed in this filing

/stocks — the workspaceLOADING

Item 1. Business

2022-12-12 compared with 2021-12-02 · 230 added, 212 removed, 384 unchanged (54% of the section changed)

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(“we,” “us” or “our”) is a leading provider of transportation and technical training programs.

As of September 30, 2021, we offered certificate, diploma or degree programs at 12 campuses across the United States under the banner of several well-known brands, including Universal Technical Institute (“UTI”), Motorcycle Mechanics Institute and Marine Mechanics Institute (collectively, “MMI”) and NASCAR Technical Institute (“NASCAR Tech”).

As of September 30, 2022, we offered certificate, diploma or degree programs at 16 campuses across the United States under the banner of several well-known brands, including Universal Technical Institute (“UTI”), Motorcycle Mechanics Institute and Marine Mechanics Institute (collectively, “MMI”), NASCAR Technical Institute (“NASCAR Tech”), and MIAT College of Technology (“MIAT”).

Additionally, we offer manufacturer specific advanced training (“MSAT”) programs, including student-paid electives, at our campuses and manufacturer or dealer sponsored training at certain campuses and dedicated training centers.

We offer the majority of our programs in a blended learning model that combines instructor-facilitated online teaching and demonstrations with hands-on labs.

All of our campuses are nationally accredited and are eligible for federal student financial assistance funds under the Higher Education Act of 1965, as amended (“HEA”), commonly referred to as Title IV Programs, which are administered by the U.S.

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Our programs are also eligible for financial aid from federal sources other than Title IV Programs, such as the programs administered by the U.S.

Department of Veterans Affairs (“VA”) and under the Workforce Investment Act.

Department of Veterans Affairs (“VA”) and under the Workforce Innovation and Opportunity Act.

Business Model and Industry Partnerships

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We continue to evolve our business model to provide our students with accessible, affordable training with a focus on bringing education to the students at convenient locations.

The market for qualified service technicians is large and growing.

The market for qualified service technicians across the programs that we offer is large and growing.

The United States Department of Labor Bureau of Labor Statistics (“U.S.

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Additionally, the U.S.

DOL BLS estimates that an average of 49,200 new job openings for welders, 16,500 new job openings for computer-controlled machine tool operators, and 4,500 new job openings for marine and motorcycle technicians will exist annually for new entrants through 2030 in these fields.

DOL BLS estimates that an average of 42,500 new jobs openings for industrial machinery mechanics, 47,600 new job openings for welders, 40,100 new job openings in the HVAC industry, 14,700 new job openings for computer-controlled machine tool operators, 13,100 new job openings for avionic technicians, 6,100 new job openings for robotics, 4,800 new job openings for marine and motorcycle technicians and 1,900 new job openings for wind turbine service technicians will exist annually for new entrants through 2031 in these fields.

Our student recruitment efforts begin with our commitment to positive outcomes, both for our students and our industry relationships.

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Other target groups for relationship-building, such as parts and tools suppliers, provide us with a variety of strategic and financial benefits that include equipment sponsorship, new product support, licensing and branding opportunities and financial sponsorship for our campuses and students.

We offer the majority of our programs in a blended learning model that combines instructor-facilitated online teaching and demonstrations with hands-on labs.

This blended learning format has allowed us to continue to offer our programs to our students during the COVID-19 pandemic and aligns with an increasing trend of online education now being offered as

individuals seek life-long learning opportunities.

On-campus labs are designed to meet or exceed the current national guidelines recommended by the Centers for Disease Control (“CDC”) as well as state and local mandates, while still meeting our accreditation and curriculum requirements.

Business Strategy

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We provide relevant services to assist students with possible tuition financing options, educational and career counseling, opportunities for part-time work while attending school, and ultimately, graduate employment.

Our national employment services team develops job opportunities and outreach, while our local employment services teams advise active students on employment search and interviewing skills, facilitate employer visits to campuses, provide access to reference materials and assist with the composition of resumes.

Our national career services team develops job opportunities and outreach, while our local career services teams advise active students on employment search and interviewing skills, facilitate employer visits to campuses, provide access to reference materials and assist with the composition of resumes.

Strengthen Industry Relationships

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We deliver value to these partners and employers by functioning as an efficient hiring source and low cost training option for new and existing technicians.

These relationships give us direct input on the latest needs and requirements of employers, which not only guides our prospective student recruitment, but also strengthens our curricula and our students’ opportunities for employment and higher earnings after graduation.

These relationships give us direct input on the latest needs and requirements of employers, which

not only guides our prospective student recruitment, but also strengthens our curricula and our students’ opportunities for employment and higher earnings after graduation.

In addition, our manufacturer brand partners support our students through manufacturer-paid courses, scholarships, tuition reimbursement programs and early employment initiatives.

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During the year ended September 30, 2022, we executed the following as part of our growth and diversification strategy:

• We entered into a definitive agreement to acquire MIAT College of Technology (“MIAT”) from HCP & Company.

MIAT served approximately 1,200 students as of September 30, 2021 through its campuses in Canton, Michigan and Houston, Texas.

The company offers vocational and technical certificates as well as associates degrees in fields with robust and growing demand for skilled technical workers, including aviation maintenance, energy technology, wind power, robotics and automation, non-destructive testing, HVACR, and welding.

The acquisition will enable us to further expand our program offerings into growing industry sectors and rapidly expanding fields likely to be bolstered by technological innovation and the country’s focus on sustainable energy.

The transaction closed on November 1, 2021.

• Announced and began execution on our plans to open two additional campus locations during fiscal 2022 in Austin, Texas and Miramar, Florida.

• Announced the expansion of our welding technology program to our Bloomfield, New Jersey campus (launched in July 2021), to our Mooresville, North Carolina campus (in January 2022), and plans to launch a ninth welding program later in fiscal 2022.

• Launched or expanded the following MSAT programs:

◦ The Fendt® Technician Academy, a new program with AGCO Corporation, a global leader in the design, manufacture and distribution of agricultural machinery and solutions, at our Lisle, Illinois campus.

◦ The Daimler Trucks North America (“DTNA”) Finish First program to our Orlando, Florida campus.

◦ Transition of BMW to the Fast Track program our Avondale, Arizona and Orlando, Florida campuses, with Long Beach, California launching in May 2022 and three additional locations launching by the end of fiscal 2022.

• Launched or expanded the following military base MSAT programs:

◦ Premier Truck Group Technician Skills Program, a first-of-its-kind diesel-commercial vehicle technician career skills program, for service members at Fort Bliss, a U.S.

Army post in El Paso, Texas.

◦ BMW Military Service Technician Education Program at Fort Bragg, a U.S.

Army post near Fayetteville, North Carolina.

• Purchased our Avondale, Arizona campus at the end of December 2020, for approximately $45.2 million, including closing costs and other fees, with the intention of consolidating our MMI Phoenix, Arizona campus into the same location by the end of fiscal 2022.

During May 2021, we completed the financing of our Avondale, Arizona campus which replenished approximately $31.2 million of the funds used to purchase the campus.

• Announced the future consolidation and reconfiguration of the UTI and MMI Orlando, Florida campus facilities into one site which is currently scheduled for completion by the end of the second quarter of 2022.

• Entered into a definitive agreement to acquire Concorde Career Colleges, Inc.

(“Concorde”) in May 2022.

Concorde is a leading provider of industry-aligned healthcare education programs in fields such as nursing, dental hygiene and medical diagnostics.

Concorde currently operates 17 campuses across eight states with approximately 8,000 students, and offers its programs in ground, hybrid and online formats.

The acquisition aligns with our growth and diversification strategy, which is focused on offering a broader array of high-quality, in-demand workforce solutions which both prepare students for a variety of careers in fast-growing fields and help close the country's skills gap by leveraging key industry partnerships.

On December 1, 2022, we closed the Concorde acquisition.

• Completed the acquisition of MIAT College of Technology (“MIAT”) from HCP & Company on November 1, 2021.

MIAT had an average of approximately 950 undergraduate full-time active students during the year ended September 30, 2022 through its campuses in Canton, Michigan and Houston, Texas.

MIAT offers vocational and technical certificates as well as associates degrees in fields with robust and growing demand for skilled technical workers, including aviation maintenance, energy technology, wind power, robotics and automation, non-destructive testing, HVACR, and welding.

The acquisition enables us to further expand our program offerings into growing industry sectors and rapidly expanding fields likely to be bolstered by technological innovation and the country’s focus on sustainable energy.

Campus Openings and Optimization

• Expanded our operations through the opening of our new campuses in Austin, Texas and Miramar, Florida.

Austin is our third school in Texas and Miramar is our second school in Florida.

Both campuses help to broaden the reach of our skilled trade programs to high demand geographies.

• Completed the consolidation and reconfiguration of our UTI and MMI Orlando, Florida campus facilities into one site and the consolidation of the MMI Phoenix campus into our Avondale, Arizona building.

• Purchased the Lisle, Illinois campus in February 2022, for approximately $28.7 million in cash consideration, including closing costs and other fees and assumed debt of $18.3 million.

In April 2022, we completed the financing for the purchase which retired the assumed debt and replenished approximately $20.0 million of the funds used to purchase the campus.

See Notes 9, 12, 13 and 15 of the notes to our consolidated financial statements herein for additional details on the purchase and related debt and interest rate swap.

Program Expansion and New Industry Partnerships

• Executed on the next phase of our growth and diversification strategy by announcing the addition of 15 new programs across our campus footprint, including Aviation, HVACR, Robotics, Industrial Maintenance and Wind Energy Technician training to UTI and NASCAR Tech branded campuses, and initiated efforts to add Auto and

Diesel Essentials to the MIAT Canton, Michigan campus.

Pending all regulatory approvals, the initial planned program additions are projected to begin launching in the second quarter of 2023.

• Launched electric vehicle (“EV”) technician training coursework to meet increasing demand for clean cars and trucks.

This enhanced training is the initial step in our overall EV strategy to prepare future technicians for anticipated increasing EV sales in the coming decades.

▪ As part of this initiative, we rolled out new curriculum in our Ford Accelerated Credential Training program to prepare students for the next generation of vehicles on the road.

This new curriculum will feature blended learning courses on high voltage systems safety, hybrid vehicle components and operation, EV battery components and operation and an introduction to high voltage battery service, as well as a Ford instructor-led class on hybrid and EV operation and diagnosis.

• We have also selected Bosch to support the development of new courseware that helps meet the needs of the growing EV market, which continues to see record sales and a demand for skilled technicians.

• Expanded our welding technology program to our Mooresville, North Carolina and Exton, Pennsylvania campuses in January and July 2022, respectively.

• Launched the BMW Fast Track program at our Avondale, Arizona and Orlando, Florida campuses in January 2022, our Long Beach, California campus in April 2022, our Houston, Texas campus in May 2022 and our Exton, Pennsylvania campus in August 2022.

We expect to launch the program at our Lisle, Illinois campus in Spring 2023 and Miramar, Florida campus in Summer 2023.

• Formed a new strategic alliance with Napa Auto Parts (“NAPA”).

NAPA will supply essential parts for hands-on labs, including brake kits, rotors, bulbs, bearing kits, wheel weights and more.

The initial stage of the partnership will impact UTI, MMI and NASCAR Tech campuses and may be expanded to MIAT-branded campuses in the future.

Schools and Programs

We offer certificate, diploma or degree programs at campuses across the United States under the banner of several well-known brands.

The majority of our programs are designed to be completed in 36 to 90 weeks and culminate in a certificate, diploma or associate of occupational studies degree, depending on the program and campus.

The majority of our UTI programs are designed to be completed in 36 to 90 weeks while our MIAT programs are completed in 28 to 96 weeks.

Our advanced training programs range from 12 to 23 weeks in durations.

These programs culminate in a certificate, diploma, associate of occupational studies degree, or associate of applied science degree depending on the program and campus.

Tuition rates vary by type and length of our programs and the program level, such as core or advanced training.

The table below sets forth our current locations that operate under the UTI, MMI, and NASCAR Tech brands, the year the campus opened, and the principal programs taught at each location.

The table below sets forth our current locations that operate under the UTI, MMI, NASCAR Tech, and MIAT brands, the year the campus opened, and the principal programs taught at each location.

Location Brand Year Campus Opened Principal Programs

Arizona (Avondale) UTI 1965 Automotive;

Arizona (Phoenix) MMI 1973 Motorcycle

Arizona (Avondale) (1)

MMI 1973 Motorcycle

California (Long Beach) UTI 2015 Automotive;

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California (Sacramento) UTI 2005 Automotive;

Collision Repair and Refinishing (1)

Florida (Miramar) UTI 2022 Automotive;

Florida (Orlando) UTI/MMI 1986 Automotive;

Illinois (Lisle) UTI 1988 Automotive;

Michigan (Canton) MIAT 1969 Airframe and Powerplant;

Aviation Maintenance;

Industrial Maintenance;

Robotics & Automation;

New Jersey (Bloomfield) UTI 2018 Automotive;

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Pennsylvania (Exton) UTI 2004 Automotive;

Location Brand Year Campus Opened Principal Programs

Texas (Austin) UTI 2022 Automotive;

Texas (Dallas/Ft.

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Collision Repair and Refinishing;

(1) This program stopped enrolling new students in late fiscal 2020.

The teach-out of enrolled students was completed during the first quarter of fiscal 2022.

(2) The welding program in Mooresville is currently eligible for enrollment with programs starting during the second quarter of fiscal 2022.

New Campus Expansion

During the year ended September 30, 2021, we announced our plans to open two additional campus locations during fiscal 2022.

The location and initial programs expected to be offered at these campuses are summarized below.

Location Brand Expected Opening Initial Programs Expected to be Offered (1)

Texas (Austin) UTI Q2 2022 Automotive;

Florida (Miramar) UTI Q4 2022 Automotive;

(1) Both campuses have approximately 10,000 square feet of available space to accommodate additional programs that are expected to be added at a later date.

Texas (Houston) MIAT 2010 Airframe and Powerplant;

Aviation Maintenance;

Industrial Maintenance;

Non-Destructive Testing;

Robotics & Automation;

(1) As previously noted, the MMI Phoenix, Arizona campus was consolidated into our Avondale, Arizona building during fiscal 2022.

While the MMI program shares the same building as UTI in Avondale, it is considered a separate campus for our reporting requirements to the ED.

Description of Current Programs Offered

The majority of our students receive their training in a blended training model that combines instructor-facilitated online teaching and demonstrations with hands-on labs.

The blended learning model not only increases access for students, but

better prepares them to be life-long learners as technicians today perform many day-to-day tasks and continuing education courses online or on a digital device.

Many of our students receive their training in a blended training model that combines instructor-facilitated online teaching and demonstrations with hands-on labs.

The blended learning model not only increases access for students, but better prepares them to be life-long learners as technicians today perform many day-to-day tasks and continuing education courses online or on a digital device.

The table below provides an overview of the programs taught by UTI owned and operated institutions, including the year a program was first offered at one of our campuses, the focus of the program, and the type of employment the program was designed to prepare graduates to obtain.

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Diesel 1968 Diagnose, service and repair diesel systems and industrial equipment Entry-level service technicians in medium and heavy truck facilities, truck dealerships, or in service and repair facilities

Airframe and Powerplant 1969 Aircraft troubleshooting, hydraulics and pneumatics, powerplant lubrication systems and turbine engine operation Entry-level opportunities in various areas of the aviation industry

Automotive/Diesel 1970 Diagnose, service and repair automobiles and diesel systems Entry-level service technicians in automotive repair facilities, automotive dealer service departments, diesel engine repair facilities, medium and heavy truck facilities, truck dealerships, or in service and repair facilities

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Entry-level technicians at OEM dealerships and independent repair facilities

Program Year Established Program Focus Target Job Placement (1)

NASCAR 2002 Automotive training along with additional NASCAR-specific elective courses

Entry-level service technicians in automotive dealer service departments or automotive repair facilities, or opportunities in racing-related industries

Energy Technology 2007 Associate of Applied Science degree which focuses on power generation, wind power, compression technology and powerplant operations Entry-level positions in the wind, nuclear, gas, coal, power distribution, or solar industries

Industrial Maintenance 2007 Diagnose, service, test and repair various types of machinery Entry-level industrial maintenance technician in a wide range of industries including gas, coal, nuclear and solar industries

Wind Power 2007 Diagnose, service and repair wind turbine towers Entry-level service technicians for the wind power industry

Aviation Maintenance Technology 2012 Perform inspections, routine maintenance and repairs to keep aircraft in operating condition Entry-level service technicians in aviation repair stations and hangers, and on airfields

Heating, ventilation, air conditioning and refrigeration (HVACR) 2012 An awareness of safety procedures, knowledge of heating and cooling, familiarity with tools used in the industry, and the ability to perform a variety of manual skills Entry-level service technicians in the heating and cooling industry

Welding 2017 How to weld various materials using a wide range of welding processes

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Entry-level CNC operators in the manufacturing and mechanical fabrication industries

Robotics & Automation 2018 Robotics is the process of creating and using robots to complete certain tasks.

Automation refers to the process of using technology to perform tasks typically completed by humans.

Entry-level technician in a variety of industries

Non-Destructive Testing 2019 Training in the discipline focused on the quality and serviceability of materials and structures Entry-level technicians in a variety of industries, from oil and gas and manufacturing to power generation and aviation

(1) Target job placement describes the type of employment the program was designed to prepare graduates to obtain.

Graduates may also secure positions outside of the Target Job Placement, including, for example, parts associate, service writer, fabricator, paint and preparation, and shop owner or operator, among others.

Graduates may also secure positions outside of the Target Job Placement, including, for example, parts associate, service technician, fabricator, paint and preparation, and shop owner or operator, among others.

Manufacturer Specific Advanced Training (“MSAT”) Programs

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The programs range from 12 to 23 weeks in duration.

Our manufacturer-paid MSATs are intended to offer in-depth instruction on specific manufacturers’ products, qualifying a graduate for employment with a dealer seeking highly specialized, entry-level technicians with brand-specific skills.

Our manufacturer-paid MSATs are

intended to offer in-depth instruction on specific manufacturers’ products, qualifying a graduate for employment with a dealer seeking highly specialized, entry-level technicians with brand-specific skills.

We currently offer the following manufacturer-paid MSAT programs using vehicles, equipment, specialty tools and curricula provided by our manufacturer brand partners:

Manufacturer-Paid MSAT Programs Offered Location

BMW Service Technician Education Program (STEP) (1)

Avondale, Orlando

Fendt Technician Academy by AGCO (2)

Fendt Technician Academy by AGCO Lisle

Mercedes-Benz DRIVE Mercedes-Benz facilities in Long Beach, California, Jacksonville, Florida, Robbinsville, New Jersey and Grapevine, Texas

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Porsche Technician Apprenticeship Program (PTAP) Porsche facilities in Eastvale, California, Atlanta, Georgia, and Easton, Pennsylvania

Volvo Service Automotive Factory Education (SAFE) Avondale

(1) The BMW STEP program is being replaced in fiscal 2022 with the BMW FastTrack Program, a student-paid MSAT program.

The FastTrack program is targeted to expand the BMW footprint to six UTI campuses, with Avondale and Orlando launching in January 2022, Long Beach launching in May 2022, and three additional locations launching by the end of fiscal 2022.

(2) The Fendt Technician Academy, which is exclusive to UTI, launched in September 2021.

Volvo Tekniker Apprenticeship Program (1)

Avondale, Volvo facility in Ridgeville, South Carolina

(1) The Volvo South Carolina training facility launched in June 2022.

Student-Paid MSATs

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UTI and NASCAR Tech Campuses

BMW FastTrack (1)

Avondale, Exton, Houston, Long Beach, Orlando

Cummins Engines Avondale, Exton, Houston

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Toyota Professional Automotive Technician (TPAT) Lisle, Rancho Cucamonga

Student-Paid MSAT Programs Offered Location

American Honda Motor Company, Inc.

Phoenix, Orlando

BMW Motorrad of North America, LLC Phoenix, Orlando

Harley-Davidson Motor Company Phoenix, Orlando

Kawasaki Motors Corporation, U.S.A Phoenix, Orlando

Avondale, Orlando

BMW Motorrad of North America, LLC Avondale, Orlando

Harley-Davidson Motor Company Avondale, Orlando

Kawasaki Motors Corporation, USA Avondale, Orlando

Mercury Marine Orlando

Suzuki Motor of America, Inc.

Phoenix, Orlando

Avondale, Orlando

Volvo Penta of the Americas Orlando

Yamaha Motor Corporation, USA Phoenix, Orlando

Yamaha Motor Corporation, USA Avondale, Orlando

(1) The BMW STEP program was replaced in fiscal 2022 with the BMW FastTrack Program, a student-paid MSAT program.

The FastTrack program is targeted to expand the BMW footprint to seven UTI campuses, with Avondale and Orlando launched in January 2022, Long Beach launched in April 2022, Houston launched in May 2022 and Exton launched in August 2022.

It is also expected to launch at Lisle in Spring 2023 and Miramar in Summer 2023.

Military Base Programs

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Affordability and Accessibility

During the year ended September 30, 2021, tuition ranged from approximately $20,000 for our CNC program (lasting 36 weeks) to $60,000 for our Automotive and Diesel program with one specialized elective program (lasting 90 weeks).

During the year ended September 30, 2021, the average annual revenue per student was approximately $29,200, net of scholarships or grants funded by us.

During the year ended September 30, 2022, tuition at our UTI, MMI and NASCAR Tech campuses ranged from approximately $20,000 for our CNC program (lasting 36 weeks) to $60,000 for our Automotive and Diesel program with one specialized elective program (lasting 90 weeks).

During fiscal 2022, tuition at our MIAT campuses ranged from approximately $20,000 for our Industrial Maintenance Technician program (lasting 28 weeks) to $50,000 for our Aviation Maintenance Technology program (lasting 96 weeks).

During the year ended September 30, 2022, the average annual revenue per student was approximately $32,600, net of scholarships or grants funded by the institution.

We are focused on making our training more affordable and accessible through financing options, proprietary loans, institutional and relocation grants, scholarships based on need and merit, and employer sponsored training and tuition reimbursement.

During the year ended September 30, 2021, approximately 42% of our active students received a UTI-funded scholarship or grant and approximately 23% of active students received funding from our proprietary loan program.

During the year ended September 30, 2022, approximately 42% of our active students received a UTI-funded scholarship or grant and approximately 22% of active students received funding from the proprietary loan program.

To maximize student affordability and speed to completion, we are working with high schools across the nation to increase our Technical Education Institutional Grant (“TEIG”) agreements.

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In response to growing demand for trained technicians, our industry partners and employers are increasingly willing to participate in our students’ cost of education by providing them with scholarship money and relocation assistance to attend school and by offering our graduates tuition reimbursement plans and competitive compensation and benefit packages, including signing bonuses, relocation grants and tool incentives.

There are over 4,800 employer location incentive

opportunities, which when made available make our training programs more affordable for students and may provide them with valuable relationships or employment opportunities following graduation.

There are over 5,700 employer location incentive opportunities, which when made available make our training programs more affordable for students and may provide them with valuable relationships or employment opportunities following graduation.

Student Enrollment

We enroll students throughout the year, and courses start every three to six weeks.

We enroll students throughout the year, and courses typically start every three to six weeks.

For the year ended September 30, 2022, our average number of undergraduate full-time active students was 12,838, representing an increase of approximately 11.7% as compared to 11,489 for the year ended September 30, 2021.

A portion of this increase was due to our acquisition of MIAT which for the year ended September 30, 2022, had an average number of undergraduate full-time active students of 950.

At September 30, 2022, our end of period number of undergraduate full-time active students was 14,380, an increase of 5.1% from our ending full-time enrollment of 13,682 at September 30, 2021.

Currently, our student body is geographically diverse.

While our campus locations attract local students that live within 50 miles, we estimate that approximately 50% of our students elect to relocate to attend our programs.

While our campus locations attract local students that live within 50 miles, we estimate that approximately 50% of our students elect to relocate to attend our programs, with this percentage varying across campuses and programs.

Due to the seasonality of our business and normal fluctuations in student populations, we expect variability in our quarterly results.

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Identifying employment opportunities and preparing our graduates for their future careers is critical to our ability to deliver value to our graduates from their education.

Accordingly, we dedicate significant resources to maintaining an effective employment team.

Our campus-based staff facilitates several career development processes, including instruction and coaching for interview skills, interview etiquette and professionalism.

Additionally, the employment team provides students with reference materials and assistance with the composition of resumes.

Accordingly, we dedicate significant resources to maintaining an effective career services team.

Our campus-based staff facilitate several career development processes, including instruction and coaching for interview skills, interview etiquette and professionalism.

Additionally, the career services team provides students with reference materials and assistance with the composition of resumes.

Finally, we place emphasis on and devote significant time to assisting students with part-time and graduate job searches.

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Together, the campuses and centralized department coordinate and host career fairs, industry awareness presentations, interview days and employer visits to our campus locations.

We believe that our graduate employment services provide our students with a compelling value proposition and enhance the employment opportunities for our graduates and are a competitive differentiator from other education institutions.

We believe that our graduate career services provide our students with a compelling value proposition and enhance the employment opportunities for our graduates and are a competitive differentiator from other education institutions.

Our employment rate for 2021 and 2020 graduates who were employed within one year of graduation was 82% and 80%, respectively.

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Graduates employed 5,692 5,176

(1) The decrease in the graduate employment rate from fiscal 2019 to fiscal 2020 was due primarily to the impacts of the COVID-19 pandemic on our student population and the employer community.

(1) We completed the acquisition of MIAT on November 1, 2021.

As such, this table does not include the graduate employment rate data for MIAT graduates.

The for-profit, postsecondary education industry is highly competitive and highly fragmented, with no one provider controlling significant market share.

We compete with other institutions that are eligible to receive Title IV funding, including not-for-profit public and private schools, community colleges and for-profit institutions which offer automotive, diesel, collision repair, motorcycle, marine, welding, CNC machining and closely related skilled trades training programs.

We compete with other institutions that are eligible to receive Title IV funding, including not-for-profit public and private schools, community colleges and for-profit institutions which offer automotive, diesel, collision repair, motorcycle, marine, welding, CNC machining, aviation, HVACR, robotics, and closely related skilled

trades training programs.

Our competition differs in each market depending on the curriculum we offer and the availability of other choices, including job prospects.

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Each of our employees plays a key role in our mission to serve students, partners and communities by providing quality education and training for in-demand careers.

We believe that diversity and inclusion (“D&I”) among our employees is essential in this process, as a truly innovative educational institution relies on a wealth of backgrounds and experiences to enhance student outcomes.

During fiscal 2021 we hired a Director of Diversity and Inclusion who is responsible for setting the D&I strategy and roadmap to ensure that we meet our objectives both internally, of creating a company where everyone feels they belong, and externally, by working closely with our marketing and talent acquisition function to attract diverse talent.

We believe that diversity, equity, and inclusion (“DE&I”) among our employees is essential in this process, as a truly innovative educational institution relies on a wealth of backgrounds and experiences to enhance student outcomes.

We have a Director of Diversity, Equity, and Inclusion who is responsible for setting the DE&I strategy and roadmap to ensure that we meet our objectives both internally, of creating a company where everyone feels they belong, and externally, by working closely with our marketing and talent acquisition function to attract diverse talent.

To attract a truly diverse workforce, we strive to instill a culture where employees are encouraged to draw upon their own unique skills and perspectives when engaging with our growing and diverse student population.

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We require a specific level of industry experience in order to enhance the quality of the programs we offer and to address current and industry-specific issues in our course content.

We provide intensive

instructional training and continuing education to our faculty members to maintain the quality of instruction in all fields of study.

A majority of our existing instructors have a minimum of five years’ experience in the industry and an average of eight years of experience teaching at UTI.

We provide intensive instructional training and continuing education to our faculty members to maintain the quality of instruction in all fields of study.

A majority of our existing instructors have a minimum of five years’ experience in the industry and an average of seven years of experience teaching at UTI.

We employ field, military and campus-based admissions representatives who work directly with prospective students to facilitate the enrollment process.

Additionally, each school has a support team that typically includes a campus president, an education director, a financial aid director, a student services director, and an employment services director.

Additionally, each school has a support team that typically includes a campus president, an education director, a financial aid director, a student services director, and an career services director.

We believe our management team has the experience necessary to effectively implement our growth and diversification strategy and continue to drive positive educational and employment outcomes for our students.

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Environmental Matters

We use hazardous materials at our training facilities and campuses and generate small quantities of regulated waste, including, but not limited to, used oil, antifreeze, transmission fluid, paint, solvents and car batteries.

As a result, our facilities and operations are subject to a variety of environmental laws and regulations governing, among other things, the use, storage and disposal of solid and hazardous substances and waste, and the clean-up of contamination at our facilities or off-site locations to which we send or have sent waste for disposal.

facilities or off-site locations to which we send or have sent waste for disposal.

Certain of our campuses are required to obtain permits for our air emissions.

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These regulatory requirements cover the vast majority of our operations, including our educational programs, facilities, instructional and administrative staff, administrative procedures, marketing, recruiting, financial operations and financial condition.

These regulatory requirements also affect our ability to acquire, expand or open additional institutions or campuses, add new, or expand our existing educational programs and change our corporate structure and ownership.

These regulatory requirements also affect our ability to acquire, expand or open additional institutions or campuses, to revise or expand our educational programs, and to change our corporate structure and ownership.

The approvals granted by these entities permit our schools to operate and to participate in a variety of government-sponsored financial aid programs that assist students in paying for their education.

This includes the federal programs of student financial assistance under Title IV of the HEA, commonly referred to as Title IV Programs.

We also are subject to oversight by other federal agencies including the Consumer Financial Protection Bureau (“CFPB”), the SEC, the Federal Trade Commission, the Internal Revenue Service and the Departments of Veterans Affairs, Defense, Treasury, Labor and Justice.

The most significant of these is the federal student aid programs administered by the ED pursuant to HEA Title IV Programs.

Generally, to participate in Title IV Programs, an institution must be licensed or otherwise legally authorized to operate in the state where it is physically located, be accredited by an accreditor recognized by ED, be certified as an eligible institution by ED, offer at least one eligible program of education, and comply with other statutory and regulatory requirements.

We also are subject to oversight by other federal agencies including the Consumer Financial Protection Bureau (“CFPB”), the Securities and Exchange Commission (“SEC”), the Federal Trade Commission (“FTC”), the Internal Revenue Service and the Departments of Veterans Affairs (“VA”), Defense (“DOD”), Treasury, Labor, and Justice.

Below, we discuss certain elements of this regulatory environment.

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To operate and offer postsecondary programs, and to be certified to participate in Title IV Programs, each of our institutions must obtain and maintain authorization from the state in which it is physically located (“Home State”).

To engage in recruiting activities outside of its Home State, each institution also may be required to obtain and maintain authorization from the states in which it is recruiting students.

UTI is authorized to participate in the State Authorization Reciprocity Agreement (“SARA”).

SARA is an agreement among member states, districts and territories that establishes comparable national standards for interstate offering of post-secondary distance education courses and programs.

SARA is overseen by a national council (NC-SARA) and administered by four regional education compacts.

As of September 1, 2021, all states other than California are members of SARA.

Each of our institutions holds the state and/or SARA authorizations required to operate and offer postsecondary education programs in its Home State, and to recruit in the states in which it engages in recruiting activities.

To engage in educational or recruiting activities outside of its Home State, each institution also may be required to obtain and maintain authorization from the states in which it is educating or recruiting students.

The level of regulatory oversight varies substantially from state to state and is extensive in some states.

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Some states prescribe standards of financial responsibility and mandate that institutions post surety bonds.

Many states have requirements for

institutions to disclose institutional data to current and prospective students, as well as to the public, and some states require that our schools meet prescribed performance standards as a condition of continued approval.

Many states have requirements for institutions to disclose institutional data to current and prospective students, as well as to the public, and some states require that our schools meet prescribed performance standards as a condition of continued approval.

States can and often do revisit, revise, and expand their regulations governing postsecondary education and recruiting.

Our institutions are also authorized to participate in the State Authorization Reciprocity Agreement (“SARA”).

SARA is an agreement among member states, districts and territories that establishes comparable national standards for interstate offering of post-secondary distance education courses and programs.

SARA is overseen by a national council (“NC-SARA”) and administered by four regional education compacts.

As of September 2022, 49 states (all but California), the District of Columbia, Puerto Rico and the U.S.

Virgin Islands have joined SARA.

Each of our institutions holds the state and/or SARA authorizations required to operate and offer postsecondary education programs, and to recruit in the states in which it engages in recruiting activities.

Accreditation

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Institutional accreditation by an ED-recognized accreditor is required for an institution to be certified to participate in Title IV Programs.

All of our institutions are accredited by the ACCSC, which is an accrediting agency recognized by ED.

All of our institutions are accredited by the Accrediting Commission of Career Schools and Colleges (“ACCSC”), which is an accrediting agency recognized by ED.

ACCSC reviews the academic quality of each institution’s instructional programs, as well as the administrative and financial operations of the institution to ensure that it has the resources necessary to perform its educational mission, implement continuous improvement processes, and support student success.

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We strive to maintain the highest standards.

Currently 11 of our campuses are classified as a School of Excellence or Distinction.

Currently 13 of our campuses are classified as ACCSC Schools of Excellence or ACCSC Schools of Distinction.

Six of our campuses have achieved this award twice in their history, and one campus has received this award three times in its history.

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Campus Accreditation Expiration Renewal Status On-Site Evaluation

Long Beach, California September 2022 Renewed March 2017

Long Beach, California September 2022 In Process November 2022

Exton, Pennsylvania (1)

October 2022 Renewed June 2016

October 2022 In Process Est FY23

Houston, Texas (MIAT) (2)

December 2022 In Process Est FY23

Worth, Texas (1)

March 2023 Renewed December 2016

March 2023 In Process Est FY23

Sacramento, California (1)

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February 2025 Renewed March 2019

Phoenix, Arizona;

Avondale, Arizona;

Motorcycle Mechanics Institute (MMI) (1)

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May 2025 Renewed December 2019

Canton, Michigan (MIAT) (2)

July 2026 Renewed October 2021

Austin, Texas (3)

May 2024 Approved Est FY25

Miramar, Florida (3)

September 2024 Approved Est FY25

(1) Indicates a school that has achieved School of Excellence status during its most recent renewal of accreditation, which recognizes ACCSC-accredited institutions for their commitment to the expectations and rigors of ACCSC accreditation, as well as the efforts made by the institution in maintaining high levels of achievement among their students.

(2) Indicates a school that has achieved School of Distinction status during its most recent renewal of accreditation, which recognizes accredited member schools that demonstrated a commitment to the expectations and rigors of ACCSC accreditation, as well as a commitment to delivering quality educational programs to students.

(3) New schools are initially accredited for a two year term after which they are then eligible to renew for the longer five or six year renewal cycle.

Title IV Programs

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All of our institutions are certified to participate in Title IV Programs.

The HEA, which authorizes Title

IV Programs, has not been comprehensively reauthorized since 2008.

The HEA, which authorizes Title IV Programs, has not been comprehensively reauthorized since 2008.

Despite repeated attempts, Congress has not completed a full reauthorization since then.

In addition to HEA reauthorization, policies directly related to Title IV Programs and funding for those programs may be impacted by the annual budget and appropriations process as well as by other legislation.

At this time, UTI cannot predict any or all of the changes that Congress may ultimately make, and any of those changes could potentially have a material adverse effect on UTI’s business and operations.

In fiscal 2021, we derived approximately 68% of our revenues, on a cash basis as defined by ED, from Title IV Programs.

time, we cannot predict all or any of the changes that Congress may ultimately make, and any of those changes could potentially have a material adverse effect on our business and operations.

In fiscal year 2022, we derived approximately 67% of our revenues, on a cash basis as defined by ED, from Title IV Programs.

We derived approximately 49% of our revenues, on a cash basis, from the Direct Loan program, pursuant to which ED makes loans to students or their parents.

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The HEA defines an “institution” as a main campus and its additional locations.

Pursuant to this definition, ED recognizes us as operating three institutions (“OPEIDs”), organized as follows:

Pursuant to this definition, ED recognizes UTI as owning and operating four institutions (“OPE IDs”), organized as follows:

Universal Technical Institute of Arizona

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Universal Technical Institute, Long Beach, California

Universal Technical Institute, Miramar, Florida

Universal Technical Institute, Rancho Cucamonga, California

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Universal Technical Institute of Phoenix

Universal Technical Institute DBA Motorcycle Mechanics Institute, Motorcycle & Marine Mechanics Institute, Phoenix, Arizona

Universal Technical Institute DBA Motorcycle Mechanics Institute, Motorcycle & Marine Mechanics Institute, Avondale, Arizona

Additional campuses:

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Universal Technical Institute, Bloomfield, New Jersey

To participate in Title IV Programs, an institution must be authorized by the relevant state, accredited by an ED-recognized accreditor, and certified by ED.

Universal Technical Institute, Austin, Texas

MIAT College of Technology

MIAT College of Technology, Canton, Michigan

Additional campuses:

MIAT College of Technology, Houston, Texas

To obtain and maintain certification, institutions also must demonstrate ongoing compliance with the HEA and its extensive and complex implementing regulations;

regulations that ED frequently revisits, revises, and expands.

Because all of our institutions are certified to participate in Title IV Programs, they all must comply with this complex framework of statutes, regulations, and guidance, and undergo detailed oversight and review.

Because all of our institutions are certified to participate in Title IV Programs, they must all comply with this complex framework of statutes,

regulations, and guidance, and undergo detailed oversight and review.

Below, we discuss the core components of the Title IV Programs’ regulatory framework.

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The Program Participation Agreement (“PPA”) document serves as ED’s formal recognition that an institution and its associated additional locations have satisfied this requirement, and are authorized to participate in Title IV Programs for a specified period of time.

institution seeking to expand its activities in certain ways, such as opening an additional location or raising the highest academic credential it offers, must obtain approval from ED.

Every institution also is required to periodically renew its certification by applying for continued certification before its current term of certification expires.

An institution seeking to expand its activities in certain ways, such as opening an additional location or raising the highest academic credential it offers, must obtain approval from ED.

Every institution is also required to periodically renew its certification by applying for continued certification before its current term of certification expires.

Terms of certification are typically six years, but can be three years or shorter.

We received a fully recertified PPA for Universal Technical Institute of Texas in April 2018, which will expire March 31, 2022.

In November 2018, we received a fully recertified PPA for Universal Technical Institute of Arizona and for Universal Technical Institute of Phoenix.

Both of the PPA’s will expire on March 31, 2022.

We received fully recertified PPAs for Universal Technical Institute of Texas, Universal Technical Institute of Arizona and Universal Technical Institute of Phoenix in June 2022, which will expire June 30, 2024.

The 90/10 Rule

As a condition of participation in Title IV Programs, proprietary institutions must agree when they sign their PPA to comply with the 90/10 rule.

Under the current 90/10 rule, a proprietary institution is subject to sanctions if it derives more than 90% of its revenue from Title IV Program funds for a single year and loses its eligibility to participate in Title IV programs if it derives more than 90% of its revenue from Title IV Program funds for two consecutive fiscal years.

We regularly monitor compliance with this requirement to minimize the risk that any of our institutions would derive more than the allowable maximum percentage of its revenue from Title IV Programs for any fiscal year.

As of September 30, 2021, our institutions’ annual Title IV percentages as calculated under the 90/10 rule ranged from approximately 65% to 69% between our institution’s three OPEIDs.

Under the American Rescue Plan Act of 2021 (“ARPA”), a proprietary institution must derive at least 10% of its revenue from sources other than “Federal education assistance funds,” instead of from sources other than “Title IV Program funds.” The phrase “Federal education assistance funds” is broadly defined as “[f]ederal funds that are disbursed or delivered to or on behalf of a student to be used to attend such institution.” While ARPA,is current law, by the statute’s own terms, the earliest this revision to the 90/10 rule may take effect is for institutional fiscal years beginning on or after January 1, 2023.

We are currently reviewing the potential impact of this change and will be monitoring the proposed and final regulations promulgated by ED to carry out this change, which are anticipated in 2022.

Based on currently available information and reasonable expectations regarding the scope of the phrase “Federal education assistance funds” we do not believe this change will materially impact our ability to comply with the 90/10 rule.

Under the current 90/10 rule, to remain eligible to participate in the federal student aid programs, a proprietary institution cannot derive more than 90% of its revenues for each fiscal year from Title IV Program funds.

A proprietary institution is subject to sanctions if it exceeds the 90% level for a single year, and loses its eligibility to participate in Title IV Programs if it derives more than 90% of its revenue from Title IV Programs, as applicable, for two consecutive fiscal years.

In 2021, President Biden signed into law the American Rescue Plan Act of 2021 (“ARPA”), which amended the 90/10 rule.

Section 2013 of the ARPA amended the rule to require covered institutions to derive at least 10% of their revenue from sources other than “Federal education assistance funds.” The phrase “Federal education assistance funds” was broadly defined as “federal funds that are disbursed or delivered to or on behalf of a student to be used to attend such institution.” Congress directed ED to clarify the impact of this change with new regulations.

ED published a new proposed 90/10 rule on July 28, 2022 and a final rule on October 28, 2022.

This rule takes effect July 1, 2023 and applies to any annual audit submission for a proprietary institutional fiscal year beginning on or after January 1, 2023.

Significantly, pursuant to this proposed rule, “Federal education assistance funds” would include most educational assistance funds provided by a Federal agency to an institution or a student to cover tuition, fees and other institutional charges, including funds provided by the VA or DOD.

We regularly monitor compliance with the 90/10 requirement to minimize the risk that any of our institutions would derive more than the allowable maximum percentage of its revenue from Title IV Programs for any fiscal year.

As of September 30, 2022, our institutions’ annual Title IV percentages as calculated under the current 90/10 rule ranged from approximately 64% to 70% between our institution’s four OPE IDs.

Based on our review of the final 90/10 rule, including the scope of the phrase “Federal education assistance funds” we do not believe our ability to comply with 90/10 requirements will be materially impacted once the new rule takes effect.

Administrative Capability

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Cohort Years Ended September 30, (1)

2018 2017 2016

Universal Technical Institute of Arizona 3.1% 11.9% 13.8%

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Universal Technical Institute of Texas 2.7% 12.1% 16.1%

MIAT College of Technology (3)

1.9% 15.4% 21.8%

All proprietary postsecondary institutions (4)

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(1) Based on information published by ED.

(2) Includes other proprietary institutions beyond Universal Technical Institute.

(2) Due to the COVID-19 pandemic, ED paused all loan payments from March 13, 2020 through December 31, 2022.

This has significantly decreased the default rates starting with the 2019 Cohort.

(3) We completed the acquisition of MIAT on November 1, 2021.

As a result, the cohort default rates presented here relate to periods prior to our ownership.

However, since these rates affect our current collection timing on disbursements of federal student loans, we have included the rates within the table.

(4) Includes other proprietary institutions beyond UTI.

An institution whose cohort default rate exceeds 30% in consecutive fiscal years may be subject to conditions and restrictions, and will lose eligibility if the rate remains above 30% three years in a row.

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An institution whose three-year cohort default rate is 15% or greater for any one of the three preceding years is subject to a 30-day delay in receiving the first disbursement on federal student loans for first-time borrowers.

As of September 30, 2021, only Universal Technical Institute of Texas was subject to a 30-day delay in receiving the first disbursement on federal student loans for first-time borrowers due to a three-year cohort default rate that was 15% or greater for one of the three most recent years.

As of September 30, 2022, Universal Technical Institute of Texas and MIAT College of Technology were subject to a 30-day delay in receiving the first disbursement on federal student loans for first-time borrowers due to a three-year cohort default rate that was 15% or greater for one of the three most recent years.

Financial Responsibility

All institutions participating in Title IV Programs also must satisfy specific ED standards of financial responsibility.

Among other things, an institution must meet all of its financial obligations, including required refunds to students and any Title IV Program liabilities and debts, be current in its debt payments, comply with certain past performance requirements, not receive an adverse, qualified, or disclaimed opinion by its accountants in its audited financial statements.

Among other things, an institution must meet all of its financial obligations, including required refunds to students and any Title IV Program liabilities and debts, be current in its debt payments, comply with certain past performance requirements, and not receive an adverse, qualified, or disclaimed opinion by its accountants in its audited financial statements.

Each year, ED also evaluates institutions’ financial responsibility by calculating a “composite score,” which utilizes information provided in the institutions’ annual audited financial statements.

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If an institution’s composite score is above 1.5, and it meets all other requirements, it is deemed financially responsible.

If its composite score is below 1.5, but at least 1.0, the institution is still considered to be financially responsible, but must agree to additional oversight by ED in the form of cash monitoring and other participation requirements.

composite score is below 1.5, but at least 1.0, the institution is still considered to be financially responsible, but must agree to additional oversight by ED in the form of cash monitoring and other participation requirements.

If an institution’s composite score is below 1.0, the institution is considered by ED to lack financial responsibility.

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as the parent company.

ED’s regulations permit ED to examine the financial

statements of Universal Technical Institute, Inc., the financial statements of each institution and the financial statements of any related party.

ED’s regulations permit ED to examine the financial statements of Universal Technical Institute, Inc., the financial statements of each institution and the financial statements of any related party.

ED has not required us currently to post a letter of credit on behalf of any of our schools.

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• If two or more “discretionary” triggering events (as described below) take place within a certain time period unless a triggering event is resolved before any subsequent event(s) occurs.

ED also may determine that an institution is not able to meet its financial or administrative obligations if one of the following discretionary triggering events occurs and is likely to have a material adverse effect on the financial condition of the institution:

ED may also determine that an institution is not able to meet its financial or administrative obligations if one of the following discretionary triggering events occurs and is likely to have a material adverse effect on the financial condition of the institution:

• The accrediting agency for the institution issued an order, such as a show cause order or similar action, that, if not satisfied, could result in the withdrawal, revocation or suspension of institutional accreditation;

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• The institution’s state licensing agency notifies the institution of an intent to withdraw or terminate the institution’s state licensure if the institution does not take the steps necessary to come into compliance with a state licensing agency requirement;

• The institution did not receive at least 10 percent of its revenue from non-Title IV sources for its most recently completed fiscal year as calculated by ED;

• The institution did not receive at least 10% of its revenue in compliance with the 90/10 rule for its most recently completed fiscal year as calculated by ED;

• The institution has high annual drop-out rates as calculated by ED;

• The institution’s two most recent official cohort default rates are 30 percent or greater, as determined under the regulations and unless the institution has a pending or successful appeal that sufficiently reduces at least one of the rates.

• The institution’s two most recent official cohort default rates are 30% or greater, as determined under the regulations and unless the institution has a pending or successful appeal that sufficiently reduces at least one of the rates.

ED regulations give the institution an opportunity to provide information to the agency demonstrating that the triggering event is not material to the institution’s financial position in advance of any final determination regarding the institution’s financially responsibility.

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Additionally, we intend to continue to invest in our blended learning platform and curriculum to further enhance the student experience and student outcomes.

To date, we have received approval from ACCSC to permanently offer blended format programs that utilize both distance and on-ground education.

Additionally, we have received permanent approvals by all state education authorizing agencies to offer blended format programs.

Finally, we are working to secure approval from the Florida State veterans agency to classify our MMI non-degree, blended programs as resident training for purposes of VA benefits, to ensure that veterans enrolling in these programs can access their VA benefits after December 21, 2021, when applicable waivers are currently set to expire.

To date, we have received approval from ACCSC to permanently offer blended format programs that utilize both distance

and on-ground education.

Additionally, we have received permanent approvals from all state education authorizing agencies

to offer blended format programs.

Title IV Program Rulemaking

ED is almost continuously engaged in one or more negotiated rulemakings, which is the process pursuant to which it revisits, revises, and expands the complex and voluminous Title IV Program regulations.

On May 26, 2021, ED announced its intention to establish multiple rulemaking committees and for these committees to prepare proposed regulations.

These regulations could involve revisiting and potentially revising regulations across 14 different topics areas identified by ED, including the rules governing changes in ownership, standards of administrative capability, borrower defense to repayment, closed school loan discharges, mandatory pre-dispute arbitration clauses, and gainful employment.

It is expected that these negotiated rulemakings will occur throughout 2022 and 2023, and that any resulting rules will become effective thereafter.

ED has also invited public commentary on other matters around potential gaps in postsecondary outcomes, including retention, completion, loan repayment and student loan default.

The potential outcome, if any, from these announced actions is unknown at this time.

ED is almost continuously engaged in one or more negotiated rulemakings, which is the process pursuant to which the agency revisits, revises, and expands the complex and voluminous Title IV Program regulations.

Currently, ED is conducting two significant, negotiated rulemaking efforts to revise rules concerning 16 different issue areas.

Between October and December of 2021, the Affordability and Student Loans committee negotiated new rules relating to nine issue areas:

(1) borrower defense to repayment, (2) closed school loan discharges, (3) total and permanent disability discharges, (4) false certification discharges, (5) income-driven loan repayment plans, (6) interest capitalization on Federal student loans, (7) pre-dispute arbitration and class action waiver clauses, (8) Pell Grants for prison education programs, and (9) Public Service Loan Forgiveness.

Shortly thereafter, between January and March 2022, the Institutional and Programmatic Eligibility committee considered new rules relating to seven issue areas:

(1) the 90/10 rule, (2) ability to benefit, (3) certification procedures for participation in Title IV Programs, (4) change of ownership and control, (5) financial responsibility, (6) gainful employment, and (7) standards of administrative capability.

On October 28, 2022, ED published a final rule amending regulations governing Pell Grants for prison education programs, the 90/10 rule, and changes in ownership and control, effective July 1, 2023.

On November 1, 2022, ED published a final rule governing borrower defense to repayment rule, closed school loan discharges, pre-dispute arbitration and class action waiver clauses, interest capitalization on Federal student loans, Public Student Loan Forgiveness, total and permanent disability discharges, and false certification discharges, also effective July 1, 2023.

The regulated community is awaiting proposed rules on the remaining topics covered by ED’s negotiated rulemakings.

We devote significant effort to understanding the effects of ED regulations and rulemakings on our business and to developing compliant solutions that also are congruent with our business, culture, and mission to serve our students and industry relationships.

Borrower Defense to Repayment Rulemaking

The Obama administration carried out a negotiated rulemaking in 2016 to significantly revise and enhance the borrower defense to repayment (“BDTR”) framework, which specifies in regulation which acts or omissions of an institution of higher education a borrower may assert as a defense to repayment of Title IV Program loans.

Dissatisfied with the results of the 2016 effort (the “2016 BDTR Rule”), the Trump administration held a second negotiated rulemaking in 2018 to revise the BDTR rule yet again, and published its own final rule on September 23, 2019 (the “2019 BDTR Rule”), which became effective on July 1, 2020.

Litigation and regulatory actions caused considerable confusion regarding the effective date for each version of the BDTR rule, and how and when each will be interpreted and applied.

Institutions of higher education are required to comply (and to have complied) with the 2016 BDTR Rule from July 1, 2017 to June 30, 2020, and to comply with the 2019 BDTR Rule from July 1, 2020 forward.

Because the 2016 BDTR Rule was not deemed “good law” until October 2018, institutions also are required to follow nuanced guidance from ED regarding compliance during the period prior to the Court’s decisions, but subsequent to July 1, 2017.

Finally, when promulgating the 2019 BDTR Rule, ED determined that some elements of the 2016 BDTR Rule would continue to be applied on a go-forward basis, if the underlying events that gave rise to the issue occurred prior to the implementation of the 2019 BDTR Rule.

As such, elements of the 2016 BDTR Rule will remain in place, coexisting with the 2019 BDTR Rule and being applied by ED in specified circumstances.

While the borrower defense claim process was (and is) at the heart of the BDTR rulemaking, the regulatory reforms carried out by the rule are far more extensive.

In 2016, and then again in 2018, the BDTR rule included material changes to the regulations governing financial responsibility, closed school discharge, false certification discharge, misrepresentation, student grievance processes, the reporting of litigation and arbitration proceedings, the use of pre-dispute arbitration agreements and class action waivers in agreements with students, and the publication of repayment rates.

Additional details regarding certain of these reforms are as follows:

• The Borrower Defense Claim Process.

The BDTR rules establish amended procedures and standards for borrowers, either individually or as a group, to assert through an ED-administered process a defense to the borrowers’ obligation to repay certain Title IV Program loans based on certain acts or omissions of the institution.

The 2016 BDTR Rule details the types of defenses available for loans first disbursed between July 1, 2017 and June 30, 2020.

The 2019 BDTR Rule details the types of defenses available for loans first disbursed on or after July 1, 2020.

If ED approves a borrower’s defense to repayment through the applicable administrative process established in the proposed regulations, ED may discharge the borrower’s obligation to repay some or all of the borrower’s student loans and may initiate a separate proceeding to collect from the institution the discharged and returned amounts.

• Financial Responsibility.

The 2016 BDTR Rule significantly revised ED’s financial responsibility framework to specify certain triggering events, and to require that they be timely reported to ED.

It was believed that these new requirements would permit ED to identify, as early as possible, events that might impact an institution’s financial health.

The 2019 BDTR Rule does not abandon the revised financial responsibility framework established by the 2016 BDTR Rule, both triggering events and reporting timeframes remain.

However, the 2019 BDTR Rule meaningfully simplifies the reporting requirements, and affords institutions additional opportunity to dialogue with ED regarding the materiality of a reported event.

• Pre-Dispute Contractual Provisions.

The 2016 BDTR Rule prohibited the use and reliance upon certain contractual provisions regarding dispute resolution processes, such as pre-dispute arbitration agreements or class action waivers, and required certain notifications, contract provisions, and disclosures by institutions regarding students’ ability to participate in class action lawsuits or to initiate certain lawsuits instead of through arbitration.

The rules also required institutions to submit to ED copies of certain records in connection with any claim filed in arbitration by or against the school concerning a borrower defense claim and any claim filed in a lawsuit by the school against the student or by any party against the school concerning a borrower defense claim.

The 2019 BDTR Rule, which took effect on July 1, 2020, generally permits the use of arbitration clauses and class action waivers provided institutions make certain disclosures to students.

The litigation and regulatory actions that impacted the effective date for each version of the BDTR rule have made it extremely difficult to predict when and how the ban on these pre-dispute contractual provisions will be interpreted and applied by courts, particularly to litigation that precedes or spans the effective dates of the BDTR rules.

• Closed School Loan Discharge.

ED regulations have long provided that ED may discharge a borrower’s obligation to repay certain Title IV Program loans if the borrower (or the student on whose behalf a parent borrowed) did not complete the program of study for which the loan was made because the campus at which the borrower (or student) was enrolled closed.

If ED discharges the loans, the agency may seek to recover from the school or other related parties the amount of loans discharged and to impose other liabilities and penalties.

Consequently, if we close a campus, ED could discharge borrower obligations to repay certain Title IV Program loans.

We may be able to mitigate these losses by conducting or arranging for an orderly teach-out of students at a closed campus, but these efforts could be unsuccessful if students decline to participate in the teach-out or transfer their credits to another school or if they fail to complete their programs.

The 2019 BDTR Rule revised the closed school loan discharge regulations to allows students to obtain a discharge if, among other requirements, they were enrolled not more than 180 days before the campus closed.

ED has the authority to extend the 180-day period for extenuating circumstances.

ED also has the authority to discharge on its own initiative the loans of qualified borrowers without a borrower application if the borrower did not subsequently re-enroll in any Title IV eligible institution within three years from the date the school closed.

The 2019 BDTR Rule limits this authority to schools that closed between November 1, 2013 and July 1, 2020.

If we were to close a campus, we would intend to teach-out all of the currently enrolled students at the campus.

However, certain students may elect to withdraw before graduation.

We cannot predict the number of students who might withdraw prior to the closure of a campus and potentially qualify for a loan discharge.

As noted above, ED has announced its intent to establish multiple rulemaking committees to revisit a wide range of existing Title IV Program regulations.

One such committee, which began deliberations in October 2021, is considering revisions to the BDTR rules outlined above.

We are monitoring this process and will carefully review any proposed or final regulations promulgated by ED.

Accreditation and Innovation Rulemaking

On October 15, 2018, ED announced its intent to establish a negotiated rulemaking to develop regulations related to several matters, including, but not limited to, requirements for accrediting agencies in their oversight of member institutions and programs;

criteria used by ED to recognize accrediting agencies;

simplification of ED’s recognition and review of accrediting agencies;

clarification of the core oversight responsibilities amongst accrediting agencies, states and ED;

clarification of the permissible arrangements between an institution of higher education and another organization to provide a portion of an educational program;

roles and responsibilities of institutions and accrediting agencies in the teach-out process;

regulatory changes required to ensure equitable treatment of brick-and-mortar and distance education programs;

regulatory changes required to enable expansion of direct assessment programs, distance education, and competency-based education;

regulatory changes required to clarify disclosure and other requirements of state authorization;

emphasizing the importance of institutional mission in evaluating its policies, programs and outcomes;

simplification of state authorization requirements related to distance education;

defining “regular and substantive interaction” as it relates to distance education and correspondence courses;

defining the term “credit hour;” defining the requirements related to the length of educational programs and entry level requirements for the occupation;

and other matters.

In early 2019, ED hosted multiple rounds of negotiated rulemaking.

The committee and subcommittees completed their meetings in April 2019 and reached consensus on draft proposed regulations.

On November 1, 2019, ED published its final rule covering accreditation and state authorization matters, with a general effective date of July 1, 2020.

Gainful Employment Rulemaking

ED’s gainful employment regulations that took effect July 1, 2015, included debt-to-earning metrics and disclosure requirements that applied to all programs offered by proprietary institutions.

Programs with debt-to-earnings that failed to satisfy certain thresholds could lose Title IV Program eligibility.

On July 1, 2019, following a contentious negotiated rulemaking, ED issued final regulations that rescinded the existing gainful employment regulations, effective July 1, 2020.

However, ED has announced its intent to establish a rulemaking committee to revisit the gainful employment rule.

We are monitoring this process and will carefully review any proposed or final regulations promulgated by ED.

Other Federal and State Student Aid Programs

Some of our students also receive financial aid from federal sources other than Title IV Programs, such as the programs administered by the VA, the U.S.

Department of Defense (“DOD”) and under the Workforce Investment Act.

Additionally,

some states provide financial aid to our students in the form of grants, loans or scholarships.

Our Long Beach, Rancho Cucamonga and Sacramento, California campuses, for example, are currently eligible to participate in the Cal Grant program.

All of our institutions must comply with the eligibility and participation requirements applicable to each of these funding programs, which vary by funding agency and program.

ED Non-Discrimination Rulemakings

As a condition of receiving federal financial assistance, we are responsible for complying with applicable laws and regulations promulgated by ED regarding non-discrimination.

On July 12, 2022, ED published a proposed rule to amend the regulations implementing Title IX of the Education Amendments of 1972 (“Title IX”).

This proposed rule represents a significant revision of the current rules.

ED also has indicated that it will be proposing a rule to amend regulations related to nondiscrimination on the basis of disability in the Spring of 2023.

We devote significant effort to complying with non-discrimination laws and regulations.

We are monitoring all proposed non-discrimination rules and will carefully review any proposed or final regulations promulgated by ED.

Department of Veterans Affairs Benefit Programs

Some of our students receive financial aid from VA benefit programs.

In 2022, we derived approximately 13% of our revenues, on a cash basis, from veterans’ benefits programs, which include the Post-9/11 GI Bill, the Montgomery GI Bill, the Reserve Education Assistance Program (“REAP”) and VA Vocational Rehabilitation.

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The VA imposes limitations on the percentage of students per program receiving benefits under certain veterans’ benefits programs, unless the program qualifies for certain exemptions.

This rule, the 85/15 Rule, prohibits paying VA benefits to students enrolling in a program when more than 85% of the students enrolled in that program are having any portion of their tuition, fees, or other charges paid for them by the school or VA.

If the ratio of supported students to non-supported students exceeds 85% at the time a new VA student enters or reenters (such as after a break in enrollment), the student cannot be certified to receive benefits in the program.

If the VA determines that a program is out of compliance with these limitations, the VA will continue to provide benefits to current students, but new students will not be eligible to use their veterans’ benefits for an affected program until we demonstrate compliance.

Additionally, the VA requires a campus be in operation for two years before it can apply to participate in VA benefit programs.

With the exception of our newest campus in Bloomfield, New Jersey, which opened in August 2018, all of our campuses are eligible to participate in VA education benefit programs.

During 2012, President Obama signed an Executive Order directing the DOD, Veterans Affairs and Education to establish “Principles of Excellence” (“Principles”), based on certain guidelines set forth in the Executive Order, to apply to educational institutions receiving federal funding for service members, veterans and family members.

With the exception of our two newest campuses in Austin, Texas and Miramar, Florida which opened between May and August 2022, all of our campuses are eligible to participate in VA education benefit programs.

In 2012, President Obama signed an Executive Order directing the DOD, VA and ED to establish “Principles of Excellence” (“Principles”), based on certain guidelines set forth in the Executive Order, to apply to educational institutions receiving federal funding for service members, veterans and family members.

As requested, we provided written confirmation of our intent to comply with the Principles to the VA in June 2012.

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We continue to strengthen and develop relationships with our existing contacts and with new contacts in order to maintain and rebuild our access to military installations.

Other Federal and State Student Aid Programs

Some of our students receive financial aid from federal sources other than Title IV or VA Programs, such as from the DOD or under the Workforce Innovation and Opportunity Act.

Additionally, some states provide financial aid to our students in the form of grants, loans or scholarships.

Our Long Beach, Rancho Cucamonga and Sacramento, California campuses, for example, are currently eligible to participate in the Cal Grant program.

All of our institutions must comply with the eligibility and participation requirements applicable to each of these funding programs, which vary by funding agency and program.

Consumer Protections Laws and Regulations

As a postsecondary educational institution, we are subject to a broad range of consumer protection and other laws, such as recruiting, marketing, the protection of personal information, student financing and payment servicing, enforced by federal agencies such as the FTC and CFPB and various state agencies and state attorneys general.

We devote significant effort to complying with state and federal consumer protection laws.

We received a January 18, 2022 letter from the CFPB explaining that it was assessing whether UTI “is subject to the CFPB’s supervisory authority based on its activities related to student lending.” The CFPB’s letter then requested certain information about extensions of credit to our students;

generally explained the source and scope of the CFPB’s regulatory authority;

and advised that, after it reviewed the requested materials, the CFPB “anticipates providing guidance regarding whether UTI is subject to CFPB’s supervisory authority.” We have provided the requested information and are awaiting further guidance, if any, from the CFPB.

We, along with 69 other proprietary institutions, received an October 6, 2021 letter from the FTC providing notice that engaging in deceptive or unfair conduct in the education marketplace violates consumer protection laws and could lead to significant civil penalties.

The notice stated that an institutions receipt of the letter “does not reflect any assessment as to whether they have engaged in deceptive or unfair conduct,” and the FTC did not request any information.

Federal Student Loan Forgiveness

On August 24, 2022, the Biden administration announced a student loan relief plan.

Under this plan, the Department will provide up to $20,000 in debt relief to Pell Grant recipients with loans held by the Department and up to $10,000 in debt relief to non-Pell Grant recipients.

Borrowers are eligible for this relief if their individual income is less than $125,000 or $250,000 for households.

The plan is currently subject to a number of legal challenges in court.

Should the plan survive judicial scrutiny, we expect many of our alumni and a portion of our current students as of this filing, would qualify for and take advantage of this relief.

Available Information

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

What changed 10-K

Item 1. Business