PERDOCEO EDUCATION Corp (PRDO) Business

ITEM 1. BUSINESS

OVERVIEW

Perdoceo’s accredited academic institutions offer a quality postsecondary education to a diverse student population, with fully online, campus-based and hybrid learning programs. The Company’s academic institutions – Colorado Technical University (“CTU”), the American InterContinental University System (“AIUS” or “AIU System”) and University of St. Augustine for Health Sciences ("USAHS") – provide degree programs from the associate through doctoral level as well as non-degree seeking and professional development programs. Our academic institutions offer students industry-relevant and career-focused academic programs that are designed to meet the educational needs of today’s busy adults. CTU and AIUS continue to show innovation in higher education, advancing personalized learning technologies like their intellipath® learning platform and using data analytics and technology to serve and educate students while enhancing overall learning and academic experiences. USAHS prepares medical professionals to provide quality medical care to communities across the country primarily through its graduate health sciences degree offerings in physical therapy, occupational therapy, speech language therapy and nursing, as well as continuing education programs. Perdoceo's academic institutions are committed to providing quality education that closes the gap between learners who seek to advance their careers and employers and communities needing a qualified workforce

When used in this Annual Report on Form 10-K, the terms “we,” “us,” “our,” “the Company,” “Perdoceo” and “PEC” refer to Perdoceo Education Corporation and our wholly-owned subsidiaries.

Our reporting segments correspond to our accredited institutions.

CTU

CTU is committed to providing industry-relevant higher education to a diverse student population, including non-traditional adult learners seeking career advancement and the military community. CTU utilizes innovative technology and experienced faculty, enabling the pursuit of academic and professional goals for learners. CTU offers academic programs in the career-oriented disciplines of business and management, nursing, healthcare management, computer science, engineering, information systems and technology, project management, cybersecurity and criminal justice.

Discussion of business operations, trends and key drivers of operating results for CTU will primarily focus on its degree programs, which represent a majority of CTU’s operations and the CTU segment.

AIUS

AIUS is committed to providing industry-relevant higher education opportunities for a diverse student population, including non-traditional adult learners and the military community. AIUS places emphasis on the educational, professional and academic growth of each student. AIUS offers academic programs in the career-oriented disciplines of business studies, information technologies, education, behavioral sciences and criminal justice.

AIUS is comprised of three universities: the American InterContinental University ("AIU"), Trident University International (“Trident” or “TUI”) and California Southern University ("CalSouthern"). The AIUS structure provides a framework for all three universities to continue to serve their unique student populations while benefitting from one university system. Although all universities operate under a shared governance structure and have a common mission, the system structure allows each to retain its name and customize its programs and instructional and student service models to the needs of its unique student populations.

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Discussion of business operations, trends and key drivers of operating results for AIUS will primarily focus on AIU and Trident, which represent a majority of the AIU System and AIUS reporting segment. Specific references will be made to the other universities when material to the disclosure or necessary to understand the overall discussion.

USAHS

USAHS is dedicated to offering graduate education opportunities in health sciences to a diverse range of students. USAHS focuses on developing professional healthcare practitioners through innovative and personalized classroom, clinical, and distance education opportunities. USAHS offers graduate degrees in health sciences, primarily in physical therapy, occupational therapy, speech-language therapy and nursing, along with continuing education programs, which together prepare professionals to serve and provide quality medical care to communities across the country.

Student Enrollments Statistics

Total student enrollments as of December 31, 2025 and 2024 were approximately 44,400 students and 41,380 students, respectively, with approximately 91% enrolled in our institutions’ fully-online academic programs for each of the years ended December 31, 2025 and 2024. Substantially all of the students attending our institutions reside within the United States. Total student enrollments and student enrollment statistics stated above and presented below do not include learners participating in: a) non-degree seeking and professional development programs, and b) degree seeking, non-Title IV, self-paced programs at our universities. Additional student enrollment demographic information for our institutions as of December 31, 2025 and 2024 was as follows:

Student Enrollments by Age Group

Student Enrollments by Core Curricula

Student Enrollments by Degree Granting Program

GUIDING PRINCIPLES AND STRATEGIC PRIORITIES

In an increasingly demanding economy, learners benefit from higher education that provides practical skills and meaningful career development. We aim to establish our academic institutions as leading online postsecondary education providers for non-traditional students, including adult learners, guided by the following core principles:

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enhance academic outcomes;

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further elevate academic quality and integrity; and

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focus on governance and compliance.

Our strategic priorities revolve around students and their academic successes and we believe these priorities will further support long-term sustainable and responsible growth. These strategic priorities include:

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optimize student enrollment processes;

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enhance student retention and engagement;

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use technology as a differentiator;

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leverage efficient and effective scalable shared services to support organic growth at our universities and as a key enabler for inorganic growth strategies; and

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invest in student-serving processes that support our overall academic operations.

OUR BUSINESS

Through our three accredited academic institutions, we offer quality postsecondary education to a diverse student population, with fully online, campus-based and hybrid learning programs, with the health sciences degree programs at USAHS having a strong clinical component. We maintain a student-first approach by providing support throughout the academic journey, from enrollment and orientation to ongoing coaching and learning through graduation, which we believe enhances overall student learning experiences and academic outcomes. We are committed to investing in our academic institutions, including through course curriculum development and student support technology, which we believe enables our student support teams to provide customized service that contributes to positive student experiences. Technology is a key enabler for us, and we are continuing to explore and utilize artificial intelligence ("AI") within the student enrollment and academic life cycle to enhance student experiences. We believe that our technology innovations provide students with tools that enable them to focus on educational content in a manner that is best suited to their personal learning style.

Marketing, Student Recruitment and the Student Enrollment Process

Our academic institutions intend to serve motivated students with both the desire and ability to complete their academic programs of choice. To promote interest among potential students, our academic institutions develop and engage in a variety of marketing activities which build awareness of our academic programs and universities among prospective students. Aided by data analytics, our marketing programs are designed to focus on enrolling students who we believe will be more likely to succeed at one of our academic institutions and eventually complete their degree of choice.

Our three academic institutions primarily serve a non-traditional and diverse student population, including adult learners. Our students have a broad range of educational and employment experiences which contributes to their college-level readiness. Each of our universities has an admissions function responsible for interacting with prospective students interested in applying to an institution after they have expressed interest in learning more about our academic institutions and programs. Generally, to be qualified for admission to an undergraduate program at one of our universities, an applicant must have received a high school diploma or a recognized equivalent, such as a General Education Development certificate. Our graduate programs require applicants to hold a bachelor's degree and some have additional program specific admissions requirements.

We leverage predictive analytics to help us identify and focus on prospective students who are more likely to succeed at one of our universities. Our prospective student outreach process uses technology to provide a more customized approach to enable us to more effectively provide prospective students with relevant information to help them make more informed academic decisions.

Perdoceo and its academic institutions have continued to test and explore AI-related technology to effectively and efficiently serve current and prospective students and provide our enrollment and student support staff with tools necessary to improve the overall learning and academic experience of our learners. Perdoceo was an early adopter of virtual assistants ("chatbots") that lead to efficiencies in both attracting and servicing of students. These virtual assistants utilize the latest Large Language Models ("LLMs"), as well as other generative AI technologies. The upgraded chatbots are more responsive to student queries, as well as reducing the time and effort to train the chatbots on information students are requesting. In addition, the new virtual assistants give staff increased visibility into what information is important to students as they progress in their academic journeys.

Our technology enhancements enable our admissions staff to customize their prospective student outreach and engagement strategies based on student's prior educational experience, degree and area of program interest, which enables a more meaningful and relevant interaction with the prospective student. We believe prospective students have an improved overall experience in communications with our admissions personnel due to these enhancements.

Admissions advisors serve as a primary point of contact for prospective students, providing information to support informed enrollment decisions and assisting throughout the enrollment process. They also offer guidance and support during the application process and student orientation, helping students transition smoothly into their first class.

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Once a student has decided to enroll at one of our academic institutions, the financial aid team works closely with them to provide information about available funding options, including loans and grants. The team’s focus is to ensure students are financially prepared in a timely manner, allowing them to concentrate on their academic pursuits.

At AIUS and CTU, students are offered an orientation that is designed to prepare them to begin classes at our institutions. This orientation process also provides the opportunity for students to understand our academic and support services. We believe completion of these activities better prepares a student to make an informed decision about pursuing their education, as well as allows them to be more successful as it simulates their classroom experience both online and in a campus-based environment. Completion of orientation does not financially obligate students, nor does it require students to continue their education with the university.

Additionally, first-time undergraduate students enrolled in online programs at AIUS and CTU, who choose not to continue, have 21 days after the start of their program to notify the university of their intention to withdraw. Students who notify and withdraw within 21 days will not be responsible for any tuition-related expenses and will receive a refund of any tuition and other institutional fees paid.

USAHS is a traditional university which offers three academic terms each calendar year, Spring, Summer and Fall, with breaks between academic terms. Prospective students are generally required to have an undergraduate degree and go through a comprehensive application and admissions process which has allowed USAHS to maintain strong academic outcomes and student experiences while also maintaining program level academic outcomes as required by various programmatic accrediting bodies.

Employer Supported Students

CTU and AIUS have focused on collaborating with certain employers that support their workforces through education benefits such as tuition assistance programs. We expect continued engagement and collaboration with companies will result in new student interest through increased awareness of our institutions by the employees of these companies. Engaging with these employers provides us with an opportunity to connect with and educate a population of students, we believe, for whom we would otherwise not likely have the same level of access. Students from these employers who attend our institutions are awarded grants from the applicable university to partially offset their tuition costs, the amount of which can vary and depend on the employer’s approach to supporting the educational pursuits of its workforce. Although the amount paid by these students results in lower revenue per student due to the grants awarded from the applicable university, the recruiting, marketing and support costs associated with these students are relatively lower as well and most of these students are able to graduate from their chosen program of study with little or no debt. As of December 31, 2025, approximately 38.3% and 7.5% of total student enrollments at CTU and AIUS, respectively, attend pursuant to these employer sponsored engagements.

Student Retention and Academic Outcomes

Our institutions have continued to focus on improving student retention and enhancing academic outcomes. Investments in student serving processes, including the use of technology, remains a key focus to support these efforts. Our faculty and student advisors provide frequent assistance and feedback to students during their course of academic study. We support increased communication between our faculty and students by providing faculty with various technology enablers such as a two-way messaging platform and enhanced data reporting and analytics to help them provide meaningful academic support and information. As is the case at any postsecondary educational institution, a portion of our students withdraw from their academic programs for a variety of academic, financial or personal reasons, and these efforts are designed to help our students remain in school and succeed in their academic program.

Our student advising model at AIUS and CTU promotes collaboration between faculty and student advisors, which we believe enhances effectiveness and provides students with consistent support and communication. Student advisors continue to work with students throughout their academic program to provide relevant and specific feedback and guidance as they progress through their classes.

Coupled with the student advising model, our academic institutions continually review and update course content and sequencing to ensure workload levels build gradually as students develop skills and acclimate to course expectations, which we believe improves academic outcomes. In general, our courses are designed to accommodate skill development holistically, which we believe will further support learning.

AIUS' student-centric framework focuses on having students interact with their admissions advisor from enrollment through the end of their first academic session and be subsequently supported by student advisors. We believe this structure, along with faculty engagement, improves overall student experiences and retention. This cross-functional strategy is aimed at improving student engagement throughout the student’s academic life cycle, with particular emphasis on the important onboarding phase and first academic term as the students adjust to their academic program. Through AIUS' "Ready" course, students can experience the classroom environment in advance of the official start of classes.

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CTU leverages data analytics to provide proactive outreach and personalized advising to improve student retention and academic outcomes. This approach is intended to help us reach the right student at the right time with the right support, which we expect will increase learning and course completion by our students. CTU continues to refine the data analytics process to enable its student advisors to be more effective in their student engagement efforts.

USAHS's student support processes for prospective students span from prior to the start of their academic program all the way through graduation, yielding positive academic outcomes through a robust support system. A dedicated team of program directors, faculty advisors, student success advisors, and a dedicated student services department offer academic advising, professional development, tutoring, writing support, accessibility accommodations and financial aid assistance, that includes individualized support, student success strategies, and student outreach. These teams prioritize student retention and academic success with a core value of ‘students first’ and through a comprehensive approach to student support, data analysis, and program and institutional review. Each student is assigned a dedicated faculty advisor and a student success advisor. Faculty advisors provide academic guidance and professional development and mentorship in the profession. Student success advisors provide proactive coaching, such as goal setting, time management, course selection, and connecting students to campus and online resources.

Given the nature of USAHS's advanced health sciences degree levels, students enrolled in these academic programs are more likely to persist in their program through completion. USAHS’s strong retention rate, coupled with strong program tenure and job placement rates creates a network effect that continues to attract quality prospective students.

Curriculum and Program Development

Our universities develop and deliver a variety of academic programs resulting in the award of credentials ranging from certificates to doctoral degrees in career-oriented programs of study in core curricula areas of business studies, information technology and health sciences.

Our curricula, instructional delivery tools and experienced faculty comprise the learning experience that provides our student population with a unique opportunity to develop the knowledge, skills and competencies required for specific careers. The curriculum development process focuses on desired career needs, while considering relative competencies necessary to achieve these career needs, as well as any applicable recommendations set forth by advisory boards, programmatic accrediting agencies and industry standards. Subsequently, learning objectives are identified and courses are developed which foster student engagement in activities and optimally result in the attainment of desired program learning outcomes. Curricula may also incorporate AI literacy and discipline-appropriate use of AI tools, which are aligned to program outcomes and workforce expectations, while also emphasizing ethical application, transparency, and critical evaluation. Program design and assessment practices are reviewed to ensure the integrity of student work and alignment with accrediting agency and industry expectations.

Through the acquisition of USAHS, our graduate health sciences offerings expanded with programs in physical therapy, occupational therapy, speech-language pathology and nursing. These programs have a strong clinical component giving students hands-on, real-world experience to apply theory and develop essential clinical skills.

Additionally, our institutions also offer non-degree professional development programs. These online courses and bootcamps offer upskilling and reskilling opportunities where one can develop skills and knowledge in a specific endeavor or area of interest.

Instructional Delivery

Our instructional delivery is based on the belief that learning depends on instructional methodologies and pedagogies that involve and efficiently enable student engagement with the instructor, with other students and with the course content. This engagement is fundamental to student learning outcomes, regardless of whether instruction occurs within a physical or virtual classroom. We continue to focus on innovation in our delivery of online education to enhance the learning experience for students.

We continue to enhance our student technology infrastructure at AIUS and CTU by implementing faculty and student-requested suggestions for our virtual campus and mobile platforms. Additionally, AIU has an interactive rubric that our faculty and student support teams can potentially use to better serve and educate students throughout their academic journey. These enhancements are designed to continuously improve the student experience, particularly for our non-traditional adult learners, while also improving operational efficiency.

USAHS provides instructional delivery both onsite at its various locations in California, Texas and Florida, as well as fully online and hybrid formats. These campus locations include learning centers designed to simulate clinical and home settings, with real medical equipment and high-fidelity, interprofessional environments. USAHS also offers anatomy education in both 2D and 3D for an interactive experience. Additionally, 3D printers and virtual headsets provide students with immersive learning experiences that enable students to see, interact with and experience diverse clinical and patient settings.

Learning Management System

Construction of, and ongoing enhancement to, a virtual campus that engages online students with their instructor, peers and content is critical to the achievement of student learning outcomes. CTU and AIUS online instructional delivery is accomplished using

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innovative, student-focused learning management systems. While online content delivery is very common today, our course content delivery systems have several features that make them distinctive. Designed around students, our course content delivery systems allow for a rich, engaging student experience that represents innovative online methods of delivering content.

CTU and AIU have implemented the use of sophisticated personalized learning technologies through our virtual campus that provide intelligent, adaptive systems to power the delivery of personalized learning. We have a perpetual license to this technology and our personalized learning content was developed by teams of our own instructors and has been integrated across many of our curricula.

USAHS utilizes Blackboard, which is a web-based learning management system, that enables instructors and faculty to efficiently manage course content, deliver assignments, facilitate online discussions, grade student work, track course attendance, and provide students access to various learning resources - all in one centralized platform. It is designed to allow students and faculty to participate in classes delivered online or to use online materials to complement face-to-face learning.

Mobile Applications

Students at CTU and AIUS have access to a mobile application and two-way messaging platform which were created to complement students’ mobile-centric lives. During 2025, we introduced new features, such as updates to the login process to streamline it and prevent user error. Approximately 97% of our students within these universities have opted in for the mobile application and 94% have opted to receive mobile notifications. Our students and staff are using the messenger application due to its ease and simplicity. The student benefits of these technological innovations include the ability to connect with their university in a different way, communicate efficiently with faculty, upload required documentation, track grades and degree progress in real-time and participate in courses from the palm of their hand, all of which contribute to increased student engagement. CTU and AIUS also have a faculty mobile application which provides informative dashboards, the ability to complete tasks on the go and enhanced outreach and communication capabilities that we believe make teacher-student interactions easier and more effective.

Additionally, USAHS offers a mobile application to its students which provides information and resources, including general campus and program information, faculty information, and links to various resources, including social media feeds.

Faculty

Our institutions employ credentialed, geographically dispersed, full-time, and part-time (i.e., adjunct) faculty who facilitate learning in our classrooms and virtual classrooms. Our faculty are hired, assigned, developed, and evaluated in accordance with current accepted higher education practices and in accordance with state, institutional accreditation, and programmatic accreditation standards.

Faculty Competencies

With the input of faculty and academic leadership at our universities, we have developed a set of instructor competencies that we believe are critical to student success and institutional effectiveness. These competencies provide the basis for faculty recruitment, hiring, orientation, evaluation, and development. Faculty hired by our academic institutions are evaluated for proficiency in the following competencies:

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communication;

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assessment of student learning;

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instructional methodology (pedagogy);

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subject matter expertise;

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utilization of technology to enhance teaching and learning;

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acknowledgement and accommodation of diversity in learners;

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student engagement;

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promotion of active student learning;

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compliance with the applicable academic institution policy; and

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demonstration of scholarship.

Seasonality and Fluctuations in Results

Our quarterly net revenues and income may fluctuate primarily due to total student enrollments during any given quarter. As a result, changes in the academic calendar may have an impact on quarterly comparability as each quarter may have non-comparable revenue-earning days because the academic calendar may align differently with each calendar year and the quarters therein. While

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most of the operating costs for our institutions do not fluctuate significantly on a quarterly basis, we may see variability within our marketing spend based on the back-to-school season and prospective student interest levels at any given time.

Human Capital

As of December 31, 2025, we had 6,000 employees, of which 2,039 work for CTU, 1,648 work for AIUS and 1,435 work for USAHS, with the remainder being corporate-level employees in areas such as marketing, information technology, financial aid, accounting, human resources, legal and compliance.

The human capital objectives that we focus on reflect the nature of our business, our regulated industry and our guiding principles and strategic priorities discussed above under the heading “Guiding Principles and Strategic Priorities.”

We focus on achieving results in a compliant and ethical manner. New employees in student-serving functions such as admissions and financial aid participate in multi-week training programs, and our compliance monitoring programs and other ongoing compliance efforts in these and other areas are robust. The Compliance and Risk Committee of our Board of Directors regularly reviews the results of our compliance monitoring programs and matters reported through the Company’s internal system for reporting compliance concerns in order to monitor the effectiveness of these programs.

We use technology to support students and enhance learning. Therefore, it is imperative that our employees in student-serving functions are trained to use our technology and systems for the benefit of our students. This includes our faculty members who must be proficient in using our online learning management system, personalized learning technology and mobile applications. We also focus significant human capital resources on protecting our technology infrastructure and the personal information maintained therein regarding applicants, our students, their families and our alumni. The Compliance and Risk Committee and the full Board of Directors regularly review information security matters given their importance to the Company.

Our goal is to deploy resources in the most effective and efficient manner that we believe will lead to increased stockholder value while supporting and enhancing the academic quality of our institutions. This philosophy applies to our personnel resources as well. Significant management attention is focused on where to add personnel and other resources to grow responsibly, while at the same time monitoring personnel costs and promoting operating efficiencies. Employee turnover impacts personnel costs and operating efficiencies. The Audit Committee of our Board of Directors regularly reviews information about employee turnover within the Company, including initiatives to reduce employee turnover.

We are committed to a policy of equal employment opportunity. We value diversity and strive to create an atmosphere that supports the students and communities that we serve. Inclusivity is important in our approach to achieving a dynamic culture. We are committed to fostering an environment where differences are respected and valued and where employees feel empowered to share their experiences and ideas.

The self-identified ethnicity or race of our full-time employees, including full-time faculty members, is approximately 52% White, 23% Black or African American, 13% Hispanic, Latinx or Spanish origin, 6% Asian, 1% American Indian or Alaskan Native and less than 1% Native Hawaiian or Other Pacific Islander, and our full-time employees are approximately 33% male and 67% female. The self-identified ethnicity or race of our part-time non-student employees, who are primarily part-time adjunct faculty members, is approximately 64% White, 18% Black or African American, 8% Hispanic, Latinx or Spanish origin, 5% Asian, 1% American Indian or Alaskan Native and less than 1% Native Hawaiian or Other Pacific Islander, and our part-time employees are approximately 43% male and 57% female.

INDUSTRY BACKGROUND AND COMPETITION

The domestic postsecondary education industry is highly fragmented and competitive, with no one provider having a significant market share. The Higher Education Act of 1965, as amended and reauthorized (“Higher Education Act” or "HEA"), and the related regulations govern all higher education institutions participating in federal student aid and loan programs under Title IV of the Higher Education Act (“Title IV Programs”). According to the National Center for Education Statistics (“NCES”), there were approximately 5,600 postsecondary education institutions eligible for federal student aid in the United States for the academic year 2024-25, including approximately 2,100 for-profit schools (sometimes referred to as "proprietary schools"); approximately 1,800 public schools which include state universities and community colleges; and approximately 1,700 private non-profit schools. According to the U.S. Department of Education (“ED” or the “Department”), over the 12-month period for academic year 2023-24, approximately 25.7 million students were enrolled in postsecondary institutions.

The domestic postsecondary degree-granting education industry was an approximately $796 billion industry for fiscal year 2023, according to NCES. We compete primarily with institutionally accredited, degree-granting colleges and universities, including for-profit institutions like ours as well as public and private non-profit institutions. In particular, competition from online programs has increased as these institutions have broadened their online offerings to meet growing prospective student interest.

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Postsecondary institutions are subject to significant regulations which provide for an oversight triad by mandating specific regulatory responsibilities for the accrediting agencies recognized by the Department, the federal government through the Department, and state higher education regulatory bodies.

Extensive and increasingly complex Department regulations governing postsecondary institutions have been enacted, including regulations applicable only to for-profit institutions. These regulations, coupled with the increased focus by the U.S. Congress on the role that for-profit educational institutions play in higher education, as well as the evolving needs and objectives of students and employers, economic constraints affecting educational institutions and increased focus on affordability and value, may contribute to continued changes in business operating strategies. We have also recently been operating with dramatic shifts in regulatory approaches across different presidential administrations, resulting in a significant number of regulations being adopted, subsequently rescinded or revised, then re-adopted. We cannot predict the specific actions that the current Administration or Congress may take or their effect on the higher education sector; however the first Trump Administration focused significantly on a de-regulatory agenda and early 2025 executive orders of the current Trump Administration similarly call on all federal agencies to prioritize rescinding costly and burdensome regulations over the adoption of new regulations. We anticipate a number of regulatory changes may be forthcoming reflecting the priorities of the current Administration.

Although competition exists, for-profit institutions serve a segment of the postsecondary education market that we believe is not fully addressed by traditional public and private non-profit universities. Public and private non-profit institutions may face financial constraints that limit their ability to expand programs, including state funding challenges, enrollment declines, rising costs, deferred maintenance of facilities, research obligations, and the professor tenure system. Institutions may also limit student enrollments to preserve the perceived prestige and exclusivity of their degree offerings. For-profit postsecondary institutions offer prospective students flexible and convenient program offerings, as well as a learning structure focused on applied content and the use of technology in delivering education. Nevertheless, the share of the postsecondary education market served by for-profit institutions remains relatively small. As a result, we believe that in spite of regulatory and other challenges facing the industry, for-profit postsecondary education providers continue to have significant opportunities to address the demand for postsecondary education.

The majority of our degree-seeking students today have one or more non-traditional characteristics (e.g., did not enroll immediately after high school graduation, work full-time, are financially independent for purposes of financial aid eligibility, have dependents other than a spouse or are single parents). These non-traditional students typically are looking to improve their skills and enhance their earning potential within the context of their careers or in pursuit of new careers. As the industry has shifted to more students with non-traditional characteristics, an increasing proportion of colleges and universities are addressing the needs of working students. This includes colleges and universities with well-established brand names that were historically focused on traditional students.

ACCREDITATION, STATE REGULATION AND OTHER COMPLIANCE MATTERS

Institutional Accreditation

In the United States, institutional accreditation is widely accepted as the basis for the recognition of earned credit and degrees for academic, employment, and professional licensure purposes, and, in some states, as a component of authorization to operate as a degree-granting institution. Accrediting agencies primarily examine the academic quality of the instructional programs of an institution, and a grant of accreditation is viewed as confirmation that an institution’s programs meet generally accepted academic standards. Accrediting agencies also review the administrative and financial operations of the institutions they accredit to ensure that each institution has the resources to meet its educational mission.

Pursuant to provisions of the HEA, the Department relies on institutional accrediting agencies recognized by the Department to determine whether institutions qualify to participate in Title IV Programs (in combination with state higher education operating and degree granting authority and multiple other federal requirements). All of our institutions are accredited by accrediting agencies recognized by the Department. AIUS is accredited by the Higher Learning Commission (“HLC”), with its next reaffirmation of accreditation scheduled for 2033-2034. CTU is accredited by the HLC and is scheduled for reaccreditation in 2032-2033. USAHS is accredited by the Western Association of Colleges and Schools Senior College and University Commission (“WSCUC”), with its next reaffirmation of accreditation scheduled for 2028.

See Item 1A, “Risk Factors—Risks Related to the Highly Regulated Industry in Which We Operate— Our institutions would lose their ability to participate in Title IV Programs if they fail to maintain their institutional accreditation, and our student enrollments could decline if certain of our programs fail to obtain or maintain programmatic accreditation.”

Institutional Accreditation Table

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(1) Additional locations as defined by accreditors are in parentheses.

(2) Status as of February 19, 2026.

Programmatic Accreditation

In addition to the institutional accreditations described above, PEC institutions have specialized or programmatic accreditations for certain educational programs. Many states and professional associations require programs leading to licensure or professional practice to maintain programmatic accreditation and require individuals seeking to sit for professional licensing or certification exams to have graduated from accredited programs.

Programmatic accreditation does not satisfy the Department requirements to confer Title IV Program eligibility. Rather, it provides discipline-specific academic quality review by peers in a given field and, in many cases, may enable or assist graduates to practice, sit for licensure or certification exams, or secure appropriate employment in their chosen fields. In addition to programmatic accreditation requirements, some states have licensing boards which regulate who in a state is licensed to practice in a given profession.

Our universities pursue programmatic accreditation where it is required by employers, licensing or certification bodies, or applicable state authorities for graduates to practice a profession or to be eligible to sit for required licensing or certification exams. In some cases, programmatic accreditation is sought because it is commonly expected by employers and may enhance the ability of our graduates to compete for employment in their fields.

Programmatic accreditation has been granted by the following accrediting agencies for the following degree program areas offered by our institutions.

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Programmatic Accreditation Table (1)

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(1)
Status as of February 19, 2026.

(2)
See the applicable institution's website for a list of programs included in the approval.

State Regulation

State approval agencies are responsible for the oversight of educational institutions, and continued approval by such agencies is necessary for an institution to operate and grant degrees or certificates to its students. State laws establish standards for, among other things, student instruction, qualifications of faculty, location and nature of facilities, and financial policies. State laws and regulations may limit our campuses’ ability to operate or to award degrees or certificates or offer new programs. Moreover, under the HEA and Title IV regulations, institutions that participate in Title IV Programs must be authorized to operate by the appropriate postsecondary regulatory authority in each state where the institution has a physical presence as well as each of the other domestic jurisdictions in which it operates.

Currently, all of our campuses (ground-based and online) are authorized by the state in which it is located.

Additionally, CTU and AIUS meet state authorization requirements for their online activities via participation in a consortia program called the State Authorization Reciprocity Agreement (“SARA”). SARA is a reciprocity agreement among member states, districts and U.S. territories that establishes comparable national standards for interstate offering of postsecondary distance education courses and programs. Institutions approved under SARA are authorized to operate online programs in SARA member states. Forty-nine states, the District of Columbia, Puerto Rico, and the U.S. Virgin Islands are SARA participants (www.nc-sara.org).

California is the only state which is not a part of SARA. CTU and AIUS are registered as out-of-state institutions with the California Bureau for Private Postsecondary Education ("BPPE") to offer their distance education programs to California students. Because its main campus is located in California, USAHS cannot participate in SARA for its online activities. Instead, USAHS

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maintains licenses or exemptions in each state which requires such licensure or exemption, as the case may be, and where students are enrolled.

Participation in SARA is subject to evolving federal and state policy considerations, including efforts to amend SARA’s reciprocity standards or impose additional eligibility conditions. Certain initiatives that have been introduced are intended to expand host-state oversight of out-of-state distance education providers, narrow the scope of reciprocity, or apply differentiated requirements for proprietary institutions.

During the 2025 legislative session, California considered legislation that would have authorized California to join an interstate reciprocity agreement such as SARA subject to specified conditions. As proposed, the legislation would have continued to require certain out-of-state proprietary institutions offering online programs to California residents to comply with BPPE registration and oversight requirements, while public and nonprofit institutions would have had broader access to reciprocity-based authorization. Although this legislation was not enacted, similar proposals in California reflect ongoing policy efforts to condition reciprocity participation and impose additional state-specific obligations on out-of-state proprietary institutions. Comparable initiatives have been pursued in other states, including legislation and regulatory actions intended to preserve or expand host-state consumer-protection authority, limit the effect of reciprocity, or impose additional authorization, disclosure, or other compliance requirements on out-of-state proprietary institutions.

At the federal level, the Department and Congress have considered measures that could narrow the circumstances in which reciprocity satisfies state authorization requirements, expand licensure-related disclosure and approval obligations for distance education programs, or condition participation in Title IV Programs on enhanced state-level authorization or oversight.

If federal or state actions result in more restrictive reciprocity standards, differential treatment of proprietary institutions, or expanded host-state authorization requirements, our institutions enrolling students across multiple states may incur increased compliance costs, face operational constraints, or be required to obtain and maintain additional state authorizations, which could adversely affect their enrollments, operational efficiency, or ability to offer programs in certain jurisdictions.

In addition to state education regulations, there are other state agencies that oversee regulations related to student financing, payment servicing and general consumer protection. In some cases, state laws and regulations require us to register the volume of payment plans our students enter into and/or require licenses for our institutions to collect student payments for the educational services they deliver.

Other Compliance Matters

On July 26, 2019, the Company executed a settlement agreement with the U.S. Federal Trade Commission ("FTC") to resolve an inquiry commenced by the FTC in 2015. While not admitting any wrongdoing, the Company chose to settle the FTC inquiry after almost four years of legal expenses and cooperation with the FTC’s investigation. Under the terms of the agreement with the FTC, the Company agreed to continue its compliance with the Federal Trade Commission Act and the Telemarketing and Consumer Fraud and Abuse Prevention Act, including compliance with the national do not call registry. The Company agreed to enhance its current operational and compliance processes with respect to prospective student expressions of interest, or “leads,” purchased from third party lead aggregators and generators and implement other agreed-upon compliance measures. Specifically, the agreement with the FTC requires the operation of a system to monitor third party lead aggregators and generators involving a compliance review by, or on behalf of, the Company of the various sources a prospective student interacts with prior to the Company’s purchase and use of the prospective student lead. In addition, the FTC Agreement contains requirements regarding employee and lead aggregator acknowledgements of the agreement, compliance certifications and record creation and maintenance. The principal provisions of the agreement with the FTC will remain in effect for twenty years.

See Item 1A, “Risk Factors – Risks Related to the Highly Regulated Field in Which We Operate – Our agreement with the FTC may lead to unexpected impacts on our student enrollments or higher than anticipated expenses. A failure to comply with the agreement may lead to additional enforcement actions and continued scrutiny, which may result in additional costs or new enforcement actions,” for more information about these agreements.

STUDENT FINANCIAL AID AND RELATED FEDERAL REGULATION

A majority of our students require assistance in financing their education. Our institutions are approved to participate in the Department's Title IV Programs. Our institutions also participate in a number of state financial aid programs, tuition assistance programs of the United States Armed Forces, education benefits administered by the Department of Veterans Affairs (“VA”), as well as tuition assistance programs offered by employers. Our institutions that participate in federal and state financial aid programs are subject to extensive and frequently changing regulatory requirements imposed by federal and state government agencies, and other standards imposed by educational accrediting bodies.

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Nature of Federal and Private Support for Postsecondary Education in the United States

The U.S. government provides a substantial portion of its support for postsecondary education in the form of Title IV Program grants, loans and work-study programs to students who can use those funds to finance certain education related expenses at any institution that has been approved to participate by the Department. These federal programs are authorized by the Higher Education Act. While most students are eligible for a Title IV loan, typically, additional financial aid administered under Title IV Programs is awarded on the basis of financial need, which is generally defined under the HEA as the difference between the costs associated with attending an institution and the amount a student’s family can reasonably be expected to contribute based on a federally determined formula. Among other things, recipients of Title IV Program funds must maintain a satisfactory grade point average and progress in a timely manner toward completion of their program of study.

Students at our institutions may receive grants, loans and work-study opportunities to fund their education under the Title IV Programs described in the sections below. In addition, some students at our institutions receive education related benefits pursuant to certain programs for veterans and military personnel or through participating in employer benefit programs, the most significant of which are described further below.

Federal Student and Parent Loans

The Department’s major form of aid includes loans to students and parents through the William D. Ford Federal Direct Loan (“Direct Loan”) Program. Direct Loans are loans made directly by the U.S. Government to students or their parents. The Direct Loan program offers Federal Direct Stafford, Federal Direct PLUS (which provides loans to parents of dependent students and to graduate or professional students, known as “Parent PLUS” and “Grad PLUS,” respectively) and Federal Direct Consolidation Loans. As described below, the Grad PLUS loan program is being eliminated for new borrowers starting July 1, 2026, with new graduate-specific annual and aggregate caps under the Direct Unsubsidized Loan program.

Undergraduate students who have demonstrated financial need may be eligible to receive a Direct Subsidized Loan, with the Department paying the interest on this loan while the student is enrolled at least half-time in a Title IV eligible school. Undergraduate students who do not demonstrate financial need and graduate students may be eligible to receive a Direct Unsubsidized Loan. Graduate/professional students may only receive Direct Unsubsidized Loans. With Direct Unsubsidized Loans the student is responsible for the interest for the life of the loan, including while the student is in school, although interest payments generally may be deferred by the student until after he or she has left school. Students who are eligible for a Direct Subsidized Loan may also be eligible to receive a Direct Unsubsidized Loan.

A student is not required to meet any specific credit scoring criteria to receive a Direct Unsubsidized or Subsidized Loan, but historically, any student with a default on a prior loan made under any Title IV Program may not be eligible for new loans unless the default has been cured through repayment progress. Through a temporary student loan initiative announced on April 6, 2022, students that had previously defaulted on a student loan were temporarily eligible for new loans, which increased the number of prospective students who were able to continue their education at one of our academic institutions. This initiative expired in October 2024. The Department has established maximum annual and aggregate borrowing limits for Direct Loans.

The Federal Direct PLUS Loan Program provides Parent PLUS loans to parents of dependent undergraduate students and Grad PLUS loans to graduate and professional students with acceptable credit histories. Direct PLUS Loans may be used to cover education-related expenses for a dependent undergraduate student or for a graduate or professional student enrolled at least half-time at an eligible institution, up to the student’s cost of attendance minus all other financial aid received. Under the Reconciliation Act (defined below), the Grad PLUS loan program is discontinued for new borrowers effective July 1, 2026, and remains available only to certain existing borrowers who meet the Act’s “grandfathering” conditions. Graduate and professional students who qualify for grandfathered eligibility and do not have an adverse credit history may continue to borrow a Grad PLUS loan, for up to three academic years or graduation whichever comes earlier, while enrolled at least half-time at our eligible institutions, subject to the same cost of attendance limitations.

Federal Pell Grant and Federal Supplemental Educational Opportunity Grant

Title IV Program grants are generally made to our students under the Federal Pell Grant (“Pell Grant”) program and the Federal Supplemental Educational Opportunity Grant (“FSEOG”) program. The 2025-26 award year maximum annual Pell Grant is $7,395, before considering any additional amount awarded pursuant to a year-round Pell Grant, which began with the 2017-18 award year. A year-round Pell Grant program allows students to receive up to 150% of the student’s annual award, allowing students to receive Pell Grant funds for up to two additional academic terms during an award year so that they can continue taking classes and work toward graduating more quickly. To be eligible for the additional Pell Grant funds, the student must be enrolled at least half-time in the payment period(s) for which the student receives the additional Pell Grant funds in excess of 100% of the student’s regular Pell Grant award.

FSEOG program awards are designed to supplement Pell Grants up to a maximum amount of $4,000 per academic year for the neediest students. Institutions, including ours, are required to provide matching funding for FSEOG awards that represent not less than

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25% of the total FSEOG award to be received by eligible students. The matching may be accomplished through institutional, private and/or state funds.

Federal Work-Study Program

Generally, under the federal work-study program, federal funds are used to pay 75% of the cost of part-time employment of eligible students to perform work for the institution or certain off-campus organizations. The remaining 25% is paid by the institution or the student’s employer. In select cases, these federal funds under the federal work-study program are used to pay up to 100% of the cost of part-time employment of eligible students.

Veterans Benefits Programs

Some of our students who are veterans use their benefits under the Montgomery GI Bill, or the Post-9/11 Veterans Educational Assistance Act of 2008, as amended (“Post-9/11 GI Bill”), to cover their tuition. A certain number of our students are also eligible to receive funds from other education assistance programs administered by the VA.

The Yellow Ribbon program under the Post-9/11 GI Bill expanded education benefits for veterans who have served on active duty on or after September 11, 2001, including reservists and members of the National Guard. As originally passed, the Post-9/11 GI Bill provided that eligible veterans could receive benefits for tuition purposes up to the cost of in-state tuition at the most expensive public institution of higher education in the state where the veteran was enrolled. In addition, veterans who were enrolled in classroom-based programs or “blended programs” (programs that combine classroom learning and distance learning) could receive monthly housing stipends, while veterans enrolled in wholly distance-based programs were not entitled to a monthly housing stipend. The provisions regarding education benefits for post-9/11 veterans took effect August 1, 2009. The Post-9/11 GI Bill also increased the amount of education benefits available to eligible veterans under the pre-existing Montgomery GI Bill. The legislation also authorized expansion of service members’ ability to transfer veterans’ education benefits to family members.

On January 4, 2011, the Post-9/11 Veterans Educational Assistance Improvements Act of 2010 (“Improvements Act”) was adopted, which amended the Post-9/11 GI Bill in several respects. The Improvements Act altered the way benefits related to tuition and fees are calculated. For nonpublic U.S. institutions, the Improvements Act bases the benefits related to tuition and fees on the net cost to the student (after accounting for state and federal aid, scholarships, institutional aid, fee waivers, and similar assistance paid directly to the institution for the sole purpose of defraying tuition cost) rather than the charges established by the institution. The Improvements Act also replaced the state-dependent benefit cap with a single national cap which is adjusted annually and as of August 1, 2025, and effective through July 31, 2026, the national cap of academic year tuition and fee charges for private institutions of higher learning is $29,921. In addition, veterans pursuing a program of education solely through distance learning on a more than half-time basis are eligible to receive up to 50% of the national average of the basic housing allowance available to service members who are at military pay grade E-5 and have dependents. Most Improvements Act changes took effect on August 1 or October 1, 2011, though changes to rules regarding eligibility for benefits were effective immediately or retroactively to the effective date of the Post-9/11 GI Bill. The Improvements Act did not change the Post-9/11 GI Bill’s provision that allows veterans to receive up to $1,000 per academic year for books, supplies, equipment, and other education costs.

U.S. Military Tuition Assistance

Eligible active duty, Reserve Service members and National Guard Service members of the United States Armed Forces are eligible to receive tuition assistance through the Military Tuition Assistance ("TA") Program, which is governed by the Department of Defense (“DoD”) uniform policy and administered by each individual branch of service. Service members may use this tuition assistance to pursue postsecondary degrees at postsecondary institutions that are accredited by accrediting agencies that are recognized by the Department. Each branch of the armed forces has established its own rules for the tuition assistance programs of DoD.

In 2010, both Congress and the DoD increased their focus on DoD tuition assistance that is used for distance education and programs at for-profit institutions. The DoD Voluntary Education Partnership Memorandum of Understanding (“MOU”) was established as part of the revised DoD Instruction 1322.25, Voluntary Education Programs dated March 15, 2011. The DoD updated the MOU in 2014 and 2019, in each case with enhanced requirements for institutions. The MOU requires that participating institutions provide meaningful information to students about the financial cost of attendance at an institution so military students can make informed decisions on where to attend school, not use unfair, deceptive, and abusive recruiting practices, and provide academic and student support services to service members and their families. It contains requirements regarding the disclosures of costs and amounts covered by federal educational benefits, marketing standards, state authorization, accreditation approvals, standard institutional refund policies, educational plans, and academic and financial advising. The MOU also incorporates the use of the “VA Shopping Sheet,” a standardized cost form with federal aid information which has evolved into what is now referred to by the Department as the “College Financing Plan.” The MOU conveys the commitments and agreements between the educational institution and DoD prior to accepting funds under the tuition assistance program. For example, the MOU requires an institution to agree to support DoD regulatory guidance, adhere to a bill of rights that is specified in the regulations, and acknowledge DoD’s oversight authority, including participation in reviews if implemented. Under the MOU, institutions must also agree to adhere to the principles and criteria established by the Service Members Opportunity Colleges Degree Network System regarding the transferability of credit and the

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awarding of credit for military training and experience. CTU and AIUS (which includes Trident) have signed such MOUs most recently in July 2024, which is effective through 2029. USAHS has signed an MOU most recently in July 2025, which is effective through July 2030.

Institutional Payment Plans

Some of our students will enter into payment plans with our institutions to pay a portion, or in some cases all, of their institutional charges directly to the school. These arrangements typically apply to students who have a gap between Title IV financial aid, military service education benefits and other third-party aid and their institutional charges or for students who are enrolled in programs or courses for which Title IV or other financial aid is not available. The payment period for these plans varies and includes payment terms during the in-school period as well as for periods extending up to 12 months beyond graduation. Our institutions do not charge interest under the payment plans.

Scrutiny of the For-Profit Postsecondary Education Sector

In recent years, Congress, the Department, states, accrediting agencies, the Consumer Financial Protection Bureau (“CFPB”), the FTC, state attorneys general, consumer advocacy groups and the media have all scrutinized the for-profit postsecondary education sector. Congressional hearings and roundtable discussions were held regarding various aspects of the education industry, including issues surrounding student debt as well as publicly reported student outcomes that may be used as part of an institution’s recruiting and admissions practices, and reports were issued that are highly critical of for-profit colleges and universities. Many of the most highly criticized institutions have been closed now for several years. A group of influential U.S. senators, consumer advocacy groups and some media outlets have strongly and repeatedly encouraged the Department, DoD and the VA and its state approving agencies to take action to limit or terminate the participation of institutions such as ours in existing financial aid and tuition assistance programs. In several cases, these groups have received significant financial support from third parties critical of our sector and have aligned on messaging that negatively impacts our sector during policy and rulemaking discussions. In addition, the Biden Administration made student loan forgiveness one of its top domestic policy objectives, and it was aggressively pursued by the Department in cooperation with special interest groups, other federal agencies, state attorneys general and others. These groups collectively focused efforts relating to student debt forgiveness on for-profit colleges and universities, encouraging loan discharge applications and complaints by former students. The loan discharge efforts under multiple authorities and programs culminated in an expansive loan forgiveness effort that resulted in the discharge of nearly $189 billion for 5.3 million borrowers. In our sector, with one exception, these efforts specifically targeted any school that was no longer in operation, allowing the Administration to make accusation of behavior that support loan forgiveness to go unchallenged. Additionally, the Biden Administration agreed with activist groups to allow the approval of loan forgiveness without any supporting evidence as part of a legal settlement which vastly expanded the number of former students submitting applications without merit.

Existing regulations discussed below impose additional burdens on for-profit postsecondary institutions, and often apply unevenly. For example, the 90-10 Rule is an additional annual eligibility test that applies exclusively to for-profit sector institutions. The Gainful Employment rule is designed to primarily impose additional requirements on for-profit sector programs and many of the proposed modifications to other long standing existing rules at the federal and state levels contain new requirements that apply exclusively to for-profit sector institutions and their ownership structures.

Following President Trump’s January 20, 2025 inauguration, and the convening of the 119th Congress, federal policy has emphasized regulatory review and, in certain instances, deregulation, including through multiple executive actions addressing agency rulemaking and regulatory repeal initiatives. The Trump Administration has issued an executive order directing the Secretary of Education to take steps, to the maximum extent permitted by law, to facilitate closure of the Department of Education, and legislation to abolish the Department has also been introduced in Congress. While we cannot predict the likelihood, timing, or substance of these changes, we expect Title IV participation will continue to be heavily regulated, no matter which federal agency oversees the programs, and we may be required to adapt our policies, procedures, systems, and compliance practices in response to new laws, regulations, or agency interpretations. In addition, future federal actions may delay, block, modify, or eliminate certain Title IV and other regulations applicable to higher education institutions, and the Department may interpret, apply, and enforce existing requirements differently from prior guidance and practice.

See Item 1A, “Risk Factors – Risks Related to the Highly Regulated Field in Which We Operate – The extensive and evolving regulatory requirements applicable to our business may change, in particular as a result of the scrutiny of the for-profit postsecondary education sector, which could require us to make substantial changes to our business, reduce our profitability and make compliance more difficult," for information about the potential impact of new regulations on our business; and the “Compliance with Federal Regulatory Standards and Effect of Federal Regulatory Violations” section below for an overview of the current rules relating to the 90-10 Rule, borrower defense to repayment, financial responsibility standards, gainful employment, change in ownership or control and administrative capability.

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Legislative Action and Recent Department Regulatory Initiatives

The U.S. Congress must periodically reauthorize the HEA and other laws governing Title IV Programs and annually determines the funding level for each Title IV Program. The Higher Education Opportunity Act (“HEOA”) was the most recent reauthorization of the HEA and was signed into law on August 14, 2008. It revised many of the regulations governing an institution’s eligibility to participate in Title IV Programs. Congress has subsequently taken several actions that effectively extend the HEA and various Title IV Programs on a temporary basis. Congress could work to reauthorize the HEA in its entirety, pass a series of smaller bills that focus on individual parts of the HEA, primarily Title IV Programs, or continue to extend existing Title IV Programs for more limited terms while continuing debate on broader policy objectives. Ongoing policy differences in Congress could lead to significant regulatory changes in connection with any reauthorization of the HEA or the funding of Title IV Programs generally.

On July 4, 2025, President Trump signed into law a reconciliation bill, H.R. 1 (P.L. 1119-21), sometimes referred to as the One Big Beautiful Bill Act (the “Reconciliation Act”), which amended the HEA and enacted broad changes to federal spending and taxation, including significant changes to the Title IV Programs. Among the changes were a material restructuring of Federal Direct Loan programs. Beginning on July 1, 2026:

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The maximum lifetime borrowing limits for all students (excluding Parent PLUS loans) is $257,500.

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Grad PLUS programs are eliminated for new borrowers. New borrowing limits will apply to Direct Unsubsidized Loans: graduate students may borrow up to $20,500 per academic year with a $100,000 aggregate cap, professional-degree students may borrow up to $50,000 per academic year with a $200,000 aggregate cap. Borrowers who received a Direct or PLUS Loan before July 1, 2026, may continue to borrow under prior terms for up to three additional academic years or their remaining program time, whichever occurs first.

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Parent PLUS loans are capped, for each dependent undergraduate student, at $20,000 per academic year and $65,000 in the aggregate.

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An earnings-premium accountability test will revoke loan eligibility for any academic program whose graduates’ median earnings fall below specified comparison groups for two out of any three consecutive years.

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Repayment options for loans first disbursed on or after July 1, 2026, are limited to (i) a 10-year Standard plan and (ii) an income-driven Repayment Assistance Plan.

The Reconciliation Act also delays until July 1, 2035, the effective date of the Biden Administration’s 2022 borrower defense to repayment and closed school loan discharge regulations. These regulations remain the subject of a legal challenge. See “Compliance with Federal Regulatory Standards and Effect of Federal Regulatory Violations – Borrower Defense to Repayment" section below for further discussion.

Congress may enact additional legislation affecting federal student aid programs or higher education more broadly, and while the scope, timing, and final content of any such legislation cannot be predicted, any enacted changes could adversely affect our institutions, students, or results of operations.

2025 Negotiated Rulemakings

The Department regularly conducts negotiated rulemakings to develop regulations governing participation in the Title IV Programs, a process generally required by statute for major Title IV regulations. Through these rulemakings, the Department convenes representatives of affected stakeholders to consider proposed regulatory changes, and the outcomes of those proceedings may result in new or revised regulations that affect institutional eligibility, compliance obligations and continued access to federal student aid. If a negotiated rulemaking committee reaches consensus on regulatory language, the Department generally uses the consensus language as the basis for its proposed regulations, although it retains discretion in issuing the final rule following notice and public comment.

In 2025 the Department established two negotiated rulemaking committees for the implementation of the Reconciliation Act. The Re-Imagining and Improving Student Education (“RISE”) committee reached consensus on November 6, 2025, on the entire package of loan related changes, including federal student-loan limits, repayment plans and the elimination of the Grad PLUS Loan program. The Accountability in Higher Education and Access through Demand-driven Workforce Pell (“AHEAD”) committee reached consensus on Workforce Pell and Pell changes on December 12, 2025, and reached consensus on accountability measures on January 9, 2026. On January 30, 2026, the Department published proposed regulations related to the RISE committee. The Department indicated that it intends to publish proposed AHEAD committee regulations in spring 2026 and final regulations for both the RISE and AHEAD committees later in 2026 and may issue interim guidance to ensure the statutory July 1, 2026, effective date is met where required.

Under the HEA and existing Title IV regulations, the definition of “professional programs” consists of a limited set of previously enumerated degree programs—such as medicine, dentistry, law, veterinary medicine, optometry, pharmacy, and certain other professions—that will now be treated differently from other graduate programs for federal student loan purposes. The definition is significant for institutions because, effective July 1, 2026, classification as a professional program allows graduate students to

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borrow up to $50,000 per year, instead of $20,500 per year with a $200,000 aggregate loan limit, instead of $100,000 aggregate loan limit. In the RISE negotiating committee, the committee reached consensus on a revised definition of professional programs that largely preserves the existing framework, adding only doctoral programs in clinical psychology, and allowing certain closely related programs to be treated as professional programs based on alignment at the four-digit CIP code level, rather than through an open-ended or discretionary expansion.

Historically, Title IV borrowing by students at AIUS and CTU has remained within the new graduate-level limits outlined in the Reconciliation Act. At USAHS, many graduate students previously relied on Grad PLUS loans. Under the current consensus language, programs such as physical therapy, occupational therapy, speech-language pathology, and nursing are not classified as professional programs. If the Department’s final regulations do not revise this classification, students in these programs will be subject to lower borrowing limits, which could negatively impact enrollment. We are informing prospective students about private financing alternatives available in the market, while updating our internal processes and communications to ensure comprehensive counseling on responsible borrowing. While these steps are intended to mitigate the impact, we cannot currently predict the extent to which reduced federal loan availability may influence prospective student demand.

See “Compliance with Federal Regulatory Standards and Effect of Federal Regulatory Violations – Gainful Employment and Financial Value Transparency" for further discussion of the results of the AHEAD committee’s consensus on accountability provisions.

The Department may adopt new or revised regulations through negotiated rulemakings or other regulatory processes, and although the outcome and implementation of these efforts are uncertain, the resulting regulations could impose additional compliance obligations or otherwise have a negative impact on our schools and financial performance.

See Item 1A, “Risk Factors – Risks Related to the Highly Regulated Field in Which We Operate – The extensive and evolving regulatory requirements applicable to our business may change, in particular as a result of the scrutiny of the for-profit postsecondary education sector, which could require us to make substantial changes to our business, reduce our profitability and make compliance more difficult."

Compliance with Federal Regulatory Standards and Effect of Federal Regulatory Violations

To be eligible to participate in Title IV Programs, an institution must comply with the HEA and regulations thereunder that are administered by the Department. We and our institutions are regularly subject to audits and compliance reviews and periodically subject to inquiries, lawsuits, investigations, and/or claims of non-compliance from federal and state regulatory agencies, accrediting agencies and the Department, based on claims by present and former students and employees, and others that may allege violations of statutes, regulations, accreditation standards or other regulatory requirements applicable to us or our institutions. If the results of any such audits, reviews, investigations, claims, or actions are unfavorable to us, we may be required to pay monetary damages or be subject to fines, operational limitations, loss of federal funding, injunctions, additional oversight and reporting, provisional certification or other civil or criminal penalties. In addition, if the Department or another regulatory agency determined that one of our institutions improperly disbursed Title IV Program funds or violated a provision of the HEA or the Department’s regulations, that institution could be required to repay such funds, and could be assessed an administrative fine.

The HEA also requires that an institution’s administration of Title IV Program funds be audited annually by an independent accounting firm and that the resulting audit report be submitted to the Department for review. In May 2023, the Department’s Office of Inspector General (“OIG”) released a revised audit guide applicable specifically to proprietary schools and third-party servicers administering Title IV Programs. The updated guide is effective for fiscal years beginning after January 1, 2023. The revised audit guide was effective for us for the year ending December 31, 2023, and applies to annual compliance audits due June 30, 2024, and thereafter. The new guide increases the requirements and testing procedures necessary when filing our annual Title IV compliance audits.

Eligibility and Certification by the Department

Under the HEA, an institution must periodically apply to the Department for recertification to participate in Title IV Programs at least every six years, or more frequently as required by the Department based on institutional risk. In addition, a change in ownership or control requires separate Department review and approval and may result in provisional certification or additional conditions. An institution also must obtain the Department's approval for certain substantive changes in its operations, including changes in an institution’s accrediting agency or state authorizing agency or changes to an institution’s structure or certain basic educational features.

Institutions approved to participate in Title IV Programs sign a program participation agreement provided by the Department that describes the terms of participation and includes a number of certifications and assurances made by the senior executive officers of the institutions. As long as an institution has applied for recertification at least ninety days prior to the expiration of its current program participation agreement, the institution’s eligibility to participate in Title IV Programs continues on a month-to-month basis until the Department completes its review. The Department may issue full certification to an institution, it may deny certification, or it may elect to issue provisional certification, in which case the program participation agreement outlines additional requirements that

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the institution must meet. The Department may place an institution on provisional certification status if it finds that the institution does not fully satisfy all required eligibility and certification standards. During the period of provisional certification, an institution must obtain prior Department approval to add an educational program, open a new location or make any other significant change. Provisional certification does not generally limit an institution’s access to Title IV Program funds. The Department may withdraw an institution’s provisional certification without advance notice if the Department determines that the institution is not fulfilling all material requirements.

In February 2025, both CTU and AIUS received recertifications of their program participation agreements through June 30, 2027. Additionally, AIUS was removed from provisional certification, leaving both AIUS and CTU with full certification. Following the Trident acquisition and AIU’s implementation of a university system model, institutional accreditation and approval by the Department continues at the AIU System level. By March 31, 2027, CTU and AIUS will each be required to submit applications for recertification to continue participation in Title IV Programs.

As part of the standard change of ownership process, USAHS is operating under a temporary provisional program participation agreement as a result of the Company’s recent acquisition while the Department reviews all of the materials submitted as part of the change of ownership application process. Pursuant to applicable regulations, if the change of ownership is approved, USAHS will then participate under provisional certification for up to three years.

On October 31, 2023, the Department published new regulations on certification procedures that became effective July 1, 2024. The revised regulations provide a more rigorous process for certifying institutions to participate in the Title IV Programs, both initially and on an ongoing basis. The changes increase the Department’s oversight of institutions at critical points of institutional review including initial certification, during provisional certification, after a change of ownership, at recertification, and when there is a risk of closure.

These regulations added additional events that lead to provisional certification, such as if an institution is required to post a letter of credit because of a mandatory or discretionary trigger in the financial responsibility regulations, the Department determines the institution is at risk of closure, or the institution fails the 90-10 rule. It established new supplementary performance measures the Department may consider in determining whether to certify or condition the participation of the institution, such as withdrawal rates, the amount of educational and pre-enrollment expenditures, and licensure pass rates where the institution is required by an accrediting agency or state to report licensure exam passage rates. The regulations added a provision to include all federal agencies and add state attorneys general to the list of entities that have the authority to share with each other and the Department any information pertaining to an institution’s eligibility for or participation in Title IV Programs or any information on fraud, abuse, or other violations of law. The regulations established a non-exhaustive list of conditions that the Department may apply to provisionally certified institutions, such as the submission of teach-out plans, the release of holds on student transcripts, restrictions or limitations on the addition of new programs or locations, requirements related to enrollment in programs that lead to state licensure, restrictions on growth in enrollments or Title IV volume, restrictions on the ability to provide a teach-out on behalf of another institution, restrictions on the acquisition of other institutions, additional financial reporting requirements, and limitations on entering into written arrangements with other institutions for the provision of educational instruction. Finally, the regulations require provisionally certified schools that have major consumer protection issues to recertify after no more than three years. For institutions alleged or found to have engaged in misrepresentation, aggressive recruiting, or incentive compensation violations, the Department may require that the institution engage a monitor and submit marketing materials to the Department for its review and approval.

See Item 1A, “Risk Factors – Risks Related to the Highly Regulated Field in Which We Operate – “If the Department denies, or significantly conditions, recertification of any of our institutions to participate in Title IV Programs, that institution could not operate its business as it is currently conducted,” and other risk factors in Item 1A for additional information about the risks surrounding continued participation in Title IV Programs.

“90-10 Rule”

Under a provision of the HEA commonly referred to as the “90-10 Rule,” any of our institutions that, on modified cash basis accounting, derives more than 90% of its cash receipts from federal sources for a fiscal year will be placed on provisional participation status for its next two fiscal years, is required to provide warning notices to students regarding the potential loss of Title IV Program funds and would be required to post a letter of credit with the Department. If an institution does not satisfy the 90-10 Rule for two consecutive fiscal years, it will lose its eligibility to participate in Title IV Programs for at least two fiscal years. We have minimal control over the amount of federal funding sought by or awarded to our students. The Reconciliation Act amended the HEA to permit institutions, at their discretion, to establish Title IV loan borrowing limits for specific educational programs, provided that any such lower loan limits are applied uniformly to all students enrolled in the same program. If an institution violates the 90-10 Rule and becomes ineligible to participate in Title IV Programs but continues to disburse Title IV Program funds, the Department could require repayment of all Title IV Program funds received by it after the effective date of the loss of eligibility

We have implemented various measures intended to reduce the percentage of our institution’s 90-10 revenue attributable to federal funds, including emphasizing employer-paid and other direct-pay education programs such as our corporate student programs, diversifying our educational offerings to increase the portion of our students who do not rely on Title IV Program funds, recruitment

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of international students, who are not eligible for Title IV Program funds, the use of externally funded scholarships and grants and counseling students to carefully evaluate the amount of necessary Title IV Program borrowing consistent with Department regulations and guidance.

On October 28, 2022, the Department published final regulations, effective July 1, 2023, to calculate the percentage of a for-profit school’s revenue that is derived from federal education assistance under the 90-10 Rule. These regulations reflected amendments made by the American Rescue Plan Act of 2021 (H.R.1319), enacted on March 11, 2021, which expanded the 90-10 calculation to include all identifiable sources of federal educational funding rather than only Title IV funds. Under these regulations the definition of “federal educational assistance funds” includes any identifiable revenue a school receives from tuition assistance programs offered by federal agencies, such as the Departments of Defense, Veterans Affairs, and Labor. The regulation also included a number of technical changes, including a departure from the historical focus on cash basis revenue and existing Title IV Program cash management regulations. For example, in certain instances, institutions would be required to accelerate the receipt of, or would be deemed to have received, federal funds not received at the end of the annual measurement period.

On December 21, 2022, the Department published in the Federal Register the list of sources of Federal Education Assistance to be included as “federal educational assistance” under the revised rule. This publication confirmed that government education assistance for military or veteran personnel is considered “federal educational assistance.” Furthermore, the Department indicates that the list is not all encompassing as certain non-federal entities may sub-grant award funds under various names, and that it is up to each institution to determine if there are federal funds included in amounts received from students or other funding sources, and the precise federal and non-federal breakdown in instances where funds may be co-mingled. The result makes compliance with the revised rule more difficult if not impossible in some cases, as well as adding additional layers of complexity for institutions to calculate a rate under the new rules.

Although the regulatory text adopted by the Department in its Final Rule was consistent with the consensus language reached during negotiated rulemaking, the Department included in the preamble to the regulation a number of interpretations that are likely not consistent with the consensus language and may potentially narrow and/or limit non-federal revenue that may be included by institutions in their annual calculations. These interpretations were offered with limited explanation and are expected to make future compliance with these regulations unclear and therefore more difficult for for-profit institutions. On July 7, 2025, the Department issued an Interpretive Rule reversing a prior interpretation and clarifying that non-federal revenue from programs delivered through distance education may be counted as non-federal revenue in an institution’s 90-10 calculation.

We have preliminarily calculated the 90-10 rates for the year ended December 31, 2025, and AIUS, CTU and USAHS are all in compliance with the 90-10 Rule. The preliminary calculations for AIUS, CTU and USAHS show improvement from the prior year. The 90-10 Rule requires detailed, source-level analysis of institutional revenues to identify potential indirect or otherwise not obvious federal funding streams. The new 90-10 Rule requires a high level of granularity and research of different fund sources to determine whether there may be an indirect and an otherwise unobvious federal connection. While our preliminary calculations for the 2025 fiscal year indicate that the institutions remain in compliance with the 90/10 threshold, we are continuing our review of the applicable regulatory requirements and conducting a further audit of the 2025 calculations.

The ability of our institutions to maintain 90-10 rates below 90% will depend on the impact of future changes in our student enrollment mix, and Department regulations and guidance and other factors outside of our control. In addition, disagreements with, changes in, or new interpretations of, the technical aspects of the calculation methodology or other industry practices under the 90-10 Rule could further significantly impact our compliance with the 90-10 Rule.

We are continuing to monitor the Department’s interpretations, public statements, and other communications and have had to make adjustments in our operations in response to these new rules. See Item 1A, "Risk Factors – Risks Related to the Highly Regulated Field in Which We Operate – The extensive and evolving regulatory requirements applicable to our business may change, in particular as a result of the scrutiny of the for-profit postsecondary education sector, which could require us to make substantial changes to our business, reduce our profitability and make compliance more difficult," and "Our institutions could lose their eligibility to participate in federal student financial aid programs, face significant limitations on their ability to serve new or former students or have other limitations placed upon them if the percentage of their revenues derived from certain federal programs is too high," for information about the potential impact of new regulations on our business.

Student Loan Cohort Default Rates

An institution may lose eligibility to participate in some or all Title IV Programs if the rates at which its former students default on the repayment of their federally guaranteed or federally funded student loans exceed specified percentages. This is determined by an institution’s cohort default rate (“CDR”), which is calculated on an annual basis as a measure of administrative capability. Each cohort is the group of students who first enter into student loan repayment during a federal fiscal year (ending September 30 of each year). An institution’s CDR is calculated as the percentage of borrowers who entered repayment in the relevant federal fiscal year who default before the end of the second fiscal year following the fiscal year in which the borrowers entered repayment. This represents a three-year measurement period.

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If an institution’s three-year cohort default rate exceeds 10% for any one of the three preceding years, it must delay for 30 days the release of the first disbursement of federal student loan proceeds to first time borrowers enrolled in the first year of an undergraduate program. As a matter of regular practice, our institutions have implemented a 30-day delay for such disbursements.

If an institution’s three-year cohort default rate exceeds 30% for any given year, it must establish a default prevention task force and develop a default prevention plan with measurable objectives for improving the cohort default rate.

Excessive three-year cohort default rates will result in the loss of an institution’s Title IV eligibility, as follows:

• Annual test. If the three-year cohort default rate for any given year exceeds 40%, the institution will cease to be eligible to participate in Title IV Programs.

• Three consecutive years test. If the institution’s three-year cohort default rate exceeds 30% for three consecutive years, the institution will cease to be eligible to participate in Title IV Programs.

We have initiatives aimed at reducing the likelihood of our students’ failure to repay their loans in a timely manner. These initiatives emphasize with our students the importance of compliance with loan repayment requirements and provide for loan counseling and communication with students after they cease enrollment. Our efforts supplement the counseling, processing and other student loan servicing work performed by the Department through contracts it has with select third parties. The quality and nature of the student loan servicing work performed by the Department has a direct impact on our cohort default rates and we have experienced past performance failures by the Department and its student loan servicers in outreach to students.

As part of the CARES Act, which was signed into law on March 27, 2020, federal student loan payments and interest were suspended for a period of time. Ultimately, student loan repayment commenced again in October 2023, while interest began accruing on those loans as of September 1, 2023. During the suspended period, all student loan borrowers had their loans placed in forbearance, and as such, were no longer required to make payments on their federal student loans. Consequently, no further defaults could occur during this period. Based on this forbearance, and more specifically its timing, we have seen a favorable impact on the CDR rates starting with the 2018 cohort rates. We believe this favorability will at least continue through the 2023 cohort default rates and expect the rates through the 2022 cohort to be at or near zero percent and 2023 to be under 10%.

In September 2025, the Department released the official three-year cohort default rates for the 2022 cohort which was 0% for all our academic institutions, which is consistent with the 0% for all institutions as of 2021 and 2020 as well.

Following the expiration of the COVID-19-era payment pause, federal student loan repayment resumed in October 2023, and interest again began accruing on outstanding balances. To facilitate the transition back into repayment, the Department implemented a temporary “on-ramp” period, which extended through September 30, 2024. During this period, borrowers who missed payments were not considered in default, were not referred to collections, and generally were not reported as delinquent to credit bureaus, although interest continued to accrue on unpaid balances.

The resumption of repayment has been accompanied by significant operational challenges affecting federal loan servicers, including servicer transitions, billing errors, delayed or inconsistent borrower communications, and extended wait times for borrower assistance. During this period, the Department implemented the SAVE income-driven repayment plan, which was intended to reduce monthly payment obligations for many borrowers, including through expanded eligibility for zero-dollar payments. However, implementation of key aspects of SAVE has been disrupted by ongoing litigation. As a result of the litigation and the Department’s proposed settlement, borrowers who enrolled or attempted to enroll in SAVE—including those who, beginning in July 2024, would otherwise have been eligible for substantially reduced monthly payments—have been placed into an interest-free administrative forbearance. The Department has also announced its intention, pursuant to the proposed settlement, to transition borrowers currently enrolled in SAVE into other income-driven repayment plans. The timing and mechanics of that transition remain unclear, including when borrowers will be required to take action, how quickly servicers will process plan changes, and how the transition may affect interest accrual, progress toward loan forgiveness, and borrower repayment behavior.

The combined effects of the repayment “on-ramp” period and ongoing loan servicer disruptions create uncertainty as to how these factors will ultimately affect future cohort default rates. Loan servicers have reported prolonged wait times for borrower assistance and have indicated that they are conducting limited or no proactive outreach to delinquent borrowers as resources are redirected to managing elevated inbound call volumes, conditions that are likely to adversely affect cohort default rates at our institutions. The Department has also warned that defaults across the higher education sector may increase significantly once temporary forbearance and relief measures expire.

In addition, a number of borrower-relief policies adopted during the Biden Administration —including limiting the consequences of nonpayment during the on-ramp period and publicly advancing proposals for broad-based student loan forgiveness—may have reduced repayment incentives for certain borrowers. These policies, together with servicer challenges, are expected to negatively affect future default rates, and recent reports indicate that repayment performance among loans that re-entered repayment in October 2023 is significantly below historical levels. As a result of these factors, we anticipate that our Cohort Default Rates

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beginning with the 2024 cohort may be higher than historical levels until borrower repayment behavior and servicing conditions stabilize.

Closed School Loan Discharges

Under the HEA and Title IV regulations, certain borrowers may be eligible for a closed school loan discharge, which provides for the cancellation of federal student loans if a student’s school closes while the student is enrolled or if the student withdraws not more than 180 days before the school’s closure (or such longer period as the Department may approve in connection with a closure), and the student does not complete the program through an approved teach-out or by transferring credits to another eligible institution. Closed school loan discharges are administered by the Department and may be granted automatically or upon application, depending on the circumstances of the school’s closure and the borrower’s enrollment status.

Although the discharge relieves the borrower of repayment obligations, the Department has statutory authority to seek recoupment from the institution that closed for amounts discharged, including through offsets against future Title IV funds, demands for repayment, or draws on letters of credit or other financial protection posted by the institution. School closures and related discharge activity may also result in heightened regulatory scrutiny, additional compliance obligations, reputational harm, and potential financial exposure, including costs associated with teach-out arrangements, administrative proceedings, or related borrower defense claims.

Borrower Defense to Repayment

On November 1, 2016, the Department adopted regulations that cover multiple issues including the processes and standards for the discharge of federal student loans, which are commonly referred to as “borrower defense to repayment” ("BDR") regulations. On September 23, 2019, the Department published BDR regulations that became effective on July 1, 2020. The 2019 BDR regulations are summarized below and created a distinct loan discharge process and standards applicable to federal student loans first disbursed after July 1, 2020. On November 1, 2022, the Department published further revised and final BDR regulations that were to become effective on July 1, 2023. The BDR regulations have been negotiated and revised multiple times by the Department, which has created competing standards and outcomes for institutions and student borrowers. Since their initial adoption in 2016 and with their subsequent modifications in 2019 and 2022, the Department’s BDR regulations have also been the subject of numerous legal challenges in different jurisdictions around the country. The Department subsequently used the settlement of a lawsuit (discussed below) that was primarily seeking improvements in the Department's processing of claims as a means of providing loan forgiveness, including previously denied and/or meritless claims and further adopting yet another new BDR process and set of standards applicable to claims pending as of that date. Numerous legal challenges remain pending regarding these regulations, making it difficult to predict what standards and processes will ultimately apply to historical or future student loan forgiveness to our current or former student borrowers.

2019 Final Regulations – Summary

The 2019 BDR regulations significantly altered how loan discharge applications are to be treated by the Department. In addition to adopting the more balanced burden of proof standard of “preponderance of the evidence,” the 2019 regulations provided for a single new federal standard for a misrepresentation claim a student may assert against its school. Under that standard, an individual borrower may assert a defense to repayment based on the institution’s statement, act, or omission that is false, misleading, or deceptive. To be eligible for relief, the borrower would be required to demonstrate that the misrepresentation (1) was made with knowledge of its false, misleading, or deceptive nature or with a reckless disregard for the truth, (2) was relied upon by the borrower in making an enrollment decision, and (3) caused the student financial harm.

In addition, the 2019 final regulations eliminated the concept of automatic group loan discharges contained in the 2016 and subsequent 2022 regulations and require individual claims to be made by students and include a process for the institution to provide a defense to any claims asserted. Although these 2019 regulations were finalized and adopted, it does not appear that the Department implemented or applied them to any pending BDR applications and instead agreed to a settlement of existing claims (discussed below) that called for relying on a modified set of standards while they developed new standards and processes adopted in November 2022.

Department Settlement of Pending BDR Applications, Inducement of New Claims

On November 16, 2022, a California federal district court in Sweet v. Cardona, No. 3:19-cv-3674 (N.D. Cal.) approved a settlement agreement entered into by the Department in a class action lawsuit that challenged the way the Department had been handling BDR applications in prior years (the “Sweet Settlement”). The Sweet Settlement provided a streamlined, non-adjudicatory process under which the Department agreed to provide automatic or expedited debt forgiveness for former students of over 150 schools, including AIUS, CTU, and institutions of ours that have previously closed. Neither the Company nor our current or former institutions are a party to this lawsuit. BDR applications for over 150 schools pending at the time of the settlement agreement were approximately 286,000 but expanded by an additional 180,000 applications prior to the court’s final approval following publicity about the opportunity afforded by the settlement. The Department has neither identified the number of claims nor the specific claims covered by the Sweet Settlement that are related to our institutions. Because the process agreed to by the Department in the Sweet

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Settlement does not follow the claim adjudication procedures set out in applicable regulations, while uncertain, we believe the claims covered by the Sweet Settlement cannot form the basis of a claim for recoupment against the Company or our institutions.

Pending Borrower Defense to Repayment Applications

In May 2021, the Department notified the Company that the Department has several thousand borrower defense applications that make claims regarding the Company’s institutions, including institutions that have ceased operations. As part of the initial fact-finding process, the Department sent individual student claims to the Company and allowed the institutions the opportunity to submit responses to the borrower defense applications. A majority of the claims received involve institutions or campuses that have ceased operations and, in some cases, involve students who attended over 25 years ago. We have submitted responses to the claims received which indicate that we believe the applications fail to establish a valid borrower defense and the Department should therefore deny them. We have responded to substantial requests for information going back as far as 25 years with respect to these claims. It remains unclear what loan discharge applications the Department may grant in the future and whether they will assert repayment claims against us regardless of the date the student loan was disbursed and the corresponding discharge standards and processes.

2022 Final Regulations – Summary

As part of the Institutional and Programmatic Eligibility rulemaking, on November 1, 2022, the Department released new final rules on BDR, with an announced effective date of July 1, 2023. These rules established a single federal standard for BDR, include a new definition of aggressive and deceptive recruitment - one of five grounds under which a claim could be filed under the new rules - and reinstate a ban on pre-dispute arbitration and class action waivers. The grounds on which a student may make a claim for BDR under these new rules include:

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substantial misrepresentation,

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substantial omission of fact,

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breach of contract,

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aggressive and deceptive recruitment, or

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a federal, state judgment, or departmental adverse action against an institution that could give rise to a borrower defense claim.

As published, the new rules remove certain barriers and simplify the process for borrowers with a total and permanent disability and borrowers seeking public service loan forgiveness. The rules also expand closed school loan discharge provisions. The rules reduce the required supporting evidence and related obligations of students applying for BDR loan forgiveness, expand the categories students could raise in a BDR application, and provide the Department wide latitude to selectively adjudicate future BDR applications without affording institutions adequate opportunity to respond and potentially without regard to the individual merits of the BDR applications. The 2022 BDR rules remove any statute of limitations on student claims and create a rebuttable presumption in favor of full loan forgiveness as opposed to partial relief for most approved applications, eliminating the Department’s approach under the previous rules of assessing whether and to what extent a student had been financially harmed. The rules also increase the burden on institutions to maintain and provide documentation to refute student claims. As a result, an institution’s failure to maintain and provide timely and responsive information that goes beyond the contents of a typical student’s academic file in response to future BDR applications could form the basis for loan forgiveness. The combination of the reduced application requirements, increased categories for repayment defenses, and presumptions will increase the likelihood of loan forgiveness and potentially create a significant financial incentive for existing and former students to apply for loan forgiveness regardless of a claim’s merit. In fact, the Department’s current efforts to settle litigation in the Sweet Matter (see "Borrower Defense to Repayment: Department Settlement of Pending BDR Applications, Inducement of New Claims" for more information regarding the Sweet Matter) reflects an attempt to discharge the loans for hundreds of thousands of students without regards to the merits of their claims and induced the filing of tens of thousands of new BDR applications in a matter of only a few months from students hoping to benefit from the opportunity afforded by the settlement.

On February 28, 2023, the Career Colleges & Schools of Texas (“CCST”) filed a lawsuit in the U.S. District Court for the Northern District of Texas challenging the Department’s 2022 borrower defense to repayment and closed school loan discharge regulations. CCST initiated the lawsuit in an effort to set aside the BDR rule on the grounds that it violates the U.S. Constitution and the Administrative Procedure Act. On August 7, 2023, a three-judge Fifth Circuit Court of Appeals panel granted an injunction pending appeal, staying portions of the rule that went into effect on July 1, 2023. On April 4, 2024, the Fifth Circuit reversed the district court order and granted a preliminary injunction against the 2022 BDR Rule. On October 11, 2024, the Department petitioned the Supreme Court to review the Fifth Circuit’s grant of preliminary injunction and on January 10, 2025, the Supreme Court granted the petition for certiorari review, limited to the question whether the HEA permits the assessment of borrower defenses to repayment before default, in administrative proceedings, or on a group basis. On February 6, 2025, the Supreme Court stayed its review at the Department’s request after the Acting Secretary of Education announced that the Department would reevaluate the Department’s BDR regulations. On January 28, 2026, the U.S. District Court for the Northern District of Texas entered the preliminary injunction as

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directed by the Fifth Circuit and ordered the parties to proceed under the schedule proposed in CCST’s January 27, 2026 status report, requiring CCST to file a proposed amended complaint on or before February 20, 2026.

There continues to be significant uncertainty around the requirements and approach to handling BDR applications due to a series of rulemakings and competing regulations published in 2016, 2019 and again in 2022, along with a number of legal challenges of those rulemakings and the Department's application of these rules to select institutions.

The Reconciliation Act delays implementation of the Biden Administration 2022 regulations on borrower defense to repayment and closed school loan discharges for 10 years, to July 1, 2035, which reinstates the rules promulgated under the first Trump Administration. These regulations remain the subject of a legal challenge described above. We continue to closely monitor the Department’s public statements, legal filings, and other communications, but are unable to determine the ultimate impact of any final regulations on our business at this time.

Financial Responsibility Standards

To participate in Title IV Programs, our institutions must either satisfy standards of financial responsibility prescribed by the Department or post a letter of credit in favor of the Department and possibly accept other conditions on their participation in Title IV Programs. Pursuant to the Title IV Program regulations, each eligible higher education institution must, among other things, satisfy on an annual basis the Department’s “Composite Score,” which is a quantitative standard of financial responsibility that is based on a weighted average of three tests that assess the financial condition of the institution. The three tests measure primary reserve, equity, and net income ratios. The Primary Reserve Ratio is a measure of an institution’s financial viability and liquidity. The Equity Ratio is a measure of an institution’s capital resources and its ability to borrow. The Net Income Ratio is a measure of an institution’s profitability. These tests provide three individual scores that are converted into a single Composite Score. The maximum Composite Score is 3.0. If the institution achieves a Composite Score of at least 1.5, it is considered financially responsible without conditions or additional oversight. A Composite Score from 1.0 to 1.4 is considered to be in “the zone” of financial responsibility, and a Composite Score of less than 1.0 is not considered to be financially responsible.

Zone Alternative. If an institution is in “the zone” of financial responsibility, the institution may establish eligibility to continue to participate in Title IV Programs for up to three years under additional monitoring and reporting procedures but without having to post a letter of credit in favor of the Department. These additional monitoring and reporting procedures include being transferred from the “advance” method of payment of Title IV Program funds to cash monitoring status (referred to as Heightened Cash Monitoring 1, or “HCM1,” status) or to the “reimbursement” or Heightened Cash Monitoring 2 (“HCM2”) methods of payment. If an institution does not achieve a Composite Score of at least 1.0 in one of the three subsequent years or does not improve its financial condition to attain a Composite Score of at least 1.5 by the end of the three-year period, the institution must satisfy another alternative standard to continue participating in Title IV Programs.

If an institution has a Composite Score of less than 1.0 it does not meet the Department’s financial responsibility standards but may be permitted to continue to participate in Title IV Programs under either of the following alternative bases:

• Letter of Credit Alternative. An institution that fails to meet a standard of financial responsibility, including by having a Composite Score below 1.5, may demonstrate financial responsibility by submitting an irrevocable letter of credit to the Department in an amount equal to at least 50% of the Title IV Program funds that the institution received during its most recently completed fiscal year. An institution participating under this alternative continues to operate under a non-provisional program participation agreement.

• Provisional Certification Alternative. If an institution fails to meet a standard of financial responsibility, including by having a Composite Score below 1.5, the Department may permit the institution to participate under provisional certification for up to three years. If the Department permits an institution to participate under provisional certification, an institution must comply with the requirements of the Zone Alternative, including being transferred to the HCM1, HCM2 or “reimbursement” method of payment, and must submit a letter of credit to the Department in an amount determined by the Department, but at least 10% of the Title IV Program funds that the institution received during its most recently completed fiscal year. If an institution is still not financially responsible at the end of the period of provisional certification, including because it has a composite score of less than 1.0, the Department may again permit provisional certification subject to the terms the Department determines appropriate.

The Department applies its quantitative financial responsibility tests annually based on an institution’s audited financial statements and may apply the tests if an institution undergoes a change in control or under other circumstances. The Department also may apply the tests to the parent company of our institutions, and to other related entities. The Department currently applies the composite score for each of our institutions to the Company on a consolidated basis. Our composite score for the consolidated entity for the year ended December 31, 2024, was 3.0, and our preliminary calculation for the year ended December 31, 2025, is also 3.0, which is the highest possible score. Composite scores of 1.5 or above are considered financially responsible without conditions or additional oversight. If in the future we are required to satisfy the Department’s standards of financial responsibility on an alternative basis, including potentially by posting irrevocable letters of credit, we may not have the borrowing capacity to post these letters of credit.

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Throughout 2025, USAHS was on HCM1 and had posted a letter of credit under the Provisional Certification Alternative in favor of the Department in the amount of $20.5 million as of December 31, 2025, due to its Composite Score attributable to its prior ownership which for 2024, the last completed fiscal year prior to the USAHS acquisition, was 0.5. In January 2026, the Department notified USAHS that it was removed from HCM1 and returned to the advanced method of payment and is no longer required to maintain the letter of credit due to the Department’s assessment of financial strength of the financial statements of the Company, which were submitted on behalf of USAHS.

On October 31, 2023, the Department published new regulations on financial responsibility that became effective July 1, 2024. These regulations, among other things, significantly modified and expand the mandatory and discretionary “triggering” events that require an institution to report these events between financial statement submissions and potentially post a letter of credit or other form of financial protection with the Department. Mandatory triggering events represent automatic failures of the financial responsibility standards, while the Department evaluates discretionary triggering events, such as by recalculating the prior year’s composite score after considering the financial impact of a discretionary triggering event, or through other means, to determine if an institution has failed the financial responsibility standards. The regulations provide that a separate letter of credit of not less than 10% of the institution’s prior year Title IV receipts is required for each mandatory event, or discretionary triggering event as determined by the Department in its discretion, such that multiple triggering events could subject our institutions to substantial cumulative financial protection obligations.

Examples of mandatory triggering events in the Title IV regulations include: (i) a final judgment or settlement in a lawsuit brought by a federal or state authority to impose an injunction, to establish fines or penalties, to obtain financial relief, or in a qui tam action in which the federal government has intervened, in each case subject to certain timing and materiality requirements; (ii) an action by the Department to recover from an institution for adjudicated borrower defense to repayment claims where the potential amount of recovery would cause the institution’s recalculated composite score to drop below 1.0; (iii) receipt by the institution, in its most recently completed fiscal year, of at least 50% of its Title IV funds from programs that are failing the GE rule; (iv) a requirement imposed by a state or federal agency, an accrediting agency, or other oversight body that the institution submit a teach-out plan due to financial concerns; (v) for an institution owned at least 50% by a publicly traded entity, the entity is subject to certain actions or events specified in the rule initiated by the SEC; (vi) the institution fails the 90-10 rule for its most recently completed fiscal year; and (vii) the institution is subject to a default or other adverse condition under a line of credit, loan agreement, security agreement or other financing arrangement due to an action by the Department.

Specified discretionary triggers provide the Department with flexibility to determine whether to require a letter of credit based on the severity of the event and its potential adverse financial impact on the institution. Examples of discretionary triggers include: (i) an accrediting agency or a federal, state, or other oversight authority places the institution on probation, show cause, or comparable status; (ii) the institution is subject to a default or other specified adverse condition under a credit or financing arrangement (unless due to an action taken by the Department, which is a mandatory trigger); (iii) a “significant fluctuation” in Direct Loan or Pell Grant funds received by the institution over different award years that cannot be reasonably explained by changes in those programs; (iv) the institution has high annual dropout or withdrawal rates as calculated by the Department; (v) where the institution is under prior financial reporting obligations to the Department, the occurrence of negative cash flows, failure of other financial ratios, cash flows that significantly miss projections submitted to the Department, or significant increases in withdrawal rates or other indicators of a significant change in the institution’s financial condition; (vi) pending group-process BDR claims; (vii) a discontinuation of programs that enroll more than 25% of the institution’s students who receive Title IV funds; (viii) the closure of a location enrolling more than 25% of its students who receive Title IV funds; (ix) a citation or similar action by a state licensing agency for failing to meet its requirements; (x) the institution or a program loses eligibility to participate in another federal educational assistance program due to an administrative action; (xi) for an institution owned at least 50% by a publicly traded entity, a disclosure by the entity in a public filing that its owner is under investigation for possible violations of state, federal or foreign law; (xii) citation by, or potential loss of education assistance funds from, another federal agency for failure to comply with that agency’s requirements; (xiii) a requirement imposed by a state, the Department, another federal agency, an accrediting agency, or another oversight body that the institution submit a teach-out plan or teach-out agreement, including a programmatic teach-out; or (xiv) any other event or condition that the Department learns about from the institution or other parties where the Department determines that the event or condition is likely to have a significant adverse effect on the financial condition of the institution.

The 2023 rule also included additional circumstances that would deem an institution to lack financial responsibility, such as: failing to make debt payments for more than 90 days; failing to meet payroll obligations; borrowing from employee retirement plans or restricted funds without authorization; failing to make timely refunds or returns of Title IV funds or pay Title IV credit balances; or failing to make repayments of any Title IV liabilities. Finally, the regulations establish new rules for evaluating financial responsibility during a change in ownership.

Accreditor and state regulatory requirements also address financial responsibility, and these requirements vary among agencies and also are different from the Department requirements. Any developments relating to our satisfaction of the Department’s financial responsibility requirements may lead to additional focus or review by our accreditors or applicable state agencies regarding their respective financial responsibility requirements.

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See Item 1A, “Risk Factors – Risks Related to the Highly Regulated Field in Which We Operate – A failure to demonstrate ‘financial responsibility’ or ‘administrative capability’ or meet new 'certification' requirements would have negative impacts on our operations,” for additional information regarding risks relating to the financial responsibility standards.

Gainful Employment and Financial Value Transparency

Under Title IV of the HEA, an educational program offered by proprietary institutions such as ours, or a non-degree educational program offered by a public or nonprofit institution, must “prepare students for gainful employment in a recognized occupation” in order to be eligible to participate in the federal student aid programs. As long as the term “gainful employment” continues to exist in the HEA, CTU’s, AIUS’ and USAHS’s Title IV eligible programs will continue to need to be career focused educational programs. The Department’s current Gainful Employment (“GE”) regulations implement this statutory requirement by conditioning continued Title IV eligibility for covered programs on whether graduates’ earnings and debt outcomes satisfy prescribed performance metrics.

On October 30, 2014, the Obama Administration published a new complex final regulation, effective July 1, 2015, to define “gainful employment” as meeting certain standards measuring the general amount students borrow for enrollment in a program against an amount of their reported earnings. A Department rulemaking effort in 2019 during the first Trump Administration resulted in the rescission of the 2015 gainful employment regulation effective on July 1, 2020, effectively returning to pre-2014 language requiring programs to prepare students for gainful employment without the regulatory framework tied to debt/earnings measures. In lieu of the complex gainful employment regulation designed to eliminate program eligibility, the Department continued to update the college scorecards it developed, which apply to all Title IV eligible institutions, with relevant information for prospective students.

Current Gainful Employment and Financial Value Transparency Rules

On October 10, 2023, the Biden Administration published final regulations for a new GE rule, effective July 1, 2024. The new GE rule includes an eligibility framework that imposes additional requirements on proprietary school programs. The regulation uses two key metrics: Debt-to-Earnings (“D/E”) and Earnings Premium (“EP”) to determine whether a program prepares students for gainful employment. The D/E metric measures student debt at a program level against a measure of earnings. The EP metric measures student earnings at a program level against working individuals with a high school diploma or equivalent. GE programs that fail either the D/E or the EP metric in two of three consecutive years will lose Title IV eligibility. Programs offered by AIUS, CTU and USAHS are subject to the GE rule and could lose Title IV eligibility if they fail to pass the D/E rates and/or the EP measures. The rule also requires our institutions to warn current and prospective students if a program fails any metric in any year. The issuance of required GE warnings could deter prospective students from enrolling at our institutions and current students from continuing in their programs. Significantly, the 2023 GE rule is retroactive in its measurements, looking at data dating back many years to determine a program’s future eligibility and provides no opportunity for institutions to adopt changes that impact these eligibility metrics. It is also unclear whether and to what extent these metrics may be adversely impacted by the state and federally mandated business closures during the COVID pandemic and the general economic downturn and job loss that resulted from it.

The Financial Value Transparency (“FVT”) regulation establishes a framework that is designed to increase the quality and availability of information provided directly to students about the costs, sources of financial aid, and outcomes of students enrolled in all Title IV eligible programs. FVT disclosures apply to only certain Title IV eligible programs offered by all institutions and use the same D/E and EP metrics as the GE framework. While the FVT regulations do not contemplate penalties or sanctions as under the GE rule, the regulations require that current and prospective students be provided relevant disclosures and acknowledge when an educational program is associated with a high debt burden.

On December 22, 2023, the American Association of Cosmetology Schools (“AACS”) filed a lawsuit in the U.S. District Court for the Northern District of Texas challenging the GE rule. AACS initiated the lawsuit in an effort to set aside the GE rule on the grounds that it violates the U.S. Constitution and the Administrative Procedure Act and exceeds the Department’s authority under the laws passed by Congress. On March 20, 2024, Ogle School Management, LLC and Triocci University of Beauty Culture, LLC filed a second lawsuit in the U.S. District Court for the Northern District of Texas seeking to invalidate the rule, and the cases were subsequently consolidated. On October 2, 2025, the district court ruled in favor of the Department and upheld the GE rule. The plaintiffs timely appealed to the Fifth Circuit.

A Department ‘Fact Sheet’ initially indicated that the first official GE and FVT metrics would be released by early 2025. Administrative challenges, ongoing litigation, and significant technical issues affecting the Department’s reporting systems led to delayed rollout of the GE and FVT required reporting timelines. An initial reporting deadline of January 15, 2025, was accompanied by repeated reports of system glitches and error reports from schools across the country, with many institutions unable to submit data at all. As a result, the Department reopened its debt reporting window to February 18, 2025. On February 14, 2025, the Department further extended the reporting deadline for evaluating completers’ lists and reporting data until September 30, 2025. The Department further noted that 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 who have been unable to complete reporting to date.

The Department has not yet published initial rates under the current GE Rule. Given the proposed regulatory changes to GE and FVT discussed below, it is unclear if the Department will post these rates. Programs may be deemed ineligible to participate in Title

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IV Programs under the existing GE rule if the Department were to post an initial and a second round of rates, as the program must fail in 2 of 3 reporting years. We are unsure if or when the Administration or the pending legal challenges will provide further changes to the rule and or timelines. A loss or material reduction in eligible Title IV Programs due to the GE rule would materially impact our student enrollments and profitability. We are continuing to evaluate the regulations but given the complexity of the rules and the lack of our access to, and the lack of the Department providing transparency regarding, the earnings data used to calculate the metrics, we are unable to determine the ultimate impact of the regulation on our business at this time.

Reconciliation Act Earnings Premium and Changes to Gainful Employment and Financial Value Transparency

The Reconciliation Act required the Department to undertake negotiated rulemaking to implement a new, universally applicable earnings-premium standard for program eligibility under Title IV of the HEA. The Department’s Accountability in Higher Education and Access through Demand-driven Workforce Pell (AHEAD) committee bifurcated negotiations into two sessions, with the committee reaching consensus on Work Force Pell and Pell Grant changes on December 12, 2025, and separately reaching consensus on accountability – including GE and FVT – on January 9, 2026.

The Reconciliation Act’s earnings premium requirement overlaps with, and in some respects conflicts with, the Department’s existing GE rule, which applies primarily to programs at proprietary schools. Under the consensus reached by the AHEAD committee, degree granting programs would only be subject to the new earnings premium requirement, which is less restrictive than the earnings premium measures under the current GE rule. Under that framework, failure to meet the new earnings-premium requirement in any two out of three consecutive award years would only impact Direct Loan Program eligibility and would not result in a loss of Pell Grant eligibility.

To implement this approach, the Department agreed to revise the existing FVT and GE regulations to align with the Reconciliation Act and to establish a more streamlined and uniform transparency and accountability framework applicable across all institutional sectors and program types. Under the consensus framework, the Department would eliminate the debt-to-earnings rate metric entirely from the GE rule, revise the earnings comparison threshold used to calculate the earnings premium under the GE rule to match the statutory benchmarks, and narrow institutional reporting obligations to information necessary to calculate the earnings-premium measure and to produce required net-price disclosures. In addition, the consensus language also shortens the period of ineligibility for programs that fail the earnings-premium requirement from three years to two years, modifies student warning disclosures to track the statutory notice language more closely, and removes prior student acknowledgment requirements tied to debt-to-earnings performance.

The committee also reached consensus to expand the Department’s administrative capability authority to address institutions with a pattern of program-level failure. Under this approach, in order for an institution to be considered administratively capable, at least half of the institution’s recipients of student aid and at least half of the institution's total Title IV Program funds cannot be from low-earning outcome programs. If an institution does not comply with this standard in two out of three consecutive award years, the institution will be placed on provisional status and the institution’s low-earning outcome programs will be ineligible for any Title IV Program funds.

The consensus framework also creates Department authority to permit institutions to voluntarily enter into approved teach-out arrangements for failing programs after failing the new earnings requirement, allowing currently enrolled students to complete their programs while restricting future enrollment and loan eligibility.

We continue to evaluate the potential impact of the new earnings-premium requirement and the changes to the GE rule agreed to by the AHEAD committee and to monitor the ongoing rulemaking process. Given the complexity of the statutory framework, the absence of final regulations, and the lack of access to the underlying earnings data used to calculate the applicable metrics, we are unable at this time to determine the ultimate impact or timing of these requirements on our business.

Return and Refunds of Title IV Program Funds

An institution participating in Title IV Programs must correctly calculate the amount of unearned Title IV Program funds that were disbursed to students who withdraw from their educational programs and must return those funds to the government in a timely manner.

The portion of tuition and fee payments billed to students but not yet earned is recorded as deferred tuition revenue and reflected as a current liability on our consolidated balance sheets, as such amounts represent revenue that we expect to earn within the next year. If a student withdraws from one of our institutions prior to the completion of the academic term, we refund the portion of tuition and fees already paid that we are not entitled to retain, pursuant to applicable federal and state law, accrediting agency standards, and our refund policy. The amount of funds to be refunded on behalf of a student is calculated based upon the period of time in which the student has attended classes and the amount of tuition and fees paid by the student as of the student’s withdrawal date.

Institutions are required to return any unearned Title IV funds within 45 days of the date the institution determines that the student has withdrawn. An institution that is found to be in non-compliance with the Department refund requirements for either of the last two completed fiscal years must post a letter of credit in favor of the Department in an amount equal to 25% of the total Title IV

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Program returns that were repaid or should have been repaid by the institution during its most recently completed fiscal year. As of December 31, 2025, CTU and AIUS have posted no letters of credit in favor of the Department due to non-compliance with the Department refund requirements. USAHS has issued a letter of credit for $0.1 million due to non-compliance with the Department's refund requirements that took place before our acquisition.

Change of Ownership or Control

When an institution undergoes a change of ownership or a change of ownership resulting in a change of control, as those terms are defined and applied by the applicable state approving agency, its accrediting agency and the Department, it must secure the approval of those agencies to continue to operate and to continue to participate in Title IV Programs. A failure to do so generally results in loss of the approval. If the institution is unable to re-establish state authorization and accreditation requirements and satisfy other requirements for certification by the Department, the institution may lose its authority to operate and its ability to participate in Title IV Programs. An institution whose change of ownership or control is approved by the appropriate authorities is nonetheless provisionally re-certified by the Department for a period of up to three years. Current Department regulations require institutions to provide at least 90 days’ advance notice to the Department and enrolled students of a planned change of ownership that results in a change of control and to report ownership interest changes at thresholds as low as five percent.

Transactions or events that constitute a change of ownership or a change of control by one or more of the applicable regulatory agencies, including the Department, applicable state agencies, and accrediting bodies, include the acquisition of an institution from another entity or significant acquisition or disposition of an institution’s equity or assets. Under current regulations, a full Department review is generally triggered by ownership interest changes of 50% or more, although lower-level ownership changes may still require reporting and review. It is possible that some of these events may occur without our control. Our failure to obtain, or a delay in obtaining, a required approval of any change in control from the Department, applicable state agencies, or accrediting agencies could impair our ability or the ability of the affected institutions to participate in Title IV Programs. If we were to undergo a change of control and our institutions failed to obtain the required approvals from applicable regulatory agencies in a timely manner, our student population, financial condition, results of operations and cash flows could be materially adversely affected.

When we acquire an institution that is eligible to participate in Title IV Programs, that institution typically undergoes a change of ownership resulting in a change of control as defined by the Department. Our acquired institutions in the past have undergone a certification review under our ownership and have been certified to participate in Title IV Programs on a provisional basis, per Department requirements, until such time that the Department signs a new program participation agreement with the institution. Currently, only USAHS is subject to provisional certification status due to the Department’s change of ownership criteria. The potential adverse effects of a change of control under Department regulations may influence future decisions by us and our stockholders regarding the sale, purchase, transfer, issuance, or redemption of our common stock.

Opening New Institutions, Start-up Campuses, and Adding Educational Programs

The HEA generally requires that for-profit institutions be fully operational for two years before applying to participate in Title IV Programs. However, an institution that is certified to participate in Title IV Programs may establish a start-up branch campus or location and participate in Title IV Programs at the start-up campus without satisfying the two-year requirement if the start-up campus has received all of the necessary state and accrediting agency approvals, has been reported to the Department, and meets certain other criteria specified by the Department. Nevertheless, under certain circumstances, a start-up branch campus may also be required to obtain approval from the Department to be able to participate in Title IV Programs.

In addition to the Department regulations, certain state, and accrediting agencies with jurisdiction over our institutions have requirements that may affect our ability to open a new institution, open a start-up branch campus or location of one of our existing institutions, or begin offering a new educational program at one of our institutions. If we establish a new institution, add a new branch start-up campus, or expand program offerings at any of our institutions without obtaining the required approvals, we would likely be liable for repayment of Title IV Program funds provided to students at that institution or branch campus or enrolled in that educational program, and we could also be subject to sanctions. Also, if we are unable to obtain the requisite approvals from the Department, applicable state regulatory agencies, and accrediting agencies for any new institutions, branch campuses, or program offerings where such approvals are required, or to obtain such approvals in a timely manner, our ability to grow our business would be impaired and our financial condition, results of operations and cash flows could be materially adversely affected.

Administrative Capability

The Department regulations specify extensive criteria that an institution must satisfy to establish that it has the requisite administrative capability to participate in Title IV Programs. These criteria relate to, among other things, institutional staffing, operational standards such as policies and procedures for disbursing and safeguarding Title IV Program funds, timely submission of accurate reports to the Department and various other procedural matters. If an institution fails to satisfy any of the Department’s criteria for administrative capability, the Department may require the repayment of Title IV Program funds disbursed by the institution, place the institution on provisional certification status, require the institution to receive Title IV Program funds under a restricted funding arrangement, impose fines or limit or terminate the participation of the institution in Title IV Programs.

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On October 31, 2023, the Department published new regulations on administrative capability that became effective July 1, 2024. These regulations expand the requirements for institutions to demonstrate that they are administratively capable of providing the education they promise and of properly managing Title IV program funds, adding new standards related to financial counseling and career services, adequate clinical and externship opportunities, timely disbursement of Title IV funds, compliance with high school diploma verification requirements, aggressive and deceptive recruitment tactics or conduct, gainful employment requirements, and significant negative actions by a federal, state or accreditation agencies. The changes also provide the Department with increased and explicit authority to make an administrative capability finding based on a broader set of issues than it has used historically. Such findings could lead to fines, limitations, suspensions, terminations, or other actions, including placing the institution on a provisional program participation agreement or restricted funding arrangement.

As described previously, the consensus language under the accountability session of the AHEAD rulemaking included proposed modifications to the administrative capability regulations to link Pell eligibility to program failure under the new earnings premium test. Under the agreed upon approach, for an institution to be considered administratively capable, at least half of the institution’s recipients of student aid and at least half of the institution's total Title IV Program funds cannot be from low-earning outcome programs. If an institution does not comply with this standard in two out of three consecutive award years, the institution will be placed on provisional status and the institution’s low-earning outcome programs will be ineligible for any Title IV Program funds.

Restrictions on Payment of Commissions, Bonuses and Other Incentive Payments

An institution participating in Title IV Programs cannot provide any commission, bonus, or other incentive payment based directly or indirectly on success in securing enrollments or awarding Title IV financial aid to any persons or entities engaged in any student recruiting or admission activities or in making decisions regarding the award of student financial assistance. Regulations issued in October 2010 which became effective July 1, 2011, rescinded previously issued Department guidance and “safe harbors” relied upon by higher education institutions in making decisions about how they managed, compensated, and promoted individuals and their supervisors engaged in student recruiting and awarding of financial aid. The elimination of these “safe harbor” protections and guidance required us to terminate certain compensation payments to our affected employees and to implement changes in contractual and other arrangements with third parties to change structures formerly allowed under Department rules, and has had an impact on our ability to compensate, recruit, retain and motivate affected admissions and other affected employees, as well as on our business arrangements with third-party lead generators and other marketing vendors. The Department’s Office of Inspector General audit guide, applicable specifically to for-profit schools, requires an annual audit to review compliance with these incentive compensation restrictions.

Further, the Department provides very limited published guidance regarding this rule and does not establish clear criteria for compliance in many circumstances. If the Department determined that an institution’s compensation practices violated these standards, the Department could subject the institution to substantial monetary fines, penalties or other sanctions, and exposure to increased risk of action under the False Claims Act.

Substantial Misrepresentation

The HEA prohibits an institution participating in Title IV Programs from engaging in substantial misrepresentation of the nature of its educational programs, financial charges, graduate employability, or its relationship with the Department. Under the Department’s rules, a "misrepresentation" is any statement (made in writing, visually, orally or otherwise) made by the institution, any of its representatives or a third party that provides educational programs, marketing, advertising, recruiting, or admissions services to the institution, that is false, erroneous or has the likelihood or tendency to deceive, and a "substantial misrepresentation" is any misrepresentation on which the person to whom it was made could reasonably be expected to rely, or has reasonably relied, to that person’s detriment. Considering the broad definition of “substantial misrepresentation,” it is possible that, despite our training efforts and compliance programs, our institutions' employees or service providers may make statements that could be construed as substantial misrepresentations. If the Department determines that one of our institutions has engaged in substantial misrepresentation, the Department may revoke the institution’s program participation agreement, deny applications from the institution for approval of new programs or locations or other matters, initiate proceedings under its BDR regulations, or fine, limit, suspend, or terminate its eligibility to participate in Title IV Programs. The impacted institution could also be exposed to increased risk of action under the Federal False Claims Act.

Fraudulent Applications for Enrollment and Financial Aid

Our institutions must maintain systems and processes to identify and prevent fraudulent applications for enrollment and financial aid. We continue to refine and strengthen our fraud detection capabilities to address the evolving fraudulent schemes affecting postsecondary institutions nationwide. We have implemented various controls throughout the enrollment process to prevent ineligible students from participating in and/or entering our contact systems. In addition, we have partnered with a third party who specializes in the detection of inconsistent personal identifying indicators and suspicious online behavior. In addition to the Department’s mandatory identity verification for certain records, we have incorporated our own identity verification measures for records flagged as suspicious. We have also established automated internal controls designed to detect red flag indicators and/or

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suspicious behavior. In addition, the Trump Administration recently announced it is implementing enhanced fraud controls governing how institutions of higher education distribute financial assistance, including mandatory identity verification for certain first-time student applicants. For more information, see Item 1A, “Risk Factors - Risks Related to the Highly Regulated Field in Which We Operate -- If our institutions fail to maintain adequate systems and processes to detect and prevent fraudulent activity in student enrollment and financial aid, our institutions may lose the ability to participate in Title IV Programs, or have participation in these programs conditioned or limited.”

Compliance Reviews and Other Regulatory Investigations

In connection with its administration of Title IV Programs, the Department has broad powers to request information, conduct investigations, and review the books and records of participating institutions, including through program reviews, audits, and other oversight activities. The Department may initiate such reviews on a routine or risk-based basis, in response to complaints or referrals, or as a result of information shared with the Department by other federal or state agencies, accreditors, loan servicers, guaranty agencies, or law enforcement authorities pursuant to inter-agency information-sharing arrangements. The oversight of the Company by the Department and other governmental authorities, and future investigations, program reviews, audits, or information requests—whether initiated directly by the Department or arising from information shared by third parties—could result in additional compliance costs, management distraction, reputational risk, or adverse regulatory consequences, regardless of whether any findings ultimately result.

OTHER INFORMATION

Our website address is www.perdoceoed.com. We make available within the “Investor Relations” portion of our website under the caption “Annual Reports & SEC Filings,” free of charge, our annual reports on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K, including any amendments to those reports, as soon as reasonably practicable after we electronically file or furnish such materials to the U.S. Securities and Exchange Commission (“SEC”). Also, the SEC maintains an Internet site at www.sec.gov that contains reports, proxy and information statements, and other information that we file electronically with the SEC. Information contained on our website is expressly not incorporated by reference into this Form 10-K.