Strategic Education (STRA) risk factors, FY2024 10-K

Risks Related to Extensive Regulation of Our U.S. Business

1. 01If Capella University and Strayer University fail to comply with the extensive legal and regulatory requirements for higher education institutions, they could face significant monetary or other liabilities and penalties, including loss of access to federal student loans and grants for their students
2. 02Congressional examination of for-profit post-secondary education could lead to legislation or other governmental action that may negatively affect the industry
3. 03Capella University and Strayer University are dependent on the renewal and maintenance of Title IV programs
4. 04Capella University and Strayer University are subject to compliance reviews, which, if they result in a material finding of noncompliance, could affect their ability to participate in Title IV programs
5. 05If either Capella University or Strayer University fails to maintain its institutional accreditation or if its institutional accrediting body loses recognition by the Department of Education, the University would lose its ability to participate in Title IV programs
6. 06If either Capella University or Strayer University fails to maintain any of its state authorizations, the University would lose its ability to operate in that state and to participate in Title IV programs there
7. 07If either Capella University or Strayer University fails to obtain recertification by the Department of Education when required, that University would lose its ability to participate in Title IV programs
8. 08A failure to demonstrate financial responsibility or administrative capability may result in the loss of eligibility to participate in Title IV programs
9. 09Student loan defaults in the U.S. could result in the loss of eligibility to participate in Title IV programs
10. 10The failure by Capella University or Strayer University to comply with the Department of Education’s incentive compensation rules could result in sanctions and other liability
11. 11The failure by Capella University or Strayer University to comply with the Department of Education’s misrepresentation rules could result in sanctions and other liability
12. 12To be eligible for Title IV funding, academic programs offered by proprietary institutions of higher education generally must prepare students for gainful employment in a recognized occupation
13. 13The failure by Capella University or Strayer University to comply with the Department of Education’s credit hour or direct assessment rules could result in sanctions and other liability
14. 14The failure by Capella University or Strayer University to comply with the Clery Act or Title IX could result in sanctions and other liability
15. 15Capella University and Strayer University are subject to sanctions if they fail to calculate accurately and make timely payment of refunds of Title IV program funds for students who withdraw before completing their educational program
16. 16Investigations, legislative and regulatory developments, and general credit market conditions related to the student loan industry may result in fewer lenders and loan products and increased regulatory burdens and costs in the U.S
17. 17Our business could be harmed if Capella University or Strayer University experience a disruption in their ability to process student loans under the Federal Direct Loan Program
18. 18Our business could be harmed if Congress makes changes to the availability of Title IV funds
19. 19As enforcement of laws related to the accessibility of technology continues to evolve in the U.S., information technology development costs and compliance risks could increase

Risks Related to Our Business

1. 20Our enrollment rate is uncertain, and we may not be able to estimate our future enrollments effectively
2. 21Adding new locations, programs, and services is dependent on our forecast of the demand for those locations, programs, and services and on regulatory approvals
3. 22Our future success depends in part upon our ability to recruit and retain key personnel
4. 23Our success depends in part on our ability to update and expand the content of existing academic programs and develop new programs in a cost-effective manner and on a timely basis
5. 24Our financial performance depends in part on our ability to continue to increase awareness of the academic programs we offer among working adult students
6. 25Congressional and other governmental activities in the U.S. could damage the reputation of Capella University or Strayer University and limit our ability to attract and retain students
7. 26We face strong competition in the post-secondary education market
8. 27Capella University and Strayer University, with their online programs, operate in a highly competitive market with rapid technological changes, and they may not compete successfully
9. 28The Company relies on exclusive proprietary rights and intellectual property, and competitors may attempt to duplicate our programs and methods
10. 29Seasonal and other fluctuations in our operating results could adversely affect the trading price of our common stock
11. 30Regulatory requirements in the U.S. may make it more difficult to acquire us
12. 31Capacity constraints or system disruptions to our university’s computer networks could damage the reputation of the institutions and limit our ability to attract and retain students
13. 32The Company’s computer networks, and those of third parties we use in our operations, may be vulnerable to cybersecurity risks that could disrupt operations and require the expenditure of significant resources
14. 33The personal information that the Company collects may be vulnerable to breach, theft, or loss that could adversely affect our reputation and operations and is subject to privacy and data security laws which may impact operational efficiency
15. 34Failure to maintain adequate processes to prevent and detect fraudulent activity related to student online enrollment or financial aid could adversely affect our universities’ operations
16. 35The Company operates institutions in the U.S., Australia, and New Zealand, and is subject to complex business, economic, legal, political, geopolitical, and foreign currency risks, which risks may be difficult to address adequately
17. 36Integrating SEI and Torrens University and associated assets in Australia and New Zealand (“ANZ”) may be more difficult, costly or time consuming than expected, and the combined company may not realize all of the anticipated benefits of the acquisition
18. 37The goodwill and indefinite-lived intangible assets recorded in connection with the acquisitions of Capella Education Company (“CEC”) and ANZ could become impaired in the future
19. 38The impact of pandemics like the COVID-19 pandemic and other possible future public health emergencies may adversely affect our business, our future results of operations, and our overall financial performance