Strategic Education(US:STRA)2023-02-27 21:25Financial Performance - Strategic Education, Inc. generated net revenue of $1.1 billion in 2022[17]. U.S. Higher Education Segment - The U.S. Higher Education segment serves approximately 78,062 students, with 55% enrolled in bachelor's programs and 31% in master's programs[22]. - As of the 2022 fall term, approximately 69% of U.S. Higher Education students were age 31 or older, and 77% were female[22]. - The U.S. Higher Education business is seasonal, with enrollment typically lowest in the third quarter[23]. - Capella University focuses primarily on master's and doctoral degree offerings, with about 64% of its students enrolled in such programs[39]. - Strayer University offers an online MBA through the Jack Welch Management Institute, which is ranked in the Top-10 by Princeton Review[25]. Enrollment and Demographics - The acquisition of Torrens University and associated assets in Australia and New Zealand includes approximately 19,000 students[18]. - Capella University offers a total of 19,651 students enrolled in its Australia/New Zealand segment as of December 31, 2022, with 44% in bachelor's programs and 25% in master's programs[62]. - Approximately 32% of students at the ANZ institutions are aged 31 or older, and 64% of the student population is female[63]. - The ANZ institutions have a diverse student body, with 48% domestic students and 52% international students[64]. Educational Offerings and Partnerships - Torrens University, part of the ANZ segment, is the only investor-funded university in Australia, offering courses in five fields of study[59]. - The ANZ institutions maintain strong industry partnerships, designing most courses in collaboration with industry partners[65]. - Faculty members at the ANZ institutions are required to have a degree at least one level higher than the discipline they teach[69]. - Torrens University must maintain a robust research agenda to retain its university status, with a focus on areas like artificial intelligence and health[70]. Student Support and Affordability - Strategic Education emphasizes relationships with employers to build employee education benefits programs[16]. - The company provides scholarships and tuition discounts, including a Graduation Fund for qualifying students[37]. - Capella University provides scholarships and tuition discounts to promote affordability and encourage student retention[55]. - The company offers various affordability initiatives, including a Graduation Fund that allows students to earn free courses[93]. Technology and Innovation - The Education Technology Services segment is part of the company's strategy to enhance educational access and affordability[16]. - The Education Technology Services segment is a significant source of student enrollment, driven by employer relationships[81]. - The company focuses on innovation, leveraging technology such as artificial intelligence to improve student support and reduce operating costs[88]. - The company aims to enhance student success by hiring outstanding faculty and employing cutting-edge technology[90]. Workforce and Diversity - Strategic Education employed 3,907 full-time employees worldwide as of December 31, 2022, with 2,962 based in the U.S.[92]. - The representation of U.S. employees includes 21.1% Black or African American, 2.7% Hispanic or Latino, 4.9% Asian, and 61.5% White[94]. - The company has established a DEI Programs Team and appointed a Chief Diversity Officer to advance diversity initiatives across the organization[95]. Sustainability Initiatives - The company has reduced its overall physical footprint by more than 25% compared to 2020, leading to decreased energy consumption and waste generation[99]. - Between January 2021 and December 2022, the company securely recycled approximately 50 U.S. short tons of paper, contributing to significant environmental benefits[99]. - The corporate office in Minneapolis, MN is located in a LEED Gold certified building, reflecting the company's commitment to sustainability[99]. - The company encourages green commuting options and covers a portion of public transit costs for employees in Minneapolis, MN[99]. - The company has implemented energy-saving features in campus locations, including LED lighting and energy-efficient HVAC systems[99]. Accreditation and Compliance - Strayer University and Capella University are subject to accreditation rules and must comply with detailed substantive and reporting requirements under the Higher Education Act[104]. - Strayer University has been institutionally accredited since 1981, with accreditation reaffirmed in June 2017, extending to 2025[115]. - Capella University has been institutionally accredited since 1997, with the latest reaffirmation in January 2023, set for 2032-33[120]. - Both universities are subject to extensive regulation in states where they operate, affecting their ability to introduce new programs or establish campuses[126]. - Strayer University and Capella University are participants in the State Authorization Reciprocity Agreement (SARA), allowing them to offer online courses in participating states without additional state approval[138]. Financial Aid and Title IV Programs - Approximately 75% of students at Strayer University and Capella University participate in one or more Title IV programs[145]. - Strayer University derived approximately 82.95% of its cash-basis revenues from Title IV program funds in 2021, while Capella University derived approximately 67.06%[172]. - The Department of Education assesses financial responsibility using a composite score, which must be at least 1.5 for institutions to be deemed financially responsible[160]. - Institutions lose eligibility for Title IV programs if their cohort default rate exceeds 40%[165]. - Strayer University has a full certification for Title IV programs through September 30, 2025, while Capella University is under provisional certification until December 31, 2022[155]. Regulatory Changes and Impacts - The Department of Education's new regulations effective January 1, 2023, require proprietary institutions to count all federal education assistance funds as federal revenue in the 90/10 calculation[174]. - The 90/10 Rule prohibits proprietary institutions from deriving more than 90% of their revenues from federal funds, with potential penalties for non-compliance including provisional certification[171]. - The Department of Education has proposed new income-driven repayment plans aimed at reducing monthly payments for lower- and middle-income borrowers, potentially impacting future cohort default rates[169]. - The Department of Education is expected to publish draft gainful employment rules in spring 2023, following a failed consensus in the negotiated rulemaking committee[183]. - The Department of Education has extended the pause on student loan repayments, with payments set to resume 60 days after the implementation of the relief program or resolution of litigation[168]. Emergency Funding and Relief - The CARES Act established a $12.6 billion Higher Education Emergency Relief Fund, with Strayer University opting not to accept its allocation[207]. - The Consolidated Appropriations Act, 2021, appropriated an additional $22.7 billion for the Higher Education Emergency Relief Fund, with Strayer University eligible for $5,831,606 in direct grants[208]. - The American Rescue Plan Act of 2021 included $40 billion in emergency funding for higher education[209].