PRDO Perdoceo Education Corporation

Item 8.01Other Events.

On March 9, 2020, Perdoceo Education Corporation (the “Company”) received a letter from the U.S. Department of Veterans Affairs (the “VA”) notifying the Company that if it fails to remedy its deficiency through corrective action within 60 days, the VA will disapprove, for purposes of VA educational assistance programs, the enrollment of individuals not already enrolled in programs at the Company’s institutions.  The letter also provides for certain administrative appeal procedures if such a disapproval decision is made. The letter from the VA identifies as a deficiency matters alleged in connection with the previously settled inquiries by the U.S. Federal Trade Commission (the “FTC”) and the attorneys general of 48 states and the District of Columbia.  

The Company’s current compliance processes incorporate enhanced operational and compliance commitments made in the previous agreements with the FTC and multiple attorneys general, and we believe that these processes will demonstrate to the VA that any corrective actions they deem necessary to address the matters identified in their letter were previously taken in connection with those settlements.  As previously disclosed, those settlements were made with no admission of wrongdoing and both contained commitments as outlined below to continue and enhance on-going compliance processes.  

On January 3, 2019, the Company entered into agreements with attorneys general from 48 states and the District of Columbia to bring closure to multi-state inquiries ongoing since January 2014. As part of the agreements, the Company agreed to, among other things, work with a third-party administrator that will report annually for three years on the Company’s compliance with various obligations the Company committed to in the agreements. Operationally, the Company committed to:

From a compliance standpoint, the Company committed to:

On July 26, 2019, the Company executed a settlement agreement with the FTC to resolve an inquiry commenced by the FTC in 2015. 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 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.

Cautionary Statement Regarding Forward-Looking Statements

This current report on Form 8-K contains forward-looking statements, including statements about the Company’s ability to demonstrate compliance with the VA’s requirements. These forward-looking statements and the ultimate outcome of the VA’s action are subject to a number of risks and uncertainties that could cause actual results to differ materially from those anticipated. A failure to successfully demonstrate compliance to the VA in a timely fashion could have a material adverse effect on current and future military student enrollments.  Except to the extent required by law, the Company disclaims any obligations to update any forward-looking statements.

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