STRAYER EDUCATION INC, S-1/A, 1996-07-03

STRAYER EDUCATION INC
S-1/A, 1996-07-03
EDUCATIONAL SERVICES

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 3, 1996

REGISTRATION NO. 333-3967
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------

AMENDMENT NO. 2

FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------

STRAYER EDUCATION, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

MARYLAND
(STATE OR OTHER JURISDICTION OF
INCORPORATION OR ORGANIZATION)

8221
(PRIMARY STANDARD INDUSTRIAL
CLASSIFICATION CODE NUMBER)

52-1975978
(I.R.S. EMPLOYER
IDENTIFICATION NO.)

1025 15TH STREET, N.W.
WASHINGTON, D.C. 20005
(202) 408-2400
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)

RON K. BAILEY
PRESIDENT
STRAYER EDUCATION, INC.
1025 15TH STREET, N.W.
WASHINGTON, D.C. 20005
(202) 408-2400
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE
NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE)
------------------------
Copies to:

WALTER G. LOHR, JR.
HOGAN & HARTSON L.L.P.
111 S. CALVERT STREET, SUITE 1600
BALTIMORE, MD 21202
(410) 659-2700

RICHARD J. PARRINO
SHAW, PITTMAN, POTTS & TROWBRIDGE
2300 N STREET, N.W.
WASHINGTON, DC 20037
(202) 663-8000

------------------------

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this registration statement.

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. / /

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
------------------------

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.

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<PAGE> 2

INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.

SUBJECT TO COMPLETION

PRELIMINARY PROSPECTUS DATED JULY 3, 1996

PROSPECTUS

3,000,000 SHARES

[STRAYER LOGO]

STRAYER EDUCATION, INC.
COMMON STOCK
------------------------

All of the shares of Common Stock, $.01 par value (the "Shares"), offered
hereby are being offered (the "Offering") by Strayer Education, Inc. (the
"Company"). Prior to the Offering, there has been no public market for the
Common Stock of the Company. Approximately $19.7 million of the net proceeds of
the Offering will be used to make payments to affiliates of the Company. See
"Use of Proceeds." It is currently estimated that the initial public offering
price will be between $9.00 and $11.00 per Share. See "Underwriting" for factors
considered in determining the initial public offering price.

The Common Stock has been approved for quotation on the Nasdaq National
Market under the symbol "STRA" upon notice of issuance.

SEE "RISK FACTORS" BEGINNING ON PAGE 7 FOR A DISCUSSION OF CERTAIN RISKS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC DISCOUNT(1) COMPANY(2)
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<S> <C> <C> <C>
Per Share......................... $ $ $
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Total(3).......................... $ $ $
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
</TABLE>

(1) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933. See
"Underwriting."
(2) Before deducting expenses of the Offering estimated at $ payable by
the Company.
(3) The Company has granted to the Underwriters a 30-day option to purchase up
to 450,000 additional Shares from the Company on the same terms and
conditions as set forth above solely to cover over-allotments, if any. If
the Underwriters exercise such option in full, the total Price to Public,
Underwriting Discount, and Proceeds to Company will be $ ,
$ and $ , respectively. See "Underwriting."

------------------------

The Shares are offered by the Underwriters subject to prior sale, when, as
and if issued to and accepted by them, subject to their right to reject any
order in whole or in part and to certain other conditions. The Underwriters
reserve the right to withdraw, cancel or modify such offer and to reject offers
in whole or in part. It is expected that delivery of certificates for the Shares
will be made at the offices of Legg Mason Wood Walker, Incorporated, Baltimore,
Maryland, on or about , 1996.

------------------------

LEGG MASON WOOD WALKER
INCORPORATED

, 1996
<PAGE> 3

[MAP OF GREATER WASHINGTON D.C. AND SURROUNDING AREA INDICATING
CAMPUS LOCATIONS AND PICTURES OF EACH OF THE EIGHT CAMPUS
FACILITIES INSERTED HERE]

The Company intends to furnish its stockholders with annual reports
containing audited financial statements and quarterly reports for the first
three quarters of each fiscal year containing unaudited financial information.

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK AT
A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
TRANSACTIONS MAY BE EFFECTED ON THE NASDAQ NATIONAL MARKET OR OTHERWISE. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.

2
<PAGE> 4

PROSPECTUS SUMMARY

The following summary information is qualified in its entirety by the more
detailed information and financial statements and notes thereto appearing
elsewhere in this Prospectus. Except as otherwise indicated herein, (i) the
information in this Prospectus assumes an initial public offering price of
$10.00 per Share and no exercise of the Underwriters' over-allotment option and
(ii) all references to the Company in this Prospectus include Strayer Education,
Inc. and the business and properties of Strayer College, Inc., a Maryland
corporation ("Strayer" or the "College"), and Education Loan Processing, Inc., a
Virginia corporation ("ELP"), each of which, as a result of the plan of
reorganization (the "Reorganization") described under "Reorganization," will
become a wholly-owned subsidiary of Strayer Education, Inc. Pursuant to the
Reorganization, among other things, the College's status as an S Corporation
under the Internal Revenue Code of 1986 will be terminated and the College will
make the S Corporation Distribution (as defined herein) to its current
stockholders. All references to financial statements contained herein are to the
College's financial statements, unless otherwise indicated.

THE COMPANY

Strayer is a regional proprietary institution of higher education offering
undergraduate and graduate degree programs to more than 7,000 students at eight
campuses in Washington, D.C. and Northern Virginia. In early 1996, the College
received state approval to operate its first degree-granting campus in Maryland.
The College is accredited by the Commission on Higher Education of the Middle
States Association of Colleges and Schools ("Middle States"), the regional
institutional accrediting body recognized by the U.S. Department of Education.
The majority of Strayer students are working adults pursuing their first college
degree to improve their job skills and advance their careers. Of students
enrolled in Strayer programs at the beginning of the 1995 Fall quarter,
approximately 57% were over the age of 30 and approximately 62% were engaged in
a part-time course of study. The College believes it attracts working adults by
offering a business-oriented curriculum, convenient campus locations, flexible
class schedules, a wide variety of information technology courses and an
experienced teaching faculty. Many employers of Strayer students, including
major corporations and governmental agencies, provide full or partial tuition
reimbursement for Strayer courses.

The College was founded as Strayers Business College in Baltimore, Maryland
in 1892. Strayer began a program of significant expansion in 1989 when its
current President, Ron K. Bailey, acquired ownership of the College. Since 1989,
the number of campuses has increased from three to eight, enrollment has
increased from approximately 2,900 students at the beginning of the 1990 Fall
quarter to approximately 7,400 students at the beginning of the 1995 Fall
quarter, and annual revenues have increased from approximately $11.3 million for
the year ended December 31, 1990 to approximately $38.1 million for the year
ended December 31, 1995. During the same period, the College focused its
attention on its degree programs by broadening its course offerings, increasing
the number of faculty members with doctoral and other terminal degrees,
expanding its library and other learning resources and investing in information
systems. The College also closed the Baltimore campus, which was not a
degree-granting institution.

The College designs its educational offerings to meet the practical needs
of its student body. Strayer regularly revises its curriculum in consultation
with area employers to respond to changing business trends and workplace
requirements. The College offers associate's, bachelor's and master's degree
programs in accounting, business administration, and computer information
systems, as well as undergraduate degree programs in related fields, such as
marketing and economics. The College has expanded and upgraded its
computer-related course offerings as business and governmental organizations
have increased their use of information technology. The College offers an
intensive twelve-month diploma program in computer information systems to
instruct students in new information technologies. Strayer has equipped each of
its campuses with computer and networking laboratories containing up-to-date
hardware and software for instructional use.

Strayer provides students with classroom locations close to their homes or
workplaces and flexible class schedules that make it easier for working adults
to attend classes. Strayer currently offers its courses at two campuses in the
District of Columbia and six campuses in Northern Virginia. The College plans to
open its first Maryland degree-granting campus in early 1997. To accommodate the
scheduling requirements of

3
<PAGE> 5

working students, Strayer offers classes seven days a week at hours ranging from
6:00 a.m. to midnight. In addition, Strayer operates throughout the year on a
quarter system, which enables many of its students to attend classes all year.

Strayer recently has taken additional steps to improve the accessibility of
its instructional programs. It currently operates programs on-site at the U.S.
Department of Transportation and at the General Services Administration, for
employees of the federal government; at Quantico Marine Base, Fort Belvoir Army
Education Center and Naval Surface Warfare Center, Dahlgren Division, for active
military personnel; and at Computer Sciences Corporation, in Falls Church,
Virginia, for company employees. The College has submitted a proposal to offer
graduate and upper level undergraduate courses at the Southern Maryland Higher
Education Center in California, Maryland. Strayer also offers an increasing
number of courses through the Internet, which may allow the College in the
future to expand its student population beyond the geographical areas served by
its campuses.

Students finance their Strayer education in a variety of ways. A
significant number of students utilize federal financial aid programs. In
addition, many of Strayer's working adult students finance their own education
or receive full or partial tuition reimbursement from their employers. Since
1995, Strayer has extended educational loans through an internal program, the
Strayer Education Loan Program (the "SEL Program"), to eligible students seeking
an alternative to federal programs. The SEL Program enables students to finance
their education through monthly payments of between $200 and $300 while they
attend college and after they graduate. The administrative costs of the SEL
Program to the College are substantially less than those of the federal loan
programs. In addition, the SEL Program reduces the College's dependence on the
receipt of federal financial aid funds.

The College believes that the demand of working adults for
business-oriented higher education in Strayer's market area will continue to
increase as the result of a number of demographic and economic trends. According
to the American Council on Education, older students are more likely to pursue
postsecondary education in professional fields, including business-related
studies, than in the arts and sciences. The U.S. National Center for Educational
Statistics estimates that by the year 2000 approximately 44% of the 15.5 million
students projected to be enrolled in institutions of higher education will be
adults over the age of 24. Currently, the U.S. Bureau of the Census estimates
that 70-75% of students over the age of 24 are working adults. Management
expects that the number of adult candidates for business and computer-related
education will increase due to the continuing restructuring of businesses and
federal governmental agencies and the rapid growth and change in information
technology.

The College seeks to strengthen its position as a leading provider of
business-oriented education for working adults in its market area. Strayer
believes it will attract additional students by establishing new campuses in
Maryland and elsewhere throughout its region, broadening its curriculum and
using new distance education technologies such as the Internet. The College
intends to expand the SEL Program to reduce its administrative costs, lessen its
dependence on federal student financial aid programs and enhance its ability to
attract and retain qualified students. The College also will consider the
purchase of one or more campus facilities in order to establish permanent campus
sites and to facilitate future expansion.

RISK FACTORS

The Common Stock offered hereby involves a high degree of risk. See "Risk
Factors."

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<PAGE> 6

THE OFFERING

<TABLE>
<S> <C>
Common Stock offered hereby..... 3,000,000 Shares
Common Stock to be outstanding
after the Offering............ 9,000,000 Shares(1)
Use of proceeds................. To fund the distribution to the College's current
stockholders of undistributed income taxable to them prior
to termination of Strayer's S Corporation status (the "S
Corporation Distribution"), to fund the Company's
acquisition of ELP (an education loan servicing company),
and to provide funds for ELP's operations and for other
corporate purposes.
Nasdaq National Market Symbol... "STRA"
</TABLE>

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(1) Excludes 1,000,000 Shares reserved for issuance under the Company's stock
option plan. Upon the effectiveness of the Registration Statement of which
this Prospectus forms a part, the Company intends to grant to certain of its
employees options under the plan to purchase an aggregate of 700,000 Shares
at an exercise price equal to the initial public offering price set forth on
the cover page of this Prospectus. See "Management -- Stock Option Plan."

5
<PAGE> 7

SUMMARY FINANCIAL AND OPERATING INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE AND OPERATING DATA AMOUNTS)

THREE MONTHS ENDED MARCH 31,
YEAR ENDED DECEMBER 31, -----------------------------------
------------------------------------------------------------- (UNAUDITED) PRO
PRO FORMA
1991 1992 1993 1994 1995 FORMA 1995 1996 1996(3)
------- ------- ------- ------- ------- 1995(3) ----------- ----------- -------
-----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenues.................. $16,529 $23,793 $29,368 $34,257 $38,145 $38,145 $ 10,633 $ 12,375 $12,375
Costs and expenses(1)..... 14,449 21,298 25,124 29,055 32,025 25,850 7,682 7,747 7,747
------- ------- ------- ------- ------- ----------- ----------- ----------- -------
Income from operations.... 2,080 2,495 4,244 5,202 6,120 12,295 2,951 4,628 4,628
Investment and other
income.................. 186 184 180 350 856 856 148 100 100
------- ------- ------- ------- ------- ----------- ----------- ----------- -------
Net income(2)............. $ 2,266 $ 2,679 $ 4,424 $ 5,552 $ 6,976 $13,151 $ 3,099 $ 4,728 $ 4,728
======= ======= ======= ======= ======= ========= ======= ======= =======
PRO FORMA DATA:(3)
Pro forma income taxes.... $ 5,052 $ 1,837
Pro forma net income...... $ 8,099 $ 2,891
Pro forma net income per
share(4)................ $ 1.07 $ .38
Pro forma weighted average
shares outstanding(4)... 7,548 7,548
OPERATING DATA:
Enrollment(5)............. 4,000 5,600 6,200 6,800 7,400 6,500 7,100
Number of campuses........ 6 8 8 8 8 8 8
</TABLE>

<TABLE>
<CAPTION>
AT MARCH 31, 1996
--------------------------------
AT DECEMBER 31, (UNAUDITED)
----------------------------------------------- PRO AS
1991 1992 1993 1994 1995 ACTUAL FORMA(6) ADJUSTED(7)
------- ------- ------- ------- ------- ------- -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents................ $ 2,572 $ 3,609 $ 2,191 $ 5,564 $ 8,083 $11,544 $ 9,444 $21,764
Working capital.......................... 1,625 3,063 5,195 5,934 8,317 10,909 (5,233) 20,802
Total assets............................. 10,465 14,396 16,279 19,824 23,670 28,382 26,282 39,441
Long-term liabilities.................... 605 62 -- -- -- -- -- --
Total liabilities........................ 7,636 10,146 9,651 10,487 10,517 11,043 25,085 11,043
Total stockholders' equity............... 2,829 4,250 6,628 9,337 13,153 17,339 1,197 28,398
</TABLE>

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(1) Includes compensation payments to an S Corporation stockholder of $0.2
million in 1991, $0.9 million in 1992, $3.5 million in 1993, $5.5 million in
1994, $6.2 million in 1995 and $1.6 million in the three months ended March
31, 1995 in respect of income taxes on undistributed S Corporation income.
No such compensation payments were made during the three-month period ended
March 31, 1996. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Background and Overview" and Note 2
to the College's Financial Statements.

(2) Historical data does not reflect any provision for income taxes. The College
was an S Corporation during the periods indicated and therefore was not
subject to income tax. See "Reorganization -- Termination of S Corporation
Status."

(3) Reflects the formation of the Company and the acquisition of the College by
the Company as if those events had taken place on January 1, 1995. See
"Reorganization -- Formation of Holding Company." Following the termination
of its status as an S Corporation prior to completion of the Offering, the
College will become subject to federal and state income tax. See
"Reorganization -- Termination of S Corporation Status." The pro forma data
reflects the application of statutory corporate income tax rates to the
College's net income as if the termination of the College's S Corporation
status had occurred on January 1, 1995. The effective derived income tax
rates for the year ended December 31, 1995 and for the three months ended
March 31, 1996 were 38.4% and 38.9%, respectively. For the year ended
December 31, 1995, also gives effect to the reduction of costs and expenses
by $6.2 million, which represents compensation payments to an S Corporation
stockholder in respect of 1995 income taxes on undistributed S Corporation
income.

(4) Shares outstanding and per share data have been adjusted to reflect the
number of shares outstanding after the Reorganization and the issuance of
1,548,181 shares of Common Stock in connection with the Offering necessary
to pay the $14.0 million S Corporation Distribution. See "Reorganization"
and Note 2 to the College's Financial Statements.

(5) Reflects student enrollment as of the beginning of the Fall academic quarter
for each year indicated and as of the beginning of the Winter academic
quarter for the three months ended March 31, 1995 and March 31, 1996,
respectively. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Seasonality."

(6) Reflects (i) the April 1996 distribution of $2.1 million to the S
Corporation stockholders in respect of income taxes on estimated S
Corporation income for the five-month period ending May 31, 1996 and (ii)
the recognition of a liability for the estimated amount of previously
recognized and undistributed S Corporation income through March 31, 1996 of
$14.0 million to be paid from the proceeds of the Offering, but without
giving effect to the Offering proceeds, as if those events occurred on March
31, 1996.

(7) Gives effect to the pro forma adjustments described in note (6) above and
the receipt and application of the estimated net proceeds of the Offering as
described under "Use of Proceeds." The adjustment for net proceeds of the
Offering includes $14.0 million of the $18.5 million S Corporation
Distribution identified in "Use of Proceeds." The $14.0 million S
Corporation Distribution adjustment is based on the estimated amount of
previously recognized and undistributed S Corporation income through March
31, 1996, while the $18.5 million S Corporation Distribution also reflects
the estimated additional undistributed S Corporation income accumulated from
April 1, 1996 through the termination of S Corporation status. The estimated
$18.5 million amount is subject to adjustment for actual S Corporation
income in the latter period.

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<PAGE> 8

RISK FACTORS

In addition to the other information in this Prospectus, the following
factors should be considered carefully in evaluating an investment in the Shares
offered hereby. Certain statements included in this Prospectus concerning the
Company's future financial condition and performance are forward-looking
statements and the factors discussed below could cause actual results and
developments to be materially different from those expressed in or implied by
such statements.

POTENTIAL ADVERSE EFFECTS OF REGULATION

The College is subject to extensive regulation by governmental agencies and
licensing and accrediting bodies. In particular, the Higher Education Act of
1965, as amended (the "HEA"), and the regulations issued thereunder subject to
significant regulatory scrutiny the College and all other higher education
institutions that participate in the various federal student financial aid
programs under Title IV of the HEA ("Title IV Programs"). The HEA mandates
specific regulatory responsibilities for each of the following components of the
higher education regulatory triad: (i) the federal government through the United
States Department of Education (the "Department of Education"); (ii) the
accrediting agencies recognized by the Department of Education; and (iii) state
higher education regulatory bodies.

For the year ended December 31, 1995, the College derived approximately 46%
of its revenues from Title IV Programs. Certain recently enacted statutory and
regulatory provisions impose new requirements on the College, and the Department
of Education has not fully developed administrative interpretations of these
requirements. Therefore, it is not clear how the new requirements will be
applied and interpreted. In addition, changes in, or new interpretations of,
other applicable laws, rules or regulations could have a material adverse effect
on the College's accreditation, authorization to operate in various states,
permissible activities or costs of doing business. The College's failure to
maintain or renew any required regulatory approvals, accreditations or
authorizations would have a material adverse effect on the College. See
"Licensing, Accreditation and Financial Aid Regulation."

Certain significant regulatory factors that could adversely affect the
College are discussed below:

Loss of State Authorization and Accreditation. The College is dependent on
the authorization of the applicable agency of each state where the College is
offering educational programs to allow it to operate and to grant degrees or
diplomas. State authorization and accreditation by an accrediting agency
recognized by the Secretary of Education are also required in order for an
institution to become and remain eligible to participate in Title IV Programs.
The College is subject to extensive regulation by its accrediting agency, Middle
States, and by its state licensing agencies, the District of Columbia Education
Licensure Commission, the Virginia State Council of Higher Education and, when
the College establishes a campus in Maryland, the Maryland Higher Education
Commission. State laws and regulations and accrediting agency standards affect
the College's operations and may limit the ability of the College to introduce
educational programs or to obtain authorization to operate at certain locations
or in certain states. The loss of accreditation would, among other things,
render the College ineligible to participate in Title IV Programs and would have
a material adverse effect on the College. Similarly, the loss of state
authorization by the College or an existing campus, or the failure of the
College or a new campus to obtain state authorization, would, among other
things, render the College ineligible to participate in Title IV Programs for
students in that state or location and would have a material adverse effect on
the College. See "Licensing, Accreditation and Financial Aid Regulation -- State
Licensure" and "-- Accreditation."

Student Loan Defaults; Loss of Eligibility to Participate in Title IV
Programs. Under the HEA, an educational institution may lose its eligibility to
participate in some or all Title IV Programs if defaults on the repayment of
federally guaranteed student loans exceed certain rates. These rates (known as
"cohort default rates") are based on the repayment history of current and former
students on loans provided under certain Title IV Programs. The Department of
Education calculates a cohort default rate for each institution by determining
the rate at which borrowers who become subject to their repayment obligation in
one federal fiscal year default by the end of the following federal fiscal year.
Any institution that has a cohort default rate equal to or exceeding 25% for
three consecutive years is subject to immediate loss of eligibility to
participate in

7
<PAGE> 9

certain Title IV Programs for a period of up to three federal fiscal years. The
College's cohort default rates on federally guaranteed student loans for the
1991, 1992 and 1993 federal fiscal years, the most recent federal fiscal years
for which final information is available, were 14.1%, 10.6% and 16.6%,
respectively. See "Licensing, Accreditation and Financial Aid
Regulation -- Financial Aid Regulation -- Student Loan Defaults."

Failure to Demonstrate Administrative Capability. Department of Education
regulations specify extensive criteria an institution must satisfy to establish
that it has the requisite "administrative capability" to participate in Title IV
Programs. The failure by an institution to satisfy any of the criteria may lead
the Department of Education to determine that the institution lacks the
requisite administrative capability and, therefore, to commence a proceeding to
impose a fine or to limit, suspend or terminate the participation of the
institution in Title IV Programs, or to require additional scrutiny as a
condition of continued participation. A cohort default rate on federally
guaranteed student loans equal to or exceeding 25% in any one of the three most
recent federal fiscal years is a basis for such a determination by the
Department of Education.

Based on an inspection conducted by the Office of Inspector General of the
Department of Education in mid-1992, the Department of Education concluded that
there were serious deficiencies at that time in the College's administration of
federal student financial aid programs. The Department of Education cited late
and unpaid refunds, lack of refund notification, unpaid credit balances, a high
student withdrawal rate, lack of exit counseling documentation, incorrect loan
certifications and missing financial aid transcripts. Because of these
deficiencies, the Department of Education transferred the College from the
"advance" system of payment, under which the Department of Education accepts an
institution's request for funds and transfers the amount requested (subject to
annual audit), to the "reimbursement" system of payment, under which the
institution must disburse funds to eligible students and document their
eligibility for the aid requested before receiving funds from the Department of
Education. The College disputed various of the Department of Education's
findings, but took steps to correct certain institutional weaknesses identified
in the report. Further, following an internal audit, the College in 1993 and
1994 repaid to the government certain Title IV funds for which the College
determined its documentation was inadequate. Following these remedial actions,
the Department of Education returned the College to the advance system of
payment, effective December 7, 1995. The Department of Education could impose
additional sanctions in the future if it determined that the College lacks the
capability to administer federal student financial aid programs. See "Licensing,
Accreditation and Financial Aid Regulation -- Financial Aid
Regulation -- Administrative Capability."

Failure to Demonstrate Financial Responsibility. The HEA and the
regulations issued thereunder impose new standards of financial responsibility
on eligible higher education institutions. These standards require, among other
things, that a proprietary institution such as the College meet an "acid test"
ratio (defined as the ratio of cash, cash equivalents and current accounts
receivable to current liabilities) of at least 1-to-1 at the end of the
institution's most recent fiscal year. For the fiscal year ended December 31,
1995, the College's "acid test" ratio was equal to 1.44-to-1. In addition, an
eligible institution may be required to submit an irrevocable letter of credit,
payable to the Department of Education, in an amount equal to 25% of the total
dollar amount of refunds that the institution paid on Title IV Programs in the
previous fiscal year unless the institution meets certain conditions that
indicate student refunds will be paid. The College has obtained such a letter of
credit in the amount of $500,000. Failure of the College to meet the financial
responsibility standards would, among other things, render the College
ineligible to participate in Title IV Programs and would have a material adverse
effect on the College. See "Licensing, Accreditation and Financial Aid
Regulation -- Financial Aid Regulation -- Financial Responsibility."

Regulatory Consequences of a Change in Ownership Resulting in a Change of
Control. A change in ownership resulting in a change of control of the College,
depending on the type of transaction that gives rise to a change, may have
significant regulatory consequences for the College. Such a change in ownership
could trigger a requirement for recertification by the Department of Education,
reauthorization by certain state licensing agencies or a review of the College's
accreditation by Middle States. Based in part on advisory letters that the
Department of Education, Middle States and certain of the applicable state
authorizing agencies issued in connection with the Offering, the Company does
not believe that the Reorganization or the Offering will constitute a change in
ownership resulting in a change of control under these standards. Nevertheless,

8
<PAGE> 10

upon completion, the Reorganization and the Offering must be reported to the
Department of Education, Middle States and applicable state licensing agencies,
and the reporting could subject the College to further review by any of those
bodies. After the Offering, upon a change of control sufficient to require the
College to file a Form 8-K with the Securities and Exchange Commission, the
College would cease to be eligible to participate in Title IV Programs until
recertified or provisionally certified by the Department of Education. In
addition, the College's accrediting agency, Middle States, requires institutions
that it accredits to inform it and, if required, to obtain its approval, in
advance of any substantive change, including a change that significantly alters
the ownership or control of the institution. The District of Columbia Education
Licensure Commission may require an institution licensed by it to apply to amend
its license prior to a change in ownership. Although the Department of Education
does not treat retirement or death of an owner as a change in ownership
resulting in a change of control if ownership and control are transferred to a
member of the owner's family or to certain members of the institution's
management, District of Columbia, Virginia and Maryland law and Middle States
policies do not specifically address such changes. Consequently, one or more
regulatory entities could require reporting, review or reauthorization upon a
change in ownership resulting from an owner's retirement or death. If the
College undergoes a change in ownership and is not recertified or provisionally
certified by the Department of Education, does not obtain reauthorization from
the necessary state agencies or has its accreditation withdrawn, the change
would have a material adverse effect on the College. See "Licensing,
Accreditation and Financial Aid Regulation -- Change in Ownership Resulting in a
Change of Control."

Other Regulations. In addition to the regulations discussed above, the
College is subject to compliance with numerous other regulatory requirements.
These requirements include additional financial responsibility standards;
compliance with a rule known as the "85/15 Rule" that limits an institution's
dependence on Title IV Program funds; and restrictions on adding new locations
and programs. In addition, the College is prohibited from offering its employees
incentive compensation or other payments or gifts that might constitute
inducements to secure enrollments. Failure of the College to comply with these
regulations would, among other things, render the College ineligible to
participate in Title IV Programs and would have a material adverse effect on the
College. See "Licensing, Accreditation and Financial Aid Regulation -- Financial
Aid Regulation."

LACK OF EXPERIENCE IN OPERATING CAMPUSES IN MARYLAND

The College's business strategy includes the establishment of new campuses
in the State of Maryland pursuant to approval granted in early 1996 by the
Maryland Higher Education Commission. See "Business -- Business Strategy."
Although the College formerly operated a campus in Baltimore, Maryland, oriented
toward secretarial and clerical training, the College closed that campus in
1992, and management has no experience in operating a degree-granting higher
education institution under Maryland state regulatory requirements. There can be
no assurance that the College will be successful in establishing any campuses in
Maryland, or that any campus established in Maryland will be profitable.

COMPETITION

The post-secondary education market in the College's market area is highly
competitive. The College competes with traditional public and private two-year
and four-year colleges, other for-profit schools and alternatives to higher
education, such as employment and military service. Public colleges may offer
programs similar to those of the College at a lower tuition level as a result of
government subsidies, government and foundation grants, tax-deductible
contributions and other financial sources not available to proprietary
institutions. See "Business -- Competition."

DEPENDENCE ON KEY PERSONNEL

The College is highly dependent on certain of its personnel, particularly
Ron K. Bailey, the College's President. The loss of Mr. Bailey's services or
those of one or more of the College's other significant employees could have a
material adverse effect on the College's financial condition and results of
operations. The College believes that its future success will depend upon its
ability to continue to attract, motivate and retain highly

9
<PAGE> 11

skilled, managerial, recruitment and marketing, and academic personnel. The
College does not carry key-man life insurance on its key personnel. There can be
no assurance that the College will continue to be successful in attracting and
retaining the personnel it requires. See "Management."

RISKS RELATING TO SEL PROGRAM

In 1995, Strayer began originating educational loans under the SEL Program
to eligible students as part of its strategy to reduce its administrative
expenses, lessen its dependence on federal student financial aid programs and
attract and retain qualified students. The amounts of these loans originated in
1995 and the three months ended March 31, 1996 were approximately $1.4 million
and $650,000, respectively. See "Business -- SEL Program." The College intends
to expand the SEL Program following completion of the Offering. Strayer will be
exposed to the risk of losses associated with this type of unsecured lending.
The College has operated the SEL Program only for a limited period and for this
reason is unable to evaluate fully its underwriting standards.

ABILITY TO MANAGE GROWTH

The College experienced a period of rapid growth from 1989 to 1992 that
strained the College's financial and management information systems and other
resources. See "Licensing, Accreditation and Financial Aid Regulation -- State
Licensure" and "-- Financial Aid Regulation -- Administrative Capability."
Although the College has made a substantial investment in augmenting these
systems and resources to support future growth, there can be no assurance that
the College will be able to manage any further expansion effectively. Failure to
do so would have a material adverse effect on the College's financial condition,
results of operations and regulatory compliance.

SEASONALITY

The Company's quarterly results of operations tend to vary significantly
within a year because of student enrollment patterns. Enrollment is lower in the
third, or summer, quarter than in the other three quarters. The Company expects
that these seasonal trends will continue. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Seasonality."

CONCENTRATION OF SHARE OWNERSHIP; ANTI-TAKEOVER EFFECT

Ron K. Bailey, jointly with his spouse (the "Current Stockholders"),
currently owns all of the College's outstanding capital stock. See "The
Company." Upon completion of the Offering, the Current Stockholders will
beneficially own approximately 66.7% of the Company's outstanding Common Stock.
As a result, the Current Stockholders will have the ability to elect all of the
Company's directors and to determine the outcome of corporate actions requiring
stockholder approval. These facts may have the effect of delaying or preventing
a change in control of the Company or causing a change in control of the Company
which may not be favored by the Company's other stockholders. The Company will
be authorized to issue up to 5,000,000 shares of Preferred Stock in one or more
series, having terms fixed by the Board of Directors without stockholder vote.
Issuance of these shares could also be used as an anti-takeover device. The
Board of Directors has no current intentions or plans to issue any Preferred
Stock. See "Principal Stockholders" and "Description of Capital Stock." In
addition, a change in ownership resulting in a change of control of the Company
could trigger a requirement for recertification of the College by the Department
of Education, a review of the College's accreditation by Middle States or
reauthorization by certain state licensing agencies. These factors may tend to
discourage attempts to acquire control of the Company from the Current
Stockholders. See "Licensing, Accreditation and Financial Aid
Regulation -- Change in Ownership Resulting in a Change of Control."

BENEFITS OF THE OFFERING TO AFFILIATES

Approximately $19.7 million of the net proceeds of the Offering will be
used to make payments to affiliates of the Company. Of this amount,
approximately $18.5 million (subject to adjustment) will be paid to

10
<PAGE> 12

the Current Stockholders as the S Corporation Distribution and approximately
$1.2 million will be paid to Ron K. Bailey, a Current Stockholder, in connection
with the Company's acquisition from Mr. Bailey of an education loan servicing
company. See "Reorganization," "Use of Proceeds" and "Certain Transactions."

NO PUBLIC MARKET; POSSIBLE VOLATILITY OF STOCK PRICE

Prior to the Offering, there has been no public market for the Common
Stock, and there can be no assurance that an active trading market will develop
or be sustained after the Offering or that the market price of the Common Stock
will not decline below the initial public offering price. The initial public
offering price will be determined by negotiations between the Company and the
Representative of the Underwriters. See "Underwriting" for a discussion of
factors considered in determining the initial public offering price. The trading
price of the Company's Common Stock may be subject to wide fluctuations in
response to quarterly variations in operating results, new regulations or
interpretations of regulations, announcements of new programs and locations by
the Company or its competitors, or other factors. Those factors, as well as
general economic, political and market conditions, may adversely affect the
market price of the Common Stock.

DIVIDEND POLICY

Although the Company intends to establish an initial policy of declaring
cash dividends, there can be no assurances that dividends will be paid. The
payment and rate of future dividends are subject to the discretion of the Board
of Directors and will depend upon the Company's earnings, financial condition,
capital needs and regulatory considerations. See "Dividend Policy."

SHARES ELIGIBLE FOR FUTURE SALE

Sales of substantial amounts of Common Stock in the public market after the
Offering could adversely affect the market price of the Common Stock. Upon
completion of the Offering, there will be 9,000,000 shares of Common Stock of
the Company outstanding (excluding 700,000 shares issuable upon exercise of
options held by employees of the Company). Of these shares, all of the 3,000,000
shares of Common Stock sold in the Offering will be freely transferable without
restriction or further registration under the Securities Act of 1933, as amended
(the "Securities Act"), except that any shares purchased by "affiliates" of the
Company, as that term is defined in Rule 144 under the Securities Act, generally
may be resold only in compliance with applicable provisions of Rule 144. The
remaining 6,000,000 shares of Common Stock will be held by the Current
Stockholders and are "restricted securities" as that term is defined in Rule
144. The Company and the Current Stockholders have agreed not to sell or
otherwise dispose of any shares of Common Stock, or any securities convertible
into or exercisable or exchangeable for shares of Common Stock (subject, in the
case of the Company, to an exception for the grant of options under the
Company's stock option plan), for a period of 180 days after the date of this
Prospectus without the consent of the Representative of the Underwriters.
Commencing 90 days after the date of this Prospectus, and subject to such
consent, all but 1,000 of the 6,000,000 shares owned by the Current Stockholders
will be eligible for sale in the public market subject to compliance with the
volume limitations and other restrictions of Rule 144. See "Shares Eligible for
Future Sale."

IMMEDIATE AND SUBSTANTIAL DILUTION TO NEW INVESTORS

Investors in the Offering will experience an immediate and substantial
dilution in net tangible book value of $6.84 per Share and may experience
further dilution upon the exercise of outstanding stock options by certain
executive officers and employees. See "Dilution."

11
<PAGE> 13

THE COMPANY

The College is a regional proprietary institution of higher education
accredited by Middle States that offers business-oriented undergraduate and
graduate degree programs at eight campuses in Washington, D.C. and Northern
Virginia. At the beginning of the 1995 Fall quarter, approximately 7,400 Strayer
students were pursuing studies in accounting, business administration, computer
information systems, economics, marketing and general studies.

The College has provided educational services for over 100 years since it
began operations in Baltimore, Maryland in 1892 with the founding of Strayers
Business College of Baltimore City by Dr. S. Irving Strayer. The College was
incorporated under Maryland law in April 1898. In 1904, Dr. Strayer and his
business partner, Thomas W. Donoho, started a business school in the District of
Columbia. In 1928, the Strayer College of Accountancy was founded and was
licensed to confer associate's and professional degrees by the District of
Columbia Board of Higher Education. The Business College and the College of
Accountancy operated concurrently, in the same building, until 1958, when the
two institutions began to offer instruction as Strayer Junior College of
Finance. Shortly thereafter, the two schools were incorporated as Strayer Junior
College, Inc. The schools principally provided clerical and secretarial training
until 1969, when Strayer was first licensed to grant bachelor's degrees at its
Washington, D.C. campus. Strayer College, Inc. and Strayer Junior College, Inc.
merged in 1973, and the College was accredited in that year as a Senior College
of Business by the Accrediting Commission of the Association of Independent
Colleges and Schools.

The Donoho family transferred ownership of the College in 1980 to Dr.
Charles Palmer. In 1981, the College obtained Middle States accreditation and
received approval from the Virginia State Council of Higher Education to offer
programs at a campus in Arlington, Virginia. The Middle States accreditation did
not extend to the Baltimore campus, which remained a clerical and secretarial
institution. The College was authorized to award master's degrees in 1987, and
opened a campus in Alexandria, Virginia in 1988.

In 1989, Mr. Ron K. Bailey, jointly with his wife, acquired all of the
outstanding capital stock of the College. Under Mr. Bailey's management, Strayer
closed the Baltimore campus and inaugurated a program of significant expansion
in the greater Washington, D.C. area that resulted in the opening of five new
campuses by the end of 1992: Woodbridge in 1989; Manassas in 1990; Loudoun in
1991; and Fredericksburg and Takoma Park in 1992. Student enrollment more than
tripled from approximately 2,150 students at the beginning of the 1989 Fall
quarter to approximately 7,400 students at the beginning of the 1995 Fall
quarter. During the same period, the College focused its attention on its degree
programs by broadening its course offerings, increasing the number of faculty
members with doctoral and other terminal degrees, expanding its library and
other learning resources and investing in information systems.

Upon completion of the Offering, the College will become a wholly-owned
subsidiary of the Company. See "Reorganization -- Formation of Holding Company."

The Company's executive offices are located at 1025 Fifteenth Street, N.W.,
Washington, D.C. 20005. Its telephone number is (202) 408-2400.

REORGANIZATION

In connection with the Offering, the Company and the College will take
certain corporate actions described below, which are collectively referred to in
this Prospectus as the "Reorganization."

FORMATION OF HOLDING COMPANY

Prior to the Reorganization, the Company's business was conducted through
the College. In anticipation of the Offering, the Company was incorporated in
Maryland on May 10, 1996, and on May 15, 1996, the Company issued 1,000 shares
of Common Stock to Mr. and Mrs. Ron K. Bailey, the Current Stockholders of the
College. Upon completion of the Offering, the Company will acquire 100% of the
outstanding capital stock of the College from the Current Stockholders in
exchange for 5,999,000 shares of Common Stock. Thereafter, the College will be
operated as a wholly-owned subsidiary of the Company.

12
<PAGE> 14

TERMINATION OF S CORPORATION STATUS

The College has elected to be treated for federal income and certain state
tax purposes as an S Corporation under Subchapter S of the Internal Revenue Code
of 1986 and comparable state laws. As a result, earnings of the College for
prior tax years have been included in the taxable income of its stockholders,
and the College has not been subject to income tax on those earnings for federal
and most state tax purposes.

The College has made regular payments to Ron K. Bailey, a Current
Stockholder, in respect of the expected tax liabilities of the Current
Stockholders for income earned by the College that was treated as having been
earned by the Current Stockholders. These amounts were treated as compensation
and are reflected as general and administration expense in the College's
Financial Statements. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Background and Overview." In April 1996,
the College made a distribution in the amount of $2.1 million to the Current
Stockholders, which represents the Current Stockholders' estimated tax liability
for S Corporation income expected to be earned during the five-month period
ending May 31, 1996.

Prior to completion of the Offering, the College's S Corporation status
will terminate. Termination of S Corporation status will subject the College to
federal and state income taxes with respect to income earned after the
termination date.

In connection with termination of its S Corporation status, the College
will declare to the Current Stockholders a dividend (the "S Corporation
Distribution"), which will be paid out of the net proceeds of the Offering. See
"Use of Proceeds." The S Corporation Distribution, in the amount of
approximately $18.5 million, will be equal to the amount of the previously
recognized and undistributed S Corporation income on which the Current
Stockholders have paid, or will pay, income tax. The estimated $18.5 million
amount is subject to adjustment for actual S Corporation income during the
period prior to termination of S Corporation status. Purchasers of Shares in the
Offering will not be entitled to the S Corporation Distribution. Following
completion of the Reorganization, the Company and its subsidiaries will be
subject to corporate income taxation on a consolidated basis. See Note 2 to the
College's Financial Statements.

ACQUISITION OF ELP

Beginning in 1995, educational loans under the SEL Program have been
purchased from the College and serviced by an affiliated company, Education Loan
Processing, Inc. ("ELP"). In its first year of operations, which ended December
31, 1995, ELP had revenues of approximately $79,000 and net income before tax of
approximately $45,000. At December 31, 1995, ELP had total assets of
approximately $2.4 million and total liabilities of approximately $211,000. See
"Certain Transactions -- Transactions with ELP" for information regarding
subsequent transactions with ELP. Ron K. Bailey, President and a Director of the
Company and the founder of ELP, has been ELP's sole stockholder. Upon completion
of the Offering, the Company will purchase from Mr. Bailey for cash all of the
capital stock of ELP, which will become a wholly-owned subsidiary of the
Company. The purchase price for the ELP capital stock will be equal to the net
book value of ELP on the date of acquisition. As of March 31, 1996, ELP's net
book value was $1.2 million. The purchase price will be paid out of the net
proceeds of the Offering. The Company also intends to apply a portion of the net
proceeds of the Offering to fund ELP's operations. See "Use of Proceeds."

13
<PAGE> 15

USE OF PROCEEDS

The net proceeds to the Company from the sale of the Shares offered hereby,
after deducting the underwriting discount and estimated Offering expenses
payable by the Company, are expected to be approximately $27.2 million
(approximately $31.4 million if the Underwriters' over-allotment option is
exercised in full).

Net proceeds of the Offering of approximately $19.7 million will be applied
to make payments to affiliates of the Company. Of this amount, approximately
$18.5 million (subject to adjustment) will be used to fund the S Corporation
Distribution to the Current Stockholders and approximately $1.2 million will be
paid to Ron K. Bailey, President of the Company, in connection with the
Company's acquisition of ELP. See "Reorganization -- Termination of S
Corporation Status" and "-- Acquisition of ELP."

Of the remaining net proceeds of approximately $7.5 million, approximately
$3.5 million will be used to fund ELP operations, up to approximately $3.0
million will be used for the possible acquisition of one or more campus
facilities from unaffiliated parties and the balance, if any, will be used for
other corporate purposes. See "Business -- Business Strategy" and "Certain
Transactions -- Transactions with ELP." As of the date of this Prospectus, the
College has not exercised its purchase option under any lease for the
acquisition of a campus facility.

Pending their application, the net proceeds of the Offering will be
invested in short-term, investment-grade, interest-bearing securities.

14
<PAGE> 16

CAPITALIZATION

The following table sets forth, as of March 31, 1996, (i) the actual
capitalization of the College, (ii) the pro forma capitalization of the Company
after giving effect to the acquisition of the College by the Company, the
distribution of $2.1 million to the Current Stockholders in April 1996 in
respect of income taxes on estimated S Corporation income for the five-month
period ending May 31, 1996, and the recognition of a current liability for the
estimated S Corporation Distribution of $14.0 million (subject to adjustment) to
be paid from the proceeds of the Offering and (iii) the capitalization of the
Company as adjusted to give effect to the receipt of the net proceeds of the
Offering, the payment of the S Corporation Distribution and the acquisition of
ELP. See "Reorganization" and "Use of Proceeds."

<TABLE>
<CAPTION>
MARCH 31, 1996
---------------------------------
(UNAUDITED)
PRO AS
ACTUAL FORMA ADJUSTED(1)
------- ------- -----------
(IN THOUSANDS)
<S> <C> <C> <C>
Distribution payable to stockholders........................... $ -- $14,042 $ --
Long-term debt................................................. -- -- --
Stockholders' equity:
Preferred Stock, $.01 par value, 5,000,000 shares
authorized; no shares issued or outstanding............. -- -- --
Common Stock:
$10 par value, 500 shares authorized; 375.5 shares
issued and outstanding............................. 4 -- --
$.01 par value, 20,000,000 shares authorized;
6,000,000 and 9,000,000 shares issued and
outstanding, respectively.......................... -- 60 90
Additional paid-in capital................................ -- -- 27,119
Retained earnings......................................... 17,080 883 934
Net unrealized gains on investments....................... 255 255 255
------- ------- ---------
Total stockholders' equity........................... $17,339 $ 1,198 $28,398
======= ======= =========
Total capitalization................................. $17,339 $15,240 $28,398
======= ======= =========
</TABLE>

- ---------------

(1) The adjustment for the S Corporation Distribution is $14.0 million based on
the estimated amount of previously recognized and undistributed S
Corporation income through March 31, 1996. The S Corporation Distribution
of $18.5 million identified in "Use of Proceeds" reflects the estimated
additional undistributed S Corporation income accumulated from April 1,
1996 through the termination of S Corporation status. The estimated $18.5
million amount is subject to adjustment for actual S Corporation income
during the latter period.

DIVIDEND POLICY

After the Offering, the Company intends to establish an initial policy of
declaring quarterly cash dividends at the rate of $0.0625 per share ($0.25
annually) on the Company's Common Stock. The amount of dividends payable in the
future will be reviewed periodically by the Company's Board of Directors in
light of the Company's earnings, financial condition, capital needs and
regulatory considerations. There is no requirement or assurance that dividends
will be paid.

The College made distributions to the Current Stockholders of $2.8 million
in 1994, $3.4 million in 1995 and $650,000 in the three months ended March 31,
1996 for application by the Current Stockholders to the acquisition of campus
facilities leased to the College and to the establishment and funding of ELP.
See "Certain Transactions -- Lease of Campus Facilities" and "-- Transactions
with ELP."

15
<PAGE> 17

DILUTION

The pro forma net tangible book value of the Company's Common Stock at
March 31, 1996 was approximately $1.2 million or $.20 per share. Net pro forma
tangible book value represents the amount of the Company's net tangible assets
less total liabilities, adjusted to give effect to (i) the formation of the
Company, (ii) the acquisition of the College by the Company, (iii) the
distribution of $2.1 million to the Current Stockholders in April 1996 in
respect of income taxes on estimated S Corporation income for the five-month
period ending May 31, 1996 and (iv) the recognition of a current liability for
the estimated S Corporation Distribution of $14.0 million (subject to
adjustment) to be paid from the proceeds of the Offering divided by the pro
forma total number of shares of Common Stock outstanding. After giving effect to
the Offering (after deducting the underwriting discount and estimated Offering
expenses payable by the Company) and the application of the estimated net
proceeds therefrom as described under "Use of Proceeds," the adjusted pro forma
net tangible book value of the Company at March 31, 1996 would have been
approximately $28.4 million or $3.16 per share. This represents an immediate
increase in net tangible book value of $2.96 per share to existing stockholders
and an immediate dilution of $6.84 per share to the persons purchasing Shares in
the Offering ("New Investors"). The following table illustrates this per share
dilution:

<TABLE>
<S> <C> <C>
Assumed initial public offering price per share.............. $10.00
Pro forma net tangible book value per share at
March 31, 1996........................................ $ .20
Increase per share attributable to New Investors........ 2.96
-----
Adjusted pro forma net tangible book value per share after
the Offering(1)............................................ 3.16
------
Dilution per share to New Investors.......................... $ 6.84
======
</TABLE>

- ---------------

(1) The adjustment for net proceeds of the Offering includes $14.0 million of
the $18.5 million S Corporation Distribution identified in "Use of
Proceeds." The $14.0 million S Corporation Distribution adjustment is based
on the estimated amount of previously recognized and undistributed S
Corporation income through March 31, 1996, while the $18.5 million S
Corporation Distribution also reflects the estimated additional
undistributed S Corporation income accumulated from April 1, 1996 through
the termination of S Corporation status. The estimated $18.5 million amount
is subject to adjustment for actual S Corporation income during the latter
period.

The following table summarizes, on a pro forma basis, at March 31, 1996,
the differences between existing stockholders and the New Investors with respect
to the number of shares purchased from the Company, the total consideration paid
and the average price per share paid:

<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION
-------------------- ---------------------- AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
--------- ------- ----------- ------- -------------
<S> <C> <C> <C> <C> <C>
Existing stockholders.................. 6,000,000 66.67% $ 3,801,000(1) 11.25% $ 0.63
New Investors.......................... 3,000,000 33.33 30,000,000 88.75 $ 10.00
--------- ------- ----------- -------
Total............................. 9,000,000 100.00% $33,801,000 100.00%
======== ====== ========== ======
</TABLE>

- ---------------
(1) Reflects amount paid by the Current Stockholders in May 1996 for 1,000
shares and amount paid by the Current Stockholders in 1989 for the
College's capital stock, which will be exchanged for 5,999,000 Shares upon
completion of the Offering. See "Reorganization -- Formation of Holding
Company."

16
<PAGE> 18

SELECTED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE AND OPERATING DATA AMOUNTS)

The following table sets forth, for the periods and at the dates indicated,
financial data for the College. The financial information as of December 31,
1993, 1994 and 1995 and for each of the years then ended has been derived from
the College's Financial Statements, which statements have been audited by
Coopers & Lybrand L.L.P., independent public accountants. The financial
information as of December 31, 1991 and 1992 and for the years then ended has
been derived from the College's Financial Statements, which statements have been
audited by other independent public accountants. The information set forth below
is qualified by reference to and should be read in conjunction with the
College's Financial Statements and notes thereto and "Management's Discussion
and Analysis of Financial Condition and Results of Operations" included
elsewhere in this Prospectus. The unaudited selected financial information as of
March 31, 1995 and 1996 and for each of the three-month periods then ended has
been derived from the unaudited financial statements of the College for each
respective period presented and, in the opinion of management, reflects all
adjustments, consisting only of normal adjustments, necessary for a fair
presentation of the results of operations for these periods. The results of
operations of the College for the three months ended March 31, 1996 are not
necessarily indicative of the results to be expected for the full year. The pro
forma financial data does not purport to represent what the College's financial
position or results of operations would actually have been had these events in
fact occurred on the date or at the beginning of the periods indicated or to
project the Company's financial position or results of operations for any future
date or period.

THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
------------------------------------------------------------- -----------------------------------
PRO (UNAUDITED)
FORMA PRO
1995(3) FORMA
1991 1992 1993 1994 1995 ----------- 1995 1996 1996(3)
------- ------- ------- ------- ------- (UNAUDITED) ----------- ----------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenues
Tuition................. $16,008 $22,961 $28,545 $33,238 $36,934 $36,934 $ 9,989 $ 11,570 $11,570
Fees and other.......... 521 832 823 1,019 1,211 1,211 644 805 805
------- ------- ------- ------- ------- ----------- ----------- ----------- -------
16,529 23,793 29,368 34,257 38,145 38,145 10,633 12,375 12,375
------- ------- ------- ------- ------- ----------- ----------- ----------- -------
Costs and expenses
Instruction and
education support..... 7,399 9,262 14,185 14,740 16,168 16,168 4,042 4,577 4,577
Selling and promotion... 2,023 2,758 3,092 3,667 4,281 4,281 836 974 974
General and
administration(1)..... 5,027 9,278 7,847 10,648 11,576 5,401 2,804 2,196 2,196
------- ------- ------- ------- ------- ----------- ----------- ----------- -------
14,449 21,298 25,124 29,055 32,025 25,850 7,682 7,747 7,747
------- ------- ------- ------- ------- ----------- ----------- ----------- -------
Income from
operations............ 2,080 2,495 4,244 5,202 6,120 12,295 2,951 4,628 4,628
Investment and other
income................ 186 184 180 350 856 856 148 100 100
------- ------- ------- ------- ------- ----------- ----------- ----------- -------
Net income(2)........... $ 2,266 $ 2,679 $ 4,424 $ 5,552 $ 6,976 $13,151 $ 3,099 $ 4,728 $ 4,728
======= ======= ======= ======= ======= ========= ======= ======= =======
PRO FORMA DATA:(3)
Pro forma income taxes.... $ 5,052 $ 1,837
Pro forma net income...... $ 8,099 $ 2,891
Pro forma net income per
share(4)................ $ 1.07 $ .38
Pro forma weighted average
shares outstanding(4)... 7,548 7,548

OPERATING DATA:
Enrollment(5)............. 4,000 5,600 6,200 6,800 7,400 6,500 7,100
Number of campuses........ 6 8 8 8 8 8 8
</TABLE>

(footnotes on following page)

17
<PAGE> 19

(footnotes from previous page)
- ---------------
(1) Includes compensation payments to an S Corporation stockholder of $0.2
million in 1991, $0.9 million in 1992, $3.5 million in 1993, $5.5 million in
1994, $6.2 million in 1995 and $1.6 million in the three months ended March
31, 1995 in respect of income taxes on undistributed S Corporation income.
No such compensation payments were made during the three-month period ended
March 31, 1996. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Background and Overview" and Note 2
to the College's Financial Statements.

18
<PAGE> 20

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

BACKGROUND AND OVERVIEW

The College is a regional proprietary institution of higher education
offering undergraduate and graduate degree programs at eight campuses in the
greater Washington, D.C. area. Strayer Education, Inc., a Maryland corporation,
was incorporated in May 1996 to acquire all of the outstanding capital stock of
the College from Mr. and Mrs. Ron K. Bailey, the Current Stockholders of the
College. Upon completion of the Offering, Strayer Education, Inc. also will
acquire all of the outstanding capital stock of ELP, which services loans under
the SEL Program. Upon completion of the Offering, the College and ELP will each
be direct subsidiaries of Strayer Education, Inc. See "Reorganization."

Strayer's revenues, operating income and net income have increased in each
of the last three years. From 1993 through 1995, revenues increased 29.8%,
operating income increased 44.2% and net income increased 57.7%. Over the
three-year period, tuition revenue accounted for 97.0% of total revenue. The
number of students increased 19.3% from approximately 6,200 at the beginning of
the 1993 Fall quarter to approximately 7,400 at the beginning of the 1995 Fall
quarter. Tuition rates increased approximately 15% over the three years. During
the three-year period, the College relocated three campuses to larger
facilities, expanded information technology course offerings, added more
week-end classes and increased its marketing programs. The opening of five new
campuses from 1989 to 1992 contributed to enrollment growth during the 1993-95
period, since enrollment growth rates at a campus historically have been the
greatest in the early years following commencement of operations at the campus.
In 1995, the College added personnel in the areas of human resources, facilities
management and administration to support its plans for expansion. The costs of
these additional personnel are reflected in general and administrative expense.

The College's principal source of revenue is tuition collected from its
students. The academic year of the College is divided into four quarters which
approximately coincide with the four quarters of the calendar year. Students
generally must pay the entire tuition for each course prior to the beginning of
the quarter. If a student withdraws from a course prior to completion, the
College refunds a portion of the tuition which reflects the percentage of the
course completed. When students register for courses, tuition is recorded as
deferred revenues, which are recognized as courses are taught through the
academic quarter. Revenues also consist in part of fees and other revenues
derived principally from application fees, "no show" fees and bookstore sales.
When a student registers for a course but does not attend any classes, which can
have the effect of denying a place in the course to another student, the College
imposes a "no show" fee. Student enrollment information presented herein
reflects enrollment as of the beginning of the Fall academic quarter for the
applicable year and as of the beginning of the Winter academic quarter for the
applicable interim period.

The College records tuition receivable when students register for the
academic quarter, generally prior to the end of the previous academic quarter.
Because the College's academic quarters coincide with the calendar quarter,
tuition receivable at the end of any calendar quarter largely represents student
tuition for the following academic quarter which is included in current
liabilities as deferred tuition revenue. Based upon past experience and
judgment, the College establishes an allowance for doubtful accounts with
respect to accounts receivable not included in deferred tuition revenue. Any
uncollected account more than six months past due is charged against the
allowance. The College's historical bad debt expense as a percentage of revenue
for the years ended December 31, 1993, 1994 and 1995 was 2.9%, 1.9% and 1.7%,
respectively, and for the three months ended March 31, 1996 was 0.8%.

The College's expenses consist of instruction and educational support
expense, selling and promotion expense and general and administration expense.
Instruction and educational support expense generally contains items of expense
directly attributable to the educational activity of the College. This expense
category includes salaries and benefits of faculty, academic administrators, and
student support personnel, including financial aid officers, registrars and
career counselors. Instruction and educational support expense also includes
costs of educational supplies and facilities, including rents on campus leases,
certain costs of

19
<PAGE> 21

establishing and maintaining computer laboratories and all other physical plant
and occupancy costs with the exception of costs attributable to one floor of the
Arlington campus used for administrative purposes.

Selling and promotion expense includes salaries and benefits of personnel
engaged in recruitment, admissions, promotion and development, as well as costs
of advertising and production of marketing materials.

General and administration expense includes salaries and benefits of
personnel engaged in accounting, personnel, compliance and other business
functions and plant and occupancy costs attributable to such functions. Further,
as discussed below, general and administration expense before 1996 reflected
payments made to Ron K. Bailey for taxes payable by the Current Stockholders in
respect of the College's income.

Prior to 1996, the College each year paid to Ron K. Bailey amounts
sufficient to pay the income tax liabilities of the Current Stockholders for
income earned by the College as a corporation electing under Subchapter S of the
Internal Revenue Code of 1986. These amounts were paid as bonuses (subject to
payroll taxes and benefits) and were reflected in general and administration
expense. The bonus payments totaled $3.5 million, $5.5 million, $6.2 million and
$1.6 million in 1993, 1994, 1995 and the three months ended March 31, 1995,
respectively. Beginning January 1, 1996, amounts previously paid to Mr. Bailey
for taxes payable in respect of the College's income are being paid to Mr. and
Mrs. Bailey as distributions to stockholders and not to Mr. Bailey as a bonus.
Unlike bonuses, such distributions are not reflected as general and
administrative expense. The College will continue to make distributions to
stockholders for taxes payable in respect of the College's income until the
College's S Corporation status terminates prior to completion of the Offering.
Following such termination, the Company and its subsidiaries will be subject to
corporate income taxation on a consolidated basis.

Investment and other income consists principally of earnings on
investments.

Historically, inflation has not had a significant effect on the College's
results of operations.

RESULTS OF OPERATIONS

The following table sets forth certain income statement data as a
percentage of College revenues for the periods indicated:

<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED ENDED MARCH
DECEMBER 31, 31,
----------------------- --------------
1993 1994 1995 1995 1996
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Revenues:
Tuition............................................ 97.2% 97.0% 96.8% 93.9% 93.5%
Fees and other..................................... 2.8 3.0 3.2 6.1 6.5
----- ----- ----- ----- -----
100.0 100.0 100.0 100.0 100.0
Costs and expenses:
Instruction and educational support................ 48.3 43.0 42.4 38.0 37.0
Selling and promotion.............................. 10.5 10.7 11.2 7.9 7.9
General and administration......................... 26.7 31.1 30.3 26.4 17.7
----- ----- ----- ----- -----
Income from operations.................................. 14.5 15.2 16.1 27.7 37.4
Investment and other income............................. .6 1.0 2.2 1.4 .8
----- ----- ----- ----- -----
Net income.............................................. 15.1% 16.2% 18.3% 29.1% 38.2%
===== ===== ===== ===== =====
</TABLE>

THREE MONTHS ENDED MARCH 31, 1995 COMPARED TO THREE MONTHS ENDED MARCH 31, 1996

Revenues. Tuition revenue increased 15.8% from $10.0 million in the first
quarter of 1995 to $11.6 million in the first quarter of 1996, due to a 10.0%
increase in the number of students and a 7.0% tuition increase effective for
1996. Fees and other revenue increased 25.0% from $.6 million in the first
quarter of

20
<PAGE> 22

1995 to $.8 million in the first quarter of 1996, principally as a result of the
increase in the number of students in the 1996 quarter.

Instruction and educational support expense. Instruction and educational
support expense increased 13.2% from $4.0 million in the first quarter of 1995
to $4.6 million in the first quarter of 1996. The increase was primarily
attributable to an increase in library costs associated with a new computer
system providing students with access to substantially more resource materials,
increased financial aid costs due to the engagement of an outside contractor to
manage the student loan default rate and improve financial aid administration
and increased physical plant and occupancy costs resulting from the relocation
of the Woodbridge campus to a new and larger facility with a higher lease rate.

Selling and promotion expense. Selling and promotion expense increased
16.5% from $.8 million in the first quarter of 1995 to $1.0 million in the first
quarter of 1996, due to increased advertising costs, particularly for television
advertising.

General and administration expense. General and administration expense
decreased 21.7% from $2.8 million in the first quarter of 1995 to $2.2 million
in the first quarter of 1996, due principally to the elimination of bonuses
payable to Ron K. Bailey, as discussed above. Excluding the bonus of $1.6
million paid to Mr. Bailey in the first quarter of 1995, general and
administration expense would have increased 90.3% from $1.2 million in the
earlier period to $2.2 million in the later period. The increase primarily
reflected costs of the addition of personnel in the areas of human resources,
facilities management and administration and the effects of a 7.0% pay increase
implemented in the fourth quarter of 1995.

Income from operations. Income from operations increased 56.8% from $3.0
million in the first quarter of 1995 to $4.6 million in the first quarter of
1996. Excluding the bonus of $1.6 million paid to Mr. Bailey in the first
quarter of 1995, income from operations would have been unchanged.

Net income. Net income increased 52.6% from $3.1 million in the first
quarter of 1995 to $4.7 million in the first quarter of 1996. Excluding the
bonus of $1.6 million paid to Mr. Bailey in the first quarter of 1995, net
income would have been unchanged.

YEAR ENDED DECEMBER 31, 1994 COMPARED TO YEAR ENDED DECEMBER 31, 1995

Revenues. Tuition revenue increased 11.1% from $33.2 million in 1994 to
$36.9 million in 1995, due to a 8.8% increase in the number of students in 1995
and a 7.1% tuition increase effective for 1995. Average course credits per
student were lower in 1995 than in 1994. Fees and other revenue increased 19%
from $1.0 million in 1994 to $1.2 million in 1995, primarily as a result of the
enrollment growth and an increase in "no show" fees, which the College first
imposed in 1994.

Instruction and educational support expense. Instruction and educational
support expense increased 9.7% from $14.7 million in 1994 to $16.2 million in
1995. Salaries and benefits for instructional personnel in all of the College's
educational programs were higher as a result of salary increases, the addition
of personnel to support increased enrollments and the hiring of full-time
managers for the computer laboratory at each campus. Physical plant and
occupancy costs also increased substantially in 1995 because of the relocation
of the Manassas and Woodbridge campuses to new and larger facilities with higher
lease rates. Partially offsetting those increases were reduced expenditures for
student financial aid in 1995.

Selling and promotion expense. Selling and promotion expense increased
16.7% from $3.7 million in 1994 to $4.3 million in 1995, due principally to
increased advertising costs, particularly for television advertising.

General and administration expense. General and administration expense
increased 8.7% from $10.6 million in 1994 to $11.6 million in 1995, due
principally to an increase in the bonus paid to Ron K. Bailey. Excluding the
bonuses in both years, general and administrative expense would have increased
4.4% from $5.2 million in 1994 to $5.4 million in 1995. The increase was
primarily attributable to higher personnel costs incurred by the addition of new
administrative staff to support expansion of the College's on-site programs and
graduate enrollment. The effect of the increase was partially offset by lower
financing costs

21
<PAGE> 23

resulting from the College's return in 1995 to full access to Title IV Programs.
In 1993 and 1994, regulatory action prevented the College from making full use
of Title IV student financial aid for its students. In order to make loans
available on terms comparable to federally guaranteed student loans, the College
contracted with a private company, which purchased institutional loans to
students at a substantial discount from their face value. The discount was
recorded as a cost of financing reflected in general and administrative expense.
In 1995, there was no comparable cost of financing expense.

Income from operations. Income from operations increased 17.6% from $5.2
million in 1994 to $6.1 million in 1995 because of the factors discussed above.

Net income. Net income increased 25.6% from $5.6 million in 1994 to $7.0
million in 1995 because of the factors discussed above.

YEAR ENDED DECEMBER 31, 1993 COMPARED TO YEAR ENDED DECEMBER 31, 1994

Revenues. Tuition revenue increased 16.4% from $28.5 million in 1993 to
$33.2 million in 1994, due to a 9.7% increase in the number of students in 1994
and a 7.7% tuition increase effective for that year. Fees and other revenue
increased 23.8% from $.8 million in 1993 to $1.0 million in 1994, principally as
a result of the enrollment growth in 1994.

Instruction and educational support expense. Instruction and educational
support expense increased 3.9% from $14.2 million in 1993 to $14.7 million in
1994. Salaries and benefits for instructional personnel were higher in all of
the College's educational programs other than computer information systems. A
6.0% salary increase for all personnel was effective in 1994. Library costs were
also higher, due to the addition of personnel, books and equipment to support
expansion of learning resources centers at all campuses. Financial aid and
placement costs increased as the College engaged an outside firm to augment
regulatory compliance and improve the financial aid system. The effect of these
increases was partially offset by a substantial reduction in physical plant and
occupancy costs as a result of the expiration of two leases on premises
previously occupied by the College in Huntington, Virginia.

Selling and promotion expense. Selling and promotion expense increased
18.6% from $3.1 million in 1993 to $3.7 million in 1994, due principally to
increased advertising and marketing. The College increased its newspaper and
magazine advertising by approximately 50% in 1994, radio advertising by
approximately 40%, and television advertising by approximately 25%. The College
also hired an additional full-time marketing employee in 1994.

General and administration expense. General and administration expense
increased 35.7% from $7.8 million in 1993 to $10.6 million in 1994, principally
because of a substantial increase in the bonus paid to Ron K. Bailey. Excluding
the bonuses in both years, general and administrative expense would have
increased 18.4% from $4.5 million in 1993 to $5.2 million in 1994. This increase
was primarily attributable to a 6.0% salary increase for all administrative
personnel, an increase in the payment of outside consulting fees and an increase
in the number of administrative personnel.

Income from operations. Income from operations increased 22.6% from $4.2
million in 1993 to $5.2 million in 1994 because of the factors discussed above.

Net income. Net income increased 25.5% from $4.4 million in 1993 to $5.6
million in 1994 because of the factors discussed above.

SEASONALITY

The Company's quarterly results of operations tend to vary significantly
within a year because of student enrollment patterns. Enrollment is lower in the
third, or summer, quarter than in the other three quarters. In 1995, enrollments
at the beginning of the Winter, Spring, Summer and Fall academic quarters were
6,475, 6,510, 4,775 and 7,455, respectively. Costs are generally not affected by
the seasonal factors and do not vary significantly on a quarterly basis. To some
extent, however, instructional and educational support expense is lower in the
third quarter because fewer part-time faculty are needed.

22
<PAGE> 24

The following table sets forth the College's revenues on a quarterly basis
for the years ended December 31, 1993, 1994 and 1995 and for the three months
ended March 31, 1996:

QUARTERLY REVENUE OF STRAYER COLLEGE, INC.
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
1993 1994 1995 1996
----------------- ----------------- ----------------- -------
THREE MONTHS ENDED AMOUNT PERCENT AMOUNT PERCENT AMOUNT PERCENT AMOUNT
- ------------------------------------ ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
March 31............................ $ 8,822 30% $ 9,169 26% $10,633 28% $12,375
June 30............................. 7,663 26 8,427 25 9,655 25
September 30........................ 5,607 19 7,501 22 7,191 19
December 31......................... 7,276 25 9,160 27 10,666 28
------- ------- ------- ------- ------- -------
Total for Year............ $29,368 100% $34,257 100% $38,145 100%
======= ===== ======= ===== ======= =====
</TABLE>

LIQUIDITY AND CAPITAL RESOURCES

Since its acquisition by Ron K. Bailey in 1989, the College has financed
its activities through cash generated from operations. Cash generated from
operations, after payment of bonuses to Mr. Bailey, was $1.3 million in 1993,
$9.1 million in 1994 and $8.1 million in 1995. Cash generated from operations
has been sufficient to fund purchases of property and equipment and to make
distributions to the Current Stockholders for application by them to the
acquisition of campus facilities leased to the College and to the establishment
and funding of ELP. See "Certain Transactions -- Lease of Campus Facilities" and
"-- Transactions with ELP."

The Company expects to realize net proceeds from the Offering of $27.2
million. At March 31, 1996, the College had available cash, cash equivalents and
marketable securities of $15.8 million. Upon completion of the Offering, the
Company will pay approximately $18.5 million (subject to adjustment) to the
Current Stockholders to fund the S Corporation Distribution and approximately
$1.2 million to Ron K. Bailey in connection with the Company's acquisition of
ELP. See "Use of Proceeds." Accordingly, upon completion of the Offering and the
foregoing application of net Offering proceeds, the Company expects to have
available cash, cash equivalents and marketable securities of $23.3 million. The
Company believes that this amount, together with cash generated from operations,
will be sufficient to meet its anticipated operating cash requirements for at
least the next 24 months. If the College determines to acquire a campus
facility, it may finance the acquisition with indebtedness.

23
<PAGE> 25

BUSINESS

OVERVIEW

Strayer is a regional proprietary institution of higher education offering
undergraduate and graduate degree programs to more than 7,000 students at eight
campuses in Washington, D.C. and Northern Virginia. The College is accredited by
Middle States, the regional institutional accrediting body recognized by the
U.S. Department of Education. The majority of Strayer students are working
adults pursuing their first college degree to improve their job skills and
advance their careers. Of students enrolled in Strayer programs at the beginning
of the 1995 Fall quarter, approximately 57% were over the age of 30 and
approximately 62% were engaged in a part-time course of study. The College
considers a full-time student to be one who completes 13.5 course credits in an
academic quarter. In the 1995 Fall quarter, Strayer students completed an
average of 9.3 course credits.

Since 1989, when the College came under its current ownership and
management, Strayer has evolved from a small traditional business school into a
regional college that seeks to meet the special needs of the area's working
adult students. The College targets those students that did not go to college
immediately after high school or otherwise did not obtain a degree, but who
later seek additional education primarily for enhanced career opportunities.
Strayer recognizes that a return to school may create special difficulties for
these students, some of whom may have been dissatisfied with their secondary
education and who must balance educational goals with personal and professional
responsibilities. The College emphasizes the following factors to address the
needs of working adult students:

- Convenient Locations. Multiple campus locations provide students with
convenient access to the College throughout the greater Washington, D.C.
area. In early 1996, the College received approval to operate its first
degree-granting campus in the State of Maryland, where approximately 20%
of the College's current enrollment resides. The College also conducts
classes on-site at the Department of Transportation and at the General
Services Administration, for employees of the federal government; at
Quantico Marine Base, Fort Belvoir Army Education Center and Naval Surface
Warfare Center, Dahlgren Division, for active military personnel; and at
Computer Sciences Corporation, in Falls Church, Virginia, for company
employees. The College has submitted a proposal to offer upper level
undergraduate courses at the Southern Maryland Higher Education Center in
California, Maryland.

- Flexible Scheduling. The College's eight campuses offer classes seven
days a week, with some classes beginning as early as 6:00 a.m. and others
lasting as late as midnight. This flexible scheduling allows students to
attend classes at the most convenient times, giving them a better chance
to complete their programs. The College operates on the quarter system,
which allows students to begin their program in any quarter and permits
part-time students to complete their programs in less time than at a
traditional higher education institution.

- Supportive Learning Environment. The College believes that interaction
between teacher and student is important to student success. Accordingly,
Strayer limits the size of its classes and focuses the efforts of its
faculty on teaching, rather than on research or publishing. All full-time
Strayer faculty members maintain convenient office hours to encourage
students to seek additional help. The College provides tuition
reimbursement for faculty members seeking to update their skills and
knowledge.

- Market Responsiveness. The College upgrades and expands its
business-oriented curriculum quickly in response to the changing needs of
students and employers. Strayer's Curriculum Advisory Board includes
representatives of over 20 employers, a majority of whom are from the
private sector, and meets regularly to review and recommend curriculum
changes to the College. Through its relationships with these and other
employers, the College regularly monitors the needs of the market.
Centralized decision-making permits the College to implement curriculum
changes rapidly.

- SEL Program. Loans under the SEL Program provide students with an
alternative to government-sponsored financial aid. The SEL Program enables
students to finance their education through monthly payments of principal
and interest while they attend college and after they graduate and at
interest

24
<PAGE> 26

rates competitive with federal student loan programs. The SEL Program also
contributes to lower administrative costs and enables the College to
reduce its dependence on federal student loan funds.

- Capital Availability. Strayer students do not require the capital
intensive amenities, such as dormitories, leisure and sports facilities
and other plant assets, provided by educational institutions serving a
younger, full-time student population. Instead, the College is able to
invest its resources in its classroom facilities and instructional
programs. By gaining access to the equity capital markets, the College
will have an additional source of funds unavailable to public and
not-for-profit institutions.

BUSINESS STRATEGY

The College seeks to strengthen its position as a leading provider of
business-oriented education for working adults in its market area. To accomplish
this objective, the College employs the following strategies:

- Establish Additional Campuses. Strayer intends to increase enrollment at
its existing campuses and selectively add new campuses in its current
market and contiguous areas. The College plans to begin offering classes
in early 1997 at its first degree-granting campus in Maryland, which will
be located in Prince George's County. The College believes that additional
Strayer campuses in Maryland will help meet an existing demand from
Maryland residents and employers for business-oriented programs.

- Expand and Upgrade Curriculum. The College continually considers new
course offerings, in existing programs and in new programs, and course
upgrades in response to the changing demands of business, industry and
government.

- Expand SEL Program. The College intends to expand the SEL Program to
give students greater flexibility in financing their education and to
reduce its dependence on federal student loan funds. The Company expects
to use a portion of the proceeds from the Offering to purchase and fund
ELP, an education loan servicing company that serves the SEL Program.

- Control Campus Facilities. The College may seek to control its campus
facilities through purchase, as well as through long-term lease.
Management believes that permanent campus locations foster institutional
stability and market presence and enhance the College's ability to develop
and implement financial plans. The College may use a portion of the
proceeds from the Offering to purchase one or more of its existing campus
facilities.

- Expand Distance Education Programs. The College seeks to offer courses
through the Internet, subject to regulatory approval, to give students
greater flexibility in completing their programs. The College initiated
graduate course offerings through the Internet during the 1996 Winter
quarter and offered three graduate courses on-line during the 1996 Spring
quarter. The availability of Strayer course offerings on-line may allow
the College in the future to expand its student population beyond those
geographical areas served by Strayer campuses.

CAMPUS ORGANIZATION

The College organizes its academic programs and administrative operations
on a decentralized campus basis to increase its responsiveness to student needs.
A Campus Dean and a Campus Coordinator oversee the academic and administrative
functions, respectively, at each campus. Each campus is staffed with personnel
performing admissions, academic counseling, financial aid and career development
functions.

A learning resources center at each campus supports the College's
instructional programs. Each learning resources center contains a library and
computer laboratories and is operated by a full-time manager and support staff.

CURRICULUM

The College offers a business-oriented curriculum to equip students with
specialized knowledge and skills for careers in business, industry and
government. The Academic Curriculum Committee reviews and revises the College's
course offerings periodically to improve the educational programs and respond to
changing and

25
<PAGE> 27

competitive job markets. The College formed a Curriculum Advisory Board in 1993
to support the program evaluation process. The Curriculum Advisory Board
consists of College faculty, current and former Strayer students, and
representatives of more than 20 private and federal sector employers in the
greater Washington, D.C. area. The Curriculum Advisory Board also studies the
career progress of College alumni. The College uses these studies to make
decisions about curriculum development, resource allocation and faculty
appointments.

The College offers programs in the following areas:

BACHELOR OF SCIENCE (B.S.) DEGREE
Accounting
Business Administration
Computer Information Systems
Economics

ASSOCIATE IN ARTS (A.A.) DEGREE
Accounting
Business Administration
Computer Information Systems
Economics
General Studies
Marketing

MASTER OF SCIENCE (M.S.) DEGREE
Business Administration
Information Systems
Professional Accounting

DIPLOMA (CAREER DIVISION)
Computer Information Systems

Each undergraduate degree program emphasizes oral and written communication
skills as well as mathematics and various disciplines in the humanities and
social sciences. In addition to its degree programs, the College offers classes
to non-degree, non-program students wishing to take courses for personal or
professional enrichment. Enrollment of these students at the College has
expanded significantly in recent periods.

Although all of the College's programs and courses are offered at each
campus, the College adapts its offerings to the preferences of the student
population at each location. In addition, Strayer students may enroll in courses
at more than one campus. The following table shows Strayer's enrollment by
major, degree program and campus location at the beginning of the 1995 Fall
quarter:

26
<PAGE> 28

COLLEGE ENROLLMENT BY MAJOR, DEGREE PROGRAM
AND CAMPUS LOCATION -- 1995 FALL QUARTER

<TABLE>
<CAPTION>
CAMPUS
--------------------------------------------------------------------------------------------------------
WASHINGTON, TAKOMA
MAJOR DEGREE D.C. PARK ARLINGTON ALEXANDRIA WOODBRIDGE LOUDOUN MANASSAS FREDERICKSBURG TOTAL
- ------------------------ ------ ----------- ------ --------- ---------- ---------- ------- -------- -------------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Accounting.............. AA 50 12 11 9 11 10 8 13 124
BS 122 43 70 64 72 56 79 72 578
MS 25 8 28 15 7 7 6 8 104
Business
Administration........ AA 122 42 30 30 29 27 26 50 356
BS 242 90 194 179 192 167 174 168 1,406
MS 83 49 111 77 57 46 52 56 531
Computer Information
Systems............... DP 79 94 47 78 55 39 68 68 528
AA 153 52 62 60 55 52 34 81 549
BS 284 137 243 371 296 244 223 190 1,988
Information Systems..... MS 48 31 75 60 65 36 40 47 402
Economics............... AA 3 -- 1 1 -- -- -- 1 6
BS 10 5 4 8 2 -- 2 -- 31
General Studies......... AA 11 5 8 5 7 -- 1 5 42
Marketing............... AA 7 5 3 5 2 -- 1 1 24
Non-Degree/Non-Program*..NDNP 206 86 144 79 30 134 83 24 786
----- --- ----- ----- --- --- --- --- -----
Total........... 1,445 659 1,031 1,041 880 818 797 784 7,455
===== === ===== ===== === === === === =====
</TABLE>

- ---------------
* Includes undeclared majors.

The College allows students to apply credits earned in one program toward
attainment of a more advanced degree. For example, a student originally pursuing
a Diploma in Computer Information Systems can extend his original objective by
taking additional courses leading to an associate's degree in Computer
Information Systems, a bachelor's degree in Computer Information Systems, and
ultimately a master's degree in Information Systems. The curriculum design
provides students a level of competency and a measure of achievement in the
event they interrupt their education or choose to work in their field of
concentration prior to obtaining their final degree.

The following table illustrates the number of degrees and diplomas
conferred by Strayer in each of the last five academic years:

DEGREES AND DIPLOMAS CONFERRED
FOR THE ACADEMIC YEARS 1991 TO 1995

<TABLE>
<CAPTION>
ACADEMIC YEAR ENDED
--------------------------------------------------------
JUNE 30, JUNE 30, JUNE 30, JUNE 30, JUNE 30,
1991 1992 1993 1994 1995
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Diplomas................................... 323 714 826 702 652
Associate's Degrees........................ 115 129 168 217 239
Bachelor's Degrees......................... 285 398 453 673 787
Master's Degrees........................... 91 161 193 290 293
--- -------- -------- -------- --------
Total............................ 814 1,402 1,640 1,882 1,971
====== ====== ====== ====== ======
</TABLE>

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<PAGE> 29

FACULTY

The College seeks to appoint faculty who hold appropriate academic
credentials, are dedicated and active professionals in their field, and are
committed to teaching working adults. The following chart shows the highest
earned degrees of the College's faculty at the beginning of the 1996 Spring
quarter:

DISTRIBUTION BY HIGHEST EARNED DEGREE -- 1996 SPRING QUARTER

<TABLE>
<CAPTION>
DEGREES FULL-TIME PART-TIME
--------------------------------------------------------- --------- ---------
<S> <C> <C>
Ph.D. ................................................... 21 40
Ed.D. ................................................... 1 3
D.Sc. ................................................... 3 2
J.D. .................................................... 1 11
Master's................................................. 44 185
Bachelor's............................................... -- 17
Other:
D.C.M. ............................................. -- 1
D.P.A. ............................................. -- 2
Th.D. .............................................. -- 1
--
---
Total.......................................... 70 262
== ===
</TABLE>

In accordance with its educational mission, the College focuses the efforts
of its faculty on teaching. The normal load for a full-time faculty member is
four courses per quarter for each of three quarters, or 12 courses per academic
year. With the approval of the Campus Deans, faculty members may teach a fifth
course per quarter and extra courses during the summer quarter for additional
compensation. The College requires full-time faculty members to hold counseling
hours at least two hours per week for each course they teach.

Strayer provides financial support for faculty members seeking to update
their skills and knowledge. The College maintains a tuition plan that reimburses
instructors enrolled in advanced degree programs for one-half of their tuition
charges. Strayer conducts annual in-house faculty workshops in each discipline.
The College also fully reimburses its faculty for their costs in receiving
computer-related instruction and training to keep current in information
technology developments.

ACCREDITATION AND APPROVALS

The College was accredited by Middle States in 1981. Accreditation is a
system for recognizing educational institutions and their programs for
performance, integrity and quality that entitles them to the confidence of the
educational community and the public. In the United States, this recognition
comes primarily through private voluntary associations of institutions and
programs of higher education. These associations establish criteria for
accreditation, evaluate institutions and professional programs for
accreditation, and publicly designate those which meet their criteria.
Accredited schools are subject to periodic review by accrediting bodies to
ensure that the schools maintain the performance, integrity and quality required
for accreditation.

Middle States reaffirmed the College's accreditation in 1995. The College
is required to submit an interim status report to Middle States in 1997, and the
next scheduled evaluation visit by Middle States is currently set for the
academic year 1999-2000. See "Licensing, Accreditation and Financial Aid
Regulation -- Accreditation."

Middle States is the same accrediting agency that grants institutional
accreditation to other degree-granting public and private colleges and
universities in its region. Accreditation by Middle States is an important
attribute of the College. College and university administrators depend on
accreditation in evaluating transfers of credit and applications to graduate
schools. Employers rely on the accredited status of institutions when evaluating
a candidate's credentials, and parents and high school counselors look to
accreditation for

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<PAGE> 30

assurance that an institution has quality educational standards. Moreover,
scholarship commissions often restrict their awards to students attending
accredited institutions, and institutional accreditation is necessary to qualify
for eligibility for federal student financial assistance.

The College is permitted to grant degrees by each state in which the
College offers educational programs. The College is currently licensed by the
D.C. Education Licensure Commission and the State Council of Higher Education
for Virginia. In February 1996, the Maryland Higher Education Commission
approved the College's application to operate in Maryland as an out-of-state
institution. See "Licensing, Accreditation and Financial Aid Regulation -- State
Licensure."

The College is authorized by the Immigration and Naturalization Service of
the U.S. Department of Justice to admit foreign students. The College also
employs certain foreign faculty members and administrators in accordance with
U.S. immigration laws. See "Licensing, Accreditation and Financial Aid
Regulation -- Immigration." In addition, Strayer is approved for the education
of veterans and members of the selective reserve and their dependents, as well
as for the rehabilitation of handicapped students. Approximately 7% of the
College's students are veterans or reservists. See "Licensing, Accreditation and
Financial Aid Regulation -- Veterans Benefits."

STUDENT CHARACTERISTICS

The College's students are primarily working adults. At the beginning of
the 1995 Fall quarter, approximately 62% of the enrollment consisted of
part-time students and approximately 69% attended classes at night or on
week-ends. Women constituted approximately 55% of Strayer's students, and the
approximate age distribution of current Strayer students was as follows:

<TABLE>
<CAPTION>
PERCENTAGE
AGE OF STUDENTS
----------------------------------------------------------------- -----------
<S> <C>
21 and under..................................................... 8%
22 to 29......................................................... 32%
30 to 39......................................................... 35%
40 to 49......................................................... 19%
50 and over...................................................... 3%
Unknown.......................................................... 3%
</TABLE>

At the beginning of the 1995 Fall quarter, approximately 69% of the
College's enrollment consisted of Virginia residents. Maryland residents and
District of Columbia residents accounted for 20% and 11% of the enrollment,
respectively. Reflecting the attraction of the greater Washington, D.C. area for
international students, students from over 50 countries collectively represented
9% of the 1995 Fall quarter enrollment.

STUDENT RECRUITMENT

The College focuses its recruitment efforts on attracting students with the
motivation and ability to complete its business-oriented educational programs.
To generate interest among potential students, Strayer's marketing staff
primarily employs direct mailings and television, radio and newspaper
advertising. The College monitors the effectiveness of its various marketing
efforts in producing student enrollment. Referrals constitute the most important
source of inquiries from potential students.

The marketing department tracks and forwards to the College's admissions
representatives responses to its direct mail and advertising campaigns.
Admissions representatives at each campus pursue expressions of interest in
Strayer by arranging interviews for prospective students. The representatives
also conduct campus tours and otherwise assist prospective students in the
application process. At March 31, 1996, the College employed 51 admissions
representatives.

The College has entered into articulation agreements with Germanna
Community College, Northern Virginia Community College and Prince George's
Community College to facilitate enrollment of students

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<PAGE> 31

seeking to transfer course credits earned at these institutions. The College
sponsors recruitment events at the campuses of each of these community colleges.

STUDENT ADMISSIONS

The College seeks to ensure that incoming students have the necessary
academic background to succeed in their course of study at Strayer. Students
attending the College's undergraduate programs must possess a high school
diploma or a General Educational Development Certificate. All students must also
pass placement exams or submit acceptable standardized test scores. For
admission to the College's degree programs, students must attain a certain level
of proficiency in English and mathematics. Students attending the College's
graduate programs must have a bachelor's degree from an accredited institution.
If a student's undergraduate major varies widely from the student's proposed
graduate course of study, certain undergraduate foundation courses may be
necessary for admission to some of the highly technical courses offered at the
graduate level.

International students applying for admission must meet the same admission
requirements as other students. Those students whose native language is not
English must provide evidence that they are able to use the English language
with sufficient facility to do college-level work in an English-speaking
institution.

TUITION AND FEES

Strayer charges tuition by the credit hour. All courses offered are 4.5
credit hours. As of January 1, 1996, undergraduate, full-time students are
charged at the rate of $160 per credit hour. Undergraduate, part-time students
are charged at the rate of $170 per credit hour. Courses in graduate programs
are charged at the rate of $230 per credit hour. Accordingly, a full-time
student seeking to obtain a bachelor's degree in four years currently would pay
approximately $7,200 per year in tuition. The College implemented tuition
increases of 8.3%, 7.7% and 7.1% in 1993, 1994 and 1995, respectively.

Generally, tuition must be paid (or arrangements made therefor) prior to
the beginning of a quarter. If a student withdraws from a course before
completion, federal regulations permit the College to retain a specified
percentage of the tuition, which varies with the percentage of the course
completed.

Students finance their Strayer education in a variety of ways. A
significant number of students utilize federal financial aid programs. In
addition, many of Strayer's working adult students finance their own education
or receive full or partial tuition reimbursement from their employers. Strayer
offers grants, loans (including loans under the SEL Program), scholarships and
work-study programs as financing options for its students. Strayer students are
eligible to receive awards from the Strayer College Educational Foundation, a
non-profit organization that provides scholarships and grants to college
students, active duty military personnel and high school students in the greater
Washington, D.C. area. Through March 31, 1996, the Foundation has awarded
$42,000 in grants and scholarships.

SEL PROGRAM

In 1995, Strayer began the SEL Program of loans for eligible students as an
alternative to government-sponsored student loans. In 1995 and the three months
ended March 31, 1996, the College originated SEL loans of approximately $1.4
million and $650,000, respectively. The SEL Program enables the College to
reduce the significant administrative costs incurred by it in processing loans
under Title IV Programs and lessens the College's dependence on federal student
financial aid programs. The College believes that the SEL Program also helps it
to attract and retain qualified students.

The College designed the SEL Program for working adult students. The loans
have maturities ranging from one to six years and bear interest at a fixed rate
that is competitive with rates under Title IV Programs. Monthly loan payments
begin the first month after the loan date and generally vary between $200 and
$300, including loan principal as well as interest. Borrowers make principal
payments while still enrolled, thereby reducing the debt they otherwise would
assume upon completion of their studies. At March 31, 1996, there were a total
of 739 loans outstanding with an aggregate loan balance of approximately $1.3
million and an average individual loan balance of approximately $1,700.

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<PAGE> 32

Loans under the SEL Program are unsecured. Strayer's underwriting involves
a credit evaluation of each applicant. See "Risk Factors -- Risks of SEL
Program."

All loans under the SEL Program are purchased from the College and serviced
by an affiliated company, ELP. Upon completion of the Offering, the Company will
acquire ELP, which thereafter will be operated as a wholly-owned subsidiary of
the Company. See "Reorganization -- Acquisition of ELP" and "Certain
Transactions -- Transactions with ELP." The College intends to expand the SEL
Program after the Offering. A portion of the net proceeds of the Offering will
be applied to fund ELP's operations. See "Use of Proceeds."

STUDENT RETENTION

Strayer dedicates significant resources to assisting students in overcoming
the personal and academic obstacles that can interfere with completion of a
course of study. Each campus provides students with scheduled tutoring sessions
and with academic counseling centers that are staffed by full-time faculty
members for eight hours each week day. In addition, the College assigns each
student an academic adviser and offers developmental courses for students whose
record indicates a need for academic support. Strayer considers factors relating
to student retention in the performance evaluation of every full-time faculty
member.

Notwithstanding Strayer's student retention programs, some students at the
College, as in other higher education institutions, end their studies prior to
program completion. In the last five award years, the College's student
withdrawal rate ranged from approximately 23% to approximately 27%. The
withdrawal rate for the 1994-95 federal award year was 23.7%. Student
withdrawals have a negative regulatory, financial and marketing effect on the
College. See "Licensing, Accreditation and Financial Aid Regulation -- Financial
Aid Regulation -- Administrative Capability." The College experiences some
decline in student enrollment during each academic quarter from the enrollment
level at the beginning of the quarter. The College is obligated to make refunds
of unearned tuition with respect to students who withdraw during an academic
quarter.

CAREER DEVELOPMENT SERVICES

The College actively assists its students and alumni with job placement and
other career-related matters through career development offices located at all
eight campuses. Strayer's career development personnel conduct workshops on
employment-related topics (including resume preparation, interviewing techniques
and job search strategies), maintain job listings, arrange campus interviews by
employers and provide other placement assistance. The College sponsors career
fairs in the Fall and Spring quarters for students and alumni to discuss career
opportunities with companies and governmental agencies in the greater
Washington, D.C. area. Over 50 employers attended the career fair held in the
1995 Fall quarter.

The College conducts annual alumni surveys to monitor the career
progression of its graduates and to comply with Middle States and state
requirements to perform outcome assessments. The reliability of the survey data
largely depends on the information reported to the College. The 1995 alumni
survey, which had an approximately 10% overall response rate, indicated that
only 5% of those responding were unemployed. Approximately 77% of undergraduate
alumni indicated that their Strayer education sufficiently prepared them for
their present occupation and approximately 80% of graduate degree alumni credit
Strayer for the achievement of their professional goals. According to the
survey, Strayer's greatest assets, in order of importance, are campus locations,
schedule variety, instructor knowledge and class sizes.

Strayer students and graduates are employed in a wide range of regional and
local companies, many of whom are in the information technology industry.
Federal governmental agencies also provide a significant source of employment.

COMPETITION

The postsecondary education market in Strayer's market area is highly
competitive. The College competes with traditional public and private two-year
and four-year colleges, other for-profit schools and

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<PAGE> 33

alternatives to higher education, such as employment and military service.
Public colleges may offer programs similar to those of the College at a lower
tuition level, due to government subsidies, government and foundation grants,
tax-deductible contributions and other financial sources not available to
proprietary institutions. Tuition at private institutions is generally higher,
and in some cases significantly higher, than the tuition at the College. Many of
the College's competitors have greater financial and personnel resources than
the College.

The College competes with other educational institutions primarily based on
the quality of its business-oriented curriculum and instruction, its flexible
schedules and convenient classroom locations, and its responsiveness to changing
educational requirements of the workplace. Few of the College's competitors have
modified their programs to meet the special needs of working adult students,
although management believes that more may do so in the future.

EMPLOYEES

At March 31, 1996, the College employed 332 faculty members, of whom 70
were full-time and 262 part-time, and 269 non-faculty staff in information
systems, financial aid, recruitment and admissions, payroll and human resources,
corporate accounting and other administrative functions. Of the College's
non-faculty staff, 190 were employed full-time and 79 part-time.

LEGAL PROCEEDINGS

By letter dated April 11, 1996, an attorney representing one former and
three present employees of the College made demand upon the College for payment
to preclude further action by the claimants with respect to certain allegations
of various forms of discrimination. The claimants consist of one current
administrator of the College, who has filed a discrimination claim with the
Equal Employment Opportunity Commission (the "EEOC"), two faculty members who
are former College administrators, one of whom has taken no administrative
action and the other of whom has filed a discrimination claim with the EEOC and
the Arlington County Office of Human Rights (the latter claim having been
subsequently withdrawn), and one former clerical employee, who has filed a
discrimination claim with the Alexandria Office of Human Rights. Each claim is
based on a different set of facts and alleges different forms of discrimination,
including gender, race and national origin. Although no suits have been filed,
the attorney representing each of the claimants in the above noted letter sent
on behalf of the four claimants has made demand for $500,000 and attorneys' fees
for each claimant. The College has investigated each of the matters and believes
it has meritorious defenses in each. Accordingly, the College intends to present
its position strongly in the event of litigation. There can be no assurance that
the College will be successful in these matters; however, the College does not
believe that the ultimate resolution of these matters will have a material
impact on the College's financial position or results of operations.

From time to time, the College is involved in litigation and other legal
proceedings arising out of the ordinary course of its business. As of the date
of this Prospectus, there were no pending material legal proceedings to which
the Company was subject or to which the Company's property was subject.

NEW CAMPUSES

The College considers a number of factors in determining the location of a
new campus. The site must be in an area where the College has (or can obtain)
the necessary regulatory authorization to do business, where there is proximity
to a large number of working adults and where there is a concentration of
technology-oriented employers. The College normally avoids areas it believes are
adequately served by competitive institutions. Within an appropriate area,
specific site selection involves criteria such as convenience and accessibility.

The Company expects to incur operating losses at each new campus for at
least the first year of operations. Initial enrollment is expected to include
existing Strayer students for whom the new campus would be more convenient. This
shift would have a negative effect on enrollment at other Strayer campuses.
Approximately 20% of the current student body consists of Maryland residents,
and a substantial portion of these students are expected to enroll at Strayer's
first degree-granting Maryland campus when it opens. Over

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<PAGE> 34

time, enrollment at that campus is expected to come from other working adults in
the area and from students attending other institutions.

PROPERTIES

The College leases its eight campuses, five of which are owned by
corporations controlled by the College's President, Ron K. Bailey. The leases
with these corporations all have ten-year terms expiring in 2006, with three
five-year renewal terms. The remaining leases have terms ranging from three to
15 years, with one or two five-year renewal options. With the exception of the
Arlington campus lease, the leases contain purchase options. See "Certain
Transactions -- Lease of Campus Facilities" and Note 5 to the College's
Financial Statements. The table below sets forth certain information regarding
each of the College's properties at March 31, 1996:

<TABLE>
<CAPTION>
NUMBER OF
NUMBER OF COMPUTER AREA IN
LOCATION CLASSROOMS WORKSTATIONS SQUARE FEET
------------------------------------------- ---------- ------------ -----------
<S> <C> <C> <C>
Washington, D.C............................ 21 89 30,000
Alexandria, Virginia....................... 15 71 22,000
Arlington, Virginia........................ 12 80 26,000
Woodbridge, Virginia....................... 17 64 20,800
Manassas, Virginia......................... 17 52 20,800
Loudoun Campus (Ashburn), Virginia......... 13 76 21,000
Fredericksburg, Virginia................... 13 62 17,500
Takoma Park (Washington, D.C.)............. 15 48 21,800
</TABLE>

The campuses are easily accessible to major highways or urban thoroughfares
or to the Washington, D.C. area metrorail subway system. The teaching facilities
at each campus are housed in an air-conditioned building that includes spacious
classrooms, a student lounge, faculty offices, a bookstore and a learning
resources center. Seven of the campuses provide free parking.

The College actively monitors facility capacity in light of current
utilization and projected enrollment growth. Since 1990, the College has
relocated its downtown Washington, D.C., Alexandria, Woodbridge and Manassas
campuses to newer and larger facilities and has completed extensive renovations
to the Arlington campus. Management believes the College can accommodate a
significant increase in student enrollment at most of its campuses and can
acquire additional capacity for other campuses on acceptable terms.

LICENSING, ACCREDITATION AND FINANCIAL AID REGULATION

STATE LICENSURE

The College is dependent on the authorization of the applicable agency of
each state within which the College offers educational programs to allow it to
operate and to grant degrees or diplomas to students. The College is subject to
extensive regulation in each of the two jurisdictions (the District of Columbia
and Virginia) in which it currently operates. State laws and regulations affect
the College's operations and may limit the ability of the College to introduce
educational programs or obtain authorization to operate in certain states. State
authorization is also required in order for an institution to become and remain
eligible to participate in Title IV programs.

The College was granted a permanent license by the D.C. Education Licensure
Commission (the "D.C. Commission") in 1990 following the purchase of the College
by the Current Stockholders. If the D.C. Commission finds an accredited
institution in full compliance with D.C. licensure requirements, the D.C.
Commission grants a permanent license, which remains in effect indefinitely,
subject to periodic review and amendment due to change in ownership,
accreditation status, location, degrees or certificates offered, and other
conditions.

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<PAGE> 35

After the opening of the Takoma Park campus in 1992, the D.C. Commission
conducted a site visit and issued an evaluation report containing certain
findings of deficiency with respect to advertising and publications, graduate
programs, governance, administration, budgeting, library and computer facilities
and resources, student outcomes assessment, student health and other services,
and access for disabled students. The D.C. Commission is authorized to grant a
provisional license based on its determination that an institution complies, or
within a reasonable period of time can comply, with all applicable regulatory
requirements. A provisional license is issued for a fixed period of time and may
be subject to conditions which the D.C. Commission deems necessary to achieve
full compliance. In March 1993, the D.C. Commission granted the College a
provisional license for a period of three years on the conditions that, among
others, the College submit a progress report by March 1994 and employ a
compliance specialist to assist it in meeting licensure requirements. The
College engaged a compliance specialist and submitted a progress report to the
D.C. Commission in February 1994.

In March 1996, the D.C. Commission extended the College's provisional
license through March 1997, with a site visit planned for the Fall of 1996.
During that site visit the Commission is expected to review the College's
progress in addressing past compliance concerns, the College's operations after
the change in ownership resulting from the Offering and other matters. Because
of these considerations and the likelihood that a permanent license would
require amendment in the near future, the College intends to apply for renewal
of its provisional license for the maximum five-year period.

The College began offering its educational programs in Virginia in 1981.
The Virginia State Council of Higher Education approved the College's Northern
Virginia site in 1982. On November 15, 1995, the State Council of Higher
Education for Virginia granted the College a term of full approval ending
November 30, 1998.

In 1995, the College applied to establish a branch campus in Prince
George's County, Maryland, to offer degree-granting programs up to the master's
degree level in accounting, business administration and computer information
systems. On February 27, 1996, the Maryland Higher Education Commission ("MHEC")
advised the College of the approval of its application to operate in Maryland as
an out-of-state institution. After the College has identified a Maryland campus
site in Prince George's County, the College expects to submit a renewal
application to MHEC, as well as an application to Middle States for extension of
the College's accreditation to the Maryland campus. The College plans to begin
offering instruction at the Maryland campus in early 1997. MHEC has given the
College permission to offer courses at the Computer Sciences Corporation
facilities in Hanover, Maryland, beginning in July 1996.

ACCREDITATION

An institution must be accredited by an accrediting agency recognized by
the Department of Education in order to be eligible to participate in Title IV
Programs. The HEA requires accrediting agencies recognized by the Department of
Education to review many aspects of an institution's operations in order to
ensure that the education or training offered by the institution is of
sufficient quality to achieve, for the duration of the accreditation period, the
stated objective for which the education or training is offered. Under the
Higher Education Amendments of 1992, a recognized accrediting agency must
perform regular inspections and reviews of institutions of higher education,
including unannounced site visits of institutions such as the College that
provide vocational education and training. In accordance with that requirement,
Middle States conducted an unannounced site visit to the College in April 1996
and in its report stated that Strayer had represented itself with honesty and
integrity regarding its prebaccalaureate occupationally specific programs.

Middle States accredited the College in 1981 and reaffirmed the College's
accreditation in November 1995. The College is required to submit an interim
status report in 1997, which will address planning efforts as they relate to
expansion of enrollments and additional off-campus sites and to facilities.
Middle States' next scheduled evaluation visit to the College is currently set
for the academic year 1999-2000. Middle States is scheduled to apply for
continued recognition by the Department of Education in 1996 and has updated
certain of its policies to conform to new HEA requirements. The College expects
that its next accreditation review will be conducted under the new requirements.

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<PAGE> 36

IMMIGRATION

The College is authorized by the Immigration and Naturalization Service
("INS") of the U.S. Department of Justice to admit foreign students. The College
also employs certain foreign faculty members and administrators in accordance
with U.S. immigration laws. Foreign students, other than resident aliens,
intending citizens, and residents of certain Pacific islands, are ineligible to
participate in Title IV Programs. Immigration legislation pending in Congress
may further restrict the availability of student financial aid to foreign
students. The College has established procedures designed to comply with U.S.
immigration laws. If the College fails to comply with these laws, the INS could
take enforcement action, which could result in the withdrawal of foreign
students enrolled at Strayer, loss of authorization to admit foreign students or
loss of foreign faculty members and administrators.

FINANCING STUDENT EDUCATION

In 1995, approximately 42% of the College's students participated in one or
a combination of several of the federally supported student financial aid
programs. A substantial portion (approximately 46% in 1995) of the College's
revenues are derived from tuition financed under Title IV Programs.

The College's financial aid programs are designed to assist eligible
students whose financial resources are inadequate to meet the cost of education.
Aid is awarded on the basis of financial need, generally defined under the HEA
as the difference between the cost of attending a program of study and the
amount a student can reasonably be expected to contribute to those expenses. All
recipients of financial aid must maintain a satisfactory grade point average and
progress in a timely manner toward completion of a program of study.

Title IV Programs

The College maintains eligibility for its students to participate in the
following Title IV Programs:

Federal Family Education Loans. Pursuant to the Federal Family Education
Loan Program (the "FFEL Program"), which includes the Federal Stafford Loan
("Stafford") program and the Federal PLUS program, students and their parents
can obtain subsidized and unsubsidized student loans. Repayment of Stafford
loans is deferred until six months after the student graduates or withdraws.
Students who demonstrate financial need may qualify for a subsidized Stafford
loan, and the federal government will pay the interest on the loan while the
student is in school and for six months after the student's graduation or
withdrawal. Unsubsidized Stafford loans are available to a student in an amount
up to the difference between the student's estimated cost of attendance at the
institution and the estimated financial assistance reasonably available to that
student. The unsubsidized Stafford loan program now incorporates the former
Federal Supplemental Loans for Students ("SLS") program. In 1995, approximately
36.8% of the College's revenues were derived from Stafford loans. PLUS Loans are
made available to parents of dependent students and accounted for approximately
1.0% of the College's revenues in 1995. The maximum amount of any PLUS loan is
the difference between the student's estimated cost of attendance at the
institution and the estimated financial assistance reasonably available to that
student.

Pell Grants. Grants under the Federal Pell Grant ("Pell") program, which
are available to eligible students based on financial need and other factors,
accounted for approximately 5.1% of the College's revenues in 1995.

Campus-Based Programs. The "campus-based" Title IV Programs include the
Federal Supplemental Educational Opportunity Grant program, the Federal
Work-Study program, and the Federal Perkins Loan ("Perkins") program. These
programs are "campus-based" because the institution has significant
responsibilities for program administration. Tuition received by the College
under the campus-based programs accounted for less than 1.0% of the College's
revenues in 1995.

Direct Student Loans. In 1993, Congress enacted the William D. Ford Direct
Loan Program (the "Direct Loan Program"), under which the Department of
Education makes loans directly to students, rather than guaranteeing loans made
by lending institutions. The Direct Loan Program has been phased in, with 104
schools nationwide selected to participate in the first year of the program
(1994-95) and over 1,350 schools

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<PAGE> 37

selected to participate in the second year (1995-96). The College has been
selected to participate in this program beginning on July 1, 1996.

Other Financial Aid Programs

In addition to the College's own student loan and scholarship programs,
eligible students at the College may participate in educational assistance
programs administered by the U.S. Department of Veterans Affairs, the U.S.
Department of Defense, the District of Columbia and private organizations.

FINANCIAL AID REGULATION

To be eligible to participate in Title IV Programs, the College must comply
with specific standards and procedures set forth in the HEA and the regulations
issued thereunder by the Department of Education. To participate in Title IV
Programs, an institution must be an "eligible institution," which requires,
among other things, that the institution be authorized by each state within
which it operates to offer its educational programs and be accredited by a
recognized accrediting agency. See "Business -- Accreditation and Approvals."
The institution must also be certified by the Department of Education to
participate in Title IV Programs, which requires, among other things, that the
institution meet certain standards of administrative capability and financial
responsibility. The College is currently certified to participate in Title IV
Programs. The HEA requires the Department of Education to recertify every
institution of higher education participating in Title IV Programs by July 23,
1997, on a schedule established by the Department. The College expects that the
Department of Education will require it to apply for recertification in the near
future.

The regulatory scheme applicable to the College has been subject to
frequent revisions, many of which have increased the level of scrutiny to which
higher education institutions are subjected and raised the applicable standards.
In enacting the Higher Education Amendments of 1992 and the Higher Education
Technical Amendments of 1993, Congress imposed significant new and more
stringent standards governing institutions participating in Title IV Programs,
including new standards for institutional eligibility and the timing, scope of
and procedures for eligibility and certification reviews, accrediting agency
approval and review by state review entities. The new standards are designed to
limit institutional dependence on Title IV Program funds, prevent institutions
with unacceptable student loan default rates from participating in Title IV
Programs and, in general, require institutions to satisfy certain criteria
intended to protect the integrity of the Title IV Programs, notably criteria
regarding administrative capability and financial responsibility.

The new standards are consistent with the increased scrutiny and regulation
to which providers of postsecondary education have been subjected as a result of
increased concern over fraud and abuse in Title IV Programs. Congress and the
Department of Education have recently focused in particular upon the operations
of proprietary institutions, such as the College. Certain elements of the
regulatory scheme applicable to the College are described below.

Increased Regulatory Scrutiny

The 1992 amendments to the HEA formalized, modified and strengthened the
regulatory structure known as the "Program Integrity Triad," which consists of
the Department of Education, recognized accrediting agencies, and state higher
education regulatory bodies. Congress intended this initiative to increase the
regulatory scrutiny of postsecondary educational institutions. In addition to
the Program Integrity Triad, other participants in Title IV Programs, notably
guarantee agencies, also have enforcement authority.

As a result of the implementation of the Program Integrity Triad,
institutions of higher education are subject to greater scrutiny by the
Department of Education, accrediting agencies and possibly state agencies. In
February 1996, the Department of Education issued an advance notice of proposed
rulemaking that proposes to provide regulatory relief to institutions that have
records of outstanding performance in administering Title IV programs and strong
financial responsibility, while focusing the Department of Education's
monitoring and oversight activities on institutions that present a high risk to
federal funds. The regulatory standards in effect at the time of reviews by
regulatory authorities and the College's compliance

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with those standards may affect the operations of the College and its ability to
participate in Title IV Programs.

Administrative Capability

Recent Department of Education regulations specify extensive criteria by
which an institution must establish that it has the requisite "administrative
capability" to participate in Title IV Programs. As discussed below, the
administrative capability standards include certain requirements relating to the
institution's cohort default rates and its withdrawal rate for its undergraduate
regular students. To meet the administrative capability standards, an
institution must also not be, and not have any principal or affiliate who is,
debarred or suspended from federal contracting or engaging in activity that is
cause for debarment or suspension, and must not otherwise appear to lack
administrative capability.

If the Department of Education determines that an institution is not
administratively capable solely because it fails to comply with the cohort
default rate standards of administrative capability, the Department will certify
the institution's continuing eligibility to participate in Title IV Programs on
a provisional basis for no more than three years. During the period of
provisional certification, the institution must comply with any additional
conditions included in its program participation agreement. If the Department of
Education determines that a provisionally certified institution is unable to
meet its responsibilities under its program participation agreement, it may
revoke the institution's provisional certification and terminate its
participation in Title IV programs.

The College measures its student withdrawal rate in accordance with
Department of Education regulations, which until July 1, 1995, required
institutions such as the College to calculate student withdrawal rates based on
an eight-month period, and which currently require calculation based on the
federal award year. In the last five award years, the College's student
withdrawal rate ranged from approximately 23% to approximately 27%. The
College's withdrawal rate for the applicable eight months of the 1994-95 award
year was 23.7%.

Based on an inspection conducted by the Office of Inspector General of the
Department of Education in mid-1992, the Department of Education concluded that
there were serious deficiencies at that time in the College's administration of
federal student financial aid programs. The Department of Education cited late
and unpaid refunds, lack of refund notification, unpaid credit balances, a high
student withdrawal rate, lack of exit counseling documentation, incorrect loan
certifications and missing financial aid transcripts. Because of these
deficiencies, the Department of Education transferred the College from the
"advance" system of payment, under which the Department of Education accepts an
institution's request for funds and transfers the amount requested (subject to
annual audit), to the "reimbursement" system of payment, under which the
institution must disburse funds to eligible students and document their
eligibility for the aid requested before receiving funds from the Department of
Education. The College disputed various of the Department of Education's
findings but took steps to correct certain institutional weaknesses identified
by the Department of Education, including creating new administrative positions
dealing with Title IV Programs, hiring additional financial aid officers,
increasing training for financial aid officers and other College officials,
preparing a financial aid manual, and developing new computer systems. Further,
following an internal audit, the College in 1993 and 1994 repaid to the
government certain Title IV funds for which the College determined its
documentation was inadequate. Following these remedial actions, the Department
of Education returned the College to the advance system of payment, effective
December 7, 1995.

Based on the Department of Education review, the College's principal
guaranty agency, American Student Assistance Corporation ("ASA") imposed a
temporary emergency suspension on the College in April 1993. After conducting a
program review, ASA limited its guaranty to loans for students who had previous
loans guaranteed by ASA. In December 1993, after conducting a followup review,
ASA removed the limitation on the College's participation in the FFEL guaranteed
student loan programs. In August 1994, ASA advised the College that its
corrective measures and plan of action were satisfactory and the program review
was closed.

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Department of Education regulations permit an institution to enter into a
written contract with a third-party servicer for the administration of any
aspect of the institution's participation in Title IV Programs. The third-party
servicer must, among other obligations, comply with Title IV requirements and be
jointly and severally liable with the institution for any violation by the
servicer of any Title IV provision. The College has written contracts with two
third-party servicers, which it has, as required, reported to the Department of
Education. Financial Aid Management for Education, Inc., which has served the
College since 1983, certifies FFEL Program loan applications, prepares reports
from the College to the Department of Education, issues checks for the Pell and
campus-based programs, and issues and collects Perkins loans. ELP provides
training for financial aid employees, development and support for automated
systems for the administration of Title IV Programs, temporary financial aid
staff as needed, consulting and regulatory support for financial aid staff, and
compliance audits, storage, and responses to inquiries regarding inactive
student files and administration of a default management plan. ELP also serves
as liaison between the College and Unger and Associates, Inc., which provides
certain default management services to the College in connection with the FFEL
Programs, including notices to students of the commencement of their repayment
obligations, skiptracing, and preclaims assistance.

Financial Responsibility

Recent amendments to the HEA and the Department of Education's regulations
prescribe extensive standards of financial responsibility that institutions such
as the College must satisfy to participate in Title IV Programs. Among these
standards of financial responsibility are general standards requiring the
institution to provide the services described in its official publications and
statements; to provide the administrative resources necessary to comply with
Title IV requirements; and to meet all of its financial obligations, including
required refunds and any repayments to the Department of Education for debts and
liabilities incurred in programs administered by the Department. A for-profit
institution such as the College must: (i) demonstrate an "acid test" ratio
(defined as the ratio of cash, cash equivalents and current accounts receivable
to total current liabilities) of at least 1-to-1 at the end of its latest fiscal
year; (ii) not have had operating losses in either or both of its two latest
fiscal years that in sum result in a decrease in tangible net worth in excess of
10% of the tangible net worth at the beginning of the two-year period; and (iii)
have had a positive tangible net worth for its latest fiscal year. For the
fiscal year ended December 31, 1995, the College's "acid test" ratio was equal
to 1.44 to 1. Unless the institution meets specific alternative criteria, it
must submit an irrevocable letter of credit, payable to the Department of
Education, in an amount equal to 25% of the total dollar amount of refunds that
the institution paid on Title IV Programs in the previous fiscal year. The
College has obtained such a letter of credit in the amount of $500,000. An
institution will not be considered to be financially responsible if it or a
person exercising substantial control over it meets certain detailed indicators
of poor past performance, including unpaid liabilities for Title IV violations,
recent limitation, suspension or termination actions, recent audit or program
review findings resulting in repayment of more than 5% of Title IV funds
received for the relevant year, failure to submit timely and acceptable audit
reports, and failure to resolve satisfactorily program review or audit findings.
Based on its audited financial statements for 1995, as submitted to the
Department of Education, the College believes it satisfies each of the
applicable financial responsibility standards.

Student Loan Defaults

Under the HEA, an educational institution may lose its eligibility to
participate in some or all of the Title IV Programs if defaults on the repayment
of federally guaranteed student loans by its students exceed certain rates. A
rate of student defaults (known as a "cohort default rate") is calculated for
each institution annually by determining the rate at which borrowers who become
subject to their repayment obligation in one federal fiscal year default by the
end of the following federal fiscal year. For certain purposes described below,
the Department of Education calculates a weighted average cohort default rate
for the institution's students who enter repayment and default on a FFEL Program
or Direct Loan Program loan.

If the Department of Education notifies an institution that its cohort
default rate for FFEL Program loans equals or exceeds 25% for each of the three
most recent consecutive federal fiscal years, the institution's

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participation in the FFEL Program ends 30 days after the notification, unless
the institution timely appeals that determination on specified grounds and
according to specified procedures. An institution's participation in the Direct
Loan Program ends 30 days after notification that any combination of its FFEL
Program cohort default rate, its Direct Loan Program cohort default rate, or its
weighted average cohort default rate equals or exceeds 25% for each of the three
most recent federal fiscal years, unless the institution timely appeals. An
institution whose participation terminates under these provisions may not
participate in the relevant program for a period of up to three federal fiscal
years. An institution that is deemed ineligible to participate in a Title IV
Program based on a final default rate determination under the FFEL or Direct
Loan Programs after February 14, 1996 is also barred from receiving funds under
the Pell Grant program. The Department of Education also may initiate a
proceeding to limit, suspend or terminate an institution's participation the
FFEL Program if it has any combination of a FFEL Program, Direct Loan Program or
weighted average cohort default rate that is equal to or greater than 25% for
each of the three most recent consecutive federal fiscal years. The Department
of Education may initiate a proceeding to limit, suspend or terminate an
institution's participation in all Title IV Programs if it has a FFEL Program,
Direct Loan Program or weighted average cohort default rate that exceeds 40% for
any federal fiscal year.

In addition, an institution is considered to lack administrative capability
if its cohort default rate for the Stafford and SLS programs for any of the
three most recent federal fiscal years equals or exceeds 25% or if its cohort
default rate for the Perkins loan program equals or exceeds 15% in any federal
award year (provided that if fewer than 30 students enter repayment during a
given year, the default rate is calculated on a three-year basis). The College's
cohort default rates on federally guaranteed student loans for the 1991, 1992
and 1993 federal fiscal years, the most recent years for which final information
is available, were 14.1%, 10.6% and 16.6%, respectively. The average default
rates for proprietary institutions nationally were 30.2% and 23.9% in fiscal
years 1992 and 1993, respectively. The College's Perkins loan default rates in
federal award years 1994 and 1995 were 4.0% and 11.6%, respectively.

The 85/15 Rule

Under what is commonly referred to as the "85/15 Rule," the HEA provides
that proprietary institutions, such as the College, are eligible to participate
in Title IV Programs only if they derive no more than 85% of their revenues from
Title IV Programs, as determined in accordance with a formula in the
regulations. A proprietary institution that violates the 85/15 Rule loses its
eligibility to participate in Title IV Programs for at least one federal fiscal
year. During the 1995 federal fiscal year, the College derived 46% of its
revenues from tuition financed under Title IV Programs.

Incentive Compensation

As a part of an institution's program participation agreement with the
Department of Education, the institution must certify that it will neither
provide, nor contract with any entity that provides, any commission, bonus or
other incentive payment based directly or indirectly on success in securing
enrollments or financial aid to any person or entity engaged in any student
recruitment, admission or financial aid awarding activity. Although there can be
no assurance that the Department of Education will not find deficiencies in the
College's present or former compensation plans, the College believes that its
compensation plan complies with the HEA.

Potential Effect of Regulatory Violations

If the College fails to comply with the regulatory standards governing
Title IV Programs, the Department of Education could impose one or more
sanctions, including transferring the College to the reimbursement system of
payment, requiring repayment of certain Title IV funds, certifying the College's
eligibility on a provisional basis, taking emergency action, referring the
matter for criminal prosecution, or initiating proceedings to impose a fine or
to limit, suspend or terminate the participation of the College in Title IV
Programs. In addition, the College's guarantee agencies could limit, suspend or
terminate its eligibility in the event of certain regulatory violations.
Although there are no such sanctions currently in force, and the College does
not believe any such sanctions are contemplated, if such sanctions were imposed
against the College and

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resulted in a substantial curtailment of the College's participation in Title IV
Programs, the College would be materially and adversely affected.

If the College lost its eligibility to participate in Title IV Programs, or
if the amount of available federal student financial aid were reduced, the
College would seek to arrange or provide alternative sources of revenue or
financial aid for students. A number of private organizations provide loans to
students. Although the College believes that one or more private organizations
would be willing to provide financial assistance to students attending the
College, there is no assurance that this would be the case, and the interest
rate and other terms of such student financial aid might not be as favorable as
for Title IV Program funds. The College may be required to guarantee all or part
of such alternative assistance or might incur other additional costs in
connection with securing alternative sources of financial aid. Accordingly, the
loss of eligibility of the College to participate in Title IV Programs would be
expected to have a material adverse effect on the College even if it could
arrange or provide alternative sources of revenue or student financial aid.

RESTRICTIONS ON ADDING LOCATIONS AND EDUCATIONAL PROGRAMS

State requirements and accrediting agency standards may in certain
instances limit the ability of the College to establish additional locations and
programs. District of Columbia regulations require institutions to submit an
application for an amended license in order to add a new program or location.
The Virginia State Council of Higher Education requires institutions to obtain
approval prior to offering new educational programs at existing sites or
instruction for degree credit at a new site located more than 25 miles or 30
minutes' travel time from a central location. Maryland law and regulations
require institutions to obtain the approval of MHEC in order to offer an
instructional program not specified in its certificate of approval or to offer
more than one-third of the credit-bearing coursework leading toward a
certificate or degree at a location not specified in its certificate of
approval. Middle States requires institutions that it accredits to notify it in
advance of implementing new programs or locations, and upon notification may
undertake a review of the institution's accreditation. Based on its current
understanding of how these standards will be applied, the College does not
believe that these standards will have a material adverse effect on the College
or its expansion plans.

The HEA requires proprietary institutions of higher education to be in full
operation for two years before qualifying to participate in Title IV Programs.
However, the applicable regulations permit an institution that is already
qualified to participate in Title IV Programs to establish an additional
location that may immediately qualify, unless the location was acquired from
another institution that has ceased offering educational programs at that
location and has unpaid Title IV liabilities. The new location must satisfy all
other applicable requirements for institutional eligibility, including approval
of the additional location by the relevant state authorizing agency and the
institution's accrediting agency. In addition, a location that qualifies as a
"branch campus" must meet extensive regulatory requirements, including the
standards of administrative capability and financial responsibility discussed
above. The College's expansion plans assume its continued ability to establish
new campuses as additional locations of the College's main campus without
incurring the two-year delay in participation in Title IV Programs. The loss of
state authorization by the College or an existing campus, or the failure of the
College or a new campus to obtain state authorization, would render the College
ineligible to participate in Title IV programs in that state or location.

The Department of Education requires an institution to provide notice of an
additional location that offers at least 50%, but less than 100%, of an
educational program. The Department of Education may, in its discretion, require
the institution to apply to include such a new location in its eligibility
notification. The Department of Education bases its determination of whether to
require such an application on the percentage of an educational program that is
offered at the new location and on the financial and administrative capability
of the institution. An institution must apply to the Department of Education to
include in its eligibility designation a new branch campus or a new location at
which it offers 100% of an educational program.

Generally, if an institution eligible to participate in Title IV Programs
adds an educational program after it has been designated as an eligible
institution, the institution must apply to the Department of Education to have
the additional program designated as eligible. However, an institution is not
obligated to obtain the

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Department of Education's approval of an additional program that leads to an
associate, baccalaureate, professional or graduate degree or which prepares
students for gainful employment in the same or related recognized occupation as
an educational program that has previously been designated as an eligible
program at that institution and meets certain minimum length requirements. In
the event that an institution erroneously determines that an educational program
is eligible for Title IV funds without the Department of Education's express
approval, the institution will be liable for repayment of Title IV aid provided
to students in that program. The College does not believe that the Department of
Education's regulations will create significant obstacles to its plans to add
new programs.

DISTANCE LEARNING

State law and accrediting agency standards may regulate telecommunications
or correspondence courses offered by the College, which may include courses
offered through the Internet. The D.C. Commission requires that a course or
program offered by "correspondence, extension, or in summer session" be
consistent with the objectives and purposes of the institution and "consistent
with and comparable in quality" to courses offered to students regularly
enrolled on a full-time basis. If the College's courses offered through the
Internet failed to meet this standard, that failure could provide a basis for
adverse action by the D.C. Commission, including termination of the College's
license. Virginia requires out-of-state institutions such as the College to
obtain approval from the Virginia State Council of Higher Education before
offering any telecommunications activity at a site in Virginia.
Telecommunications activity includes any course for degree credit or program of
study where the primary mode of delivery to a site is television, video cassette
or disc, film, radio, computer, or other telecommunications devices. Middle
States has appointed a task force to develop guidelines for conducting distance
learning programs.

The HEA provides that an institution generally is not eligible to
participate in Title IV Programs if it offers more than 50% of its courses by
correspondence. The implementing regulations state that an institution is
ineligible for Title IV Programs if for its latest complete award year more than
50% of the institution's courses were correspondence courses or 50% or more of
the institution's students were enrolled in correspondence courses. Department
of Education regulations define a "telecommunications course" as a "course
offered in an award year principally through the use of television, audio, or
computer transmission, including open broadcast, closed circuit, cable,
microwave, or satellite, audio conferencing, computer conferencing, or video
cassette or discs." Accordingly, the courses the College currently offers
through the Internet constitute "telecommunications courses" under the
Department of Education regulations. If the combined number of correspondence
and telecommunications courses amount to greater than 50% of the institution's
course offerings that year, telecommunications courses are included among
correspondence courses for purposes of determining eligibility for participation
in Title IV Programs.

The current levels of correspondence and telecommunications course
offerings at the College are well within the regulatory guidelines for Title IV
eligibility. The College intends to expand the availability of on-line course
offerings in a manner consistent with applicable regulatory requirements. See
"Business -- Business Strategy."

CHANGE IN OWNERSHIP RESULTING IN A CHANGE OF CONTROL

Many states and accrediting agencies require institutions of higher
education to report or obtain approval of certain changes in ownership or other
aspects of institutional status, but the types of and triggers for such
reporting or approval vary among states and accrediting agencies. The D.C.
Commission may require an institution licensed by it to apply to amend its
license prior to a change in ownership. The applicable laws and regulations of
Virginia and Maryland do not specifically address reporting of changes in
ownership. The College's accrediting agency, Middle States, requires
institutions that it accredits to inform it in advance of any substantive
change, including a change that significantly alters the ownership or control of
the institution. Examples of substantive changes requiring advance notice to
Middle States include changes in the legal status, ownership or form of control
of the institution, such as the sale of a proprietary institution or the
beginning or ending of public sponsorship and control. Middle States must
approve a substantive change in advance in order to include the change in the
institution's accreditation status.

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Upon a change in ownership resulting in a change of control of the College,
as defined in the HEA and the Department of Education's regulations, the College
would lose its eligibility to participate in Title IV programs for an
indeterminate period of time while it applied to regain eligibility and would
thus be ineligible to receive Title IV funding during the reapproval period.
Department of Education regulations prevent an institution from avoiding a lapse
in its Title IV eligibility by applying to reestablish its eligibility before
the transfer of ownership and control is completed, although a transfer is
considered complete if it is otherwise final but subject to the condition of
subsequently obtaining approval from the Department of Education, the
accrediting agency or state regulatory authorities.

Based in part on advisory letters that the Department of Education, Middle
States and certain of the applicable state authorizing agencies issued in
connection with the Offering, the Company does not believe that the
Reorganization or the Offering will constitute a change in ownership resulting
in a change of control under these standards. Nevertheless, upon completion, the
Reorganization and the Offering must be reported to the Department of Education,
Middle States and applicable state licensing agencies, and the reporting could
subject the College to further review by any of those bodies.

The HEA and the Department of Education's regulations define a change in
ownership resulting in a change in control to include the transfer of a
controlling interest of common stock of an institution or its parent
corporation. For a publicly-traded corporation, such as the Company will be
after completion of the Offering, Department of Education regulations specify
that a change in ownership and control arises when the Securities and Exchange
Commission requires the corporation to report the change in control by filing a
Form 8-K.

The HEA and Department of Education regulations allow a change in ownership
upon the retirement or death of an owner to be treated as not resulting in a
change of control if it involves the sale or transfer of the owner's ownership
interest to a family member or to a person with an ownership interest who has
been involved in the management of the institution for at least two years.
District of Columbia, Virginia and Maryland law and Middle States policies do
not specifically address changes in ownership resulting from the retirement or
death of an owner. However, it is possible that one or more of these regulatory
bodies would consider such a change in ownership to be a substantive change that
must be reported by the institution and would require review or reauthorization
of the institution. Ron K. Bailey currently owns all of the College's
outstanding stock jointly with his wife, and after completion of the Offering
will continue to own his shares of the Company's outstanding Common Stock
jointly with his wife. If Mr. Bailey were to die, his wife would become the sole
owner of those shares. Although under current law the death of one or both of
Mr. and Mrs. Bailey may not be considered a change in ownership resulting in a
change of control for Department of Education reporting purposes, it is possible
that such a transfer would require reporting to, or review or reauthorization
by, one or more state licensing agencies or Middle States.

Under INS regulations, if a school that is approved to admit foreign
students changes ownership, approval will be automatically withdrawn 60 days
after the change of ownership unless the school files a new petition for school
approval within 60 days of that change of ownership. If, after conducting a
review, the INS district director finds that the school's approval should not be
continued, the district director must institute proceedings to withdraw the
school's approval.

If the College underwent a change that required reapproval by any state
authority, Middle States or any federal agency, and any required regulatory
approval were significantly delayed, limited or denied, there could be a
material adverse effect on the College's ability to offer certain educational
programs, award certain degrees or diplomas, operate one or more of its
locations, admit certain students or participate in Title IV programs, which in
turn would materially adversely affect the College's operations. A change that
required approval by a state regulatory authority, Middle States or a federal
agency could also delay the College's ability to establish new campuses or
educational programs and may have other adverse regulatory effects. Furthermore,
the disadvantage of undergoing a change of control may materially limit the
College's flexibility in future financings or acquisition transactions.

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VETERANS BENEFITS

Pursuant to federal law providing benefits for veterans and reservists, the
College is approved for education of veterans and members of the selective
reserve and their dependents by the state approving agency in each state in
which the College currently operates. The College is authorized to offer
educational programs to veterans and other eligible persons in the District of
Columbia and Virginia. The College expects to seek approval to offer educational
programs to veterans and other eligible persons in Maryland at an appropriate
time.

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MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

The following table sets forth certain information regarding the executive
officers, current director and persons nominated to become directors of the
Company:

<TABLE>
<CAPTION>
NAME AGE POSITION
- --------------------------------------------- --- ----------------------------------------------
<S> <C> <C>
Ron K. Bailey................................ 55 President, Treasurer and Director
Harry T. Wilkins............................. 39 Chief Financial Officer
Stanley G. Elmore............................ 55 Director Nominee
Todd A. Milano............................... 43 Director Nominee
Jennie D. Seaton............................. 66 Director Nominee
Roland Carey................................. 56 Director Nominee
Donald T. Benson............................. 53 Director Nominee
G. Thomas Waite, III......................... 45 Director Nominee
Donald Stoddard.............................. 59 Director Nominee
Charlotte Beason............................. 48 Director Nominee
</TABLE>

Ron K. Bailey is the President, Treasurer and a director of the Company.
Mr. Bailey has been the President and a trustee of the College since 1989 and
the President and a director of ELP since its formation in 1994. From 1980 to
1989, Mr. Bailey held a variety of administrative positions with the College,
including the position of Vice President of the College. Before assuming his
first full-time position with the College in 1980, Mr. Bailey was a part-time
faculty member of the College and served as Director of Data Processing of the
National Association of Home Builders.

Harry T. Wilkins is the Chief Financial Officer of the Company and has been
the Director of Financial Affairs of the College since 1992. Prior to joining
the College, Mr. Wilkins was a Director with the accounting firm of Wooden &
Benson, Chartered from 1984 to 1992 and a member of the consulting practice of
the accounting firm of Deloitte Touche (then Deloitte, Haskins and Sells) from
1979 to 1984. Mr. Wilkins is a Certified Public Accountant.

Stanley G. Elmore has been nominated and has agreed to serve as a director
of the Company upon the completion of the Offering. Mr. Elmore has been the
Chairman of the Board of Trustees of the College since 1989. Mr. Elmore has
served as Projects and Programs Manager, Citibank Mid-Atlantic, a position he
has held for more than five years.

Todd A. Milano has been nominated and has agreed to serve as a director of
the Company upon the completion of the Offering. Mr. Milano has been the Vice
Chairman of the Board of Trustees of the College since 1992. Mr. Milano has
served as President and Chief Executive Officer of Central Pennsylvania Business
School since 1989.

Dr. Jennie D. Seaton has been nominated and has agreed to serve as a
director of the Company upon the completion of the Offering. Dr. Seaton has been
a member of the Board of Trustees of the College since 1990. Dr. Seaton is
retired and was College Administrator of Virginia Commonwealth University from
1975 to 1994.

Roland Carey has been nominated and has agreed to serve as a director of
the Company upon the completion of the Offering. Mr. Carey has been a member of
the Board of Trustees of the College since 1990. Mr. Carey is an Instructor with
the Carl Sandburg School, a position he has held for more than five years.

Donald T. Benson has been nominated and has agreed to serve as a director
of the Company upon the completion of the Offering. Mr. Benson has been a member
of the Board of Trustees of the College since 1992. Mr. Benson has served as
Vice President, Human Resources, of Aetna Life Insurance Company since 1992.
From 1976 to 1992, Mr. Benson was Senior Vice President, Human Resources, of
Cigna Insurance Company.

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G. Thomas Waite, III has been nominated and has agreed to serve as a
director of the Company upon the completion of the Offering. Mr. Waite has been
a member of the Board of Trustees of the College since 1994. Mr. Waite has
served as Treasurer for the Humane Society of the United States since 1993. In
1992, Mr. Waite was the Director of Commercial Management of The National
Housing Partnership; from 1986 to 1991, he held the position of Senior Vice
President of Hurst Property Company. As a result of the insolvency of a real
estate partnership in which Mr. Waite served as a general partner, Mr. Waite
filed for protection from creditors under Chapter 11 of the Federal Bankruptcy
Code in 1993, which subsequently was converted to a Chapter 7 filing in 1993.

Dr. Donald Stoddard has been nominated and has agreed to serve as a
director of the Company upon the completion of the Offering. Dr. Stoddard has
been a member of the Board of Trustees of the College since 1995. Dr. Stoddard
is a Professor, Department of English, Anne Arundel Community College, a
position he has held since 1990. From 1979 to 1990, Dr. Stoddard was the
Coordinator, Collegiate Institutional Approval, of the Maryland Higher Education
Commission.

Dr. Charlotte Beason has been nominated and has agreed to serve as a
director of the Company upon the completion of the Offering. Dr. Beason has been
a member of the Board of Trustees of the College since 1995. Dr. Beason is an
Educational Consultant at the U.S. Department of Veterans Affairs/Health Care
Reform Office, a position she has held for more than five years.

Upon completion of the Offering, the director nominees shown in the table
above will begin service as directors of the Company, effective on that date.

Directors of the Company are elected at the annual meeting of stockholders
and serve until their successors are duly elected and qualified or until their
earlier resignation or removal. Executive officers serve at the discretion of
the Board of Directors.

CERTAIN SIGNIFICANT EMPLOYEES OF THE COLLEGE

The following information is supplied with respect to certain other
significant employees of the College:

Younes P. Benab, Ph.D., 59, is the Academic Dean of the College, a position
he has held since 1986.

J. Chris Toe, Ph.D., 41, is the Director, Graduate Programs of the College,
a position he has held since 1994. Dr. Toe joined the College in 1993 as an
adjunct professor, becoming a full-time professor in 1994. Prior to joining the
College, Dr. Toe was an independent consultant.

James F. McCoy, Jr., 37, is the Administrative Dean of the College, a
position he has held since 1994. Mr. McCoy previously was Finance Team Leader,
Phillips Colleges, in 1994; Vice President of Operations, Brenell Institute,
from 1992 to 1994; and Operations Manager, Phillips Colleges, from 1983 to 1992.

Marla Boulter, 41, is the College's Director of College Relations, a
position she has held since 1995. Ms. Boulter joined the College in 1990 as an
accountant and was the College's Director of Marketing from 1991 to 1995.

Don R. Anderson, 53, is the Director of Facilities of the College, a
position he has held since 1988.

Robert E. Farmer, 57, is the Director of Human Resources of the College, a
position he has held since 1995. Mr. Farmer was the Campus Coordinator of the
Arlington campus from 1992 until 1995, and was the Director of Admissions at
that campus from 1990 to 1992.

Piroj Piroolnuruk, 42, is the College's Director of Information Management,
a position he has held since 1992. Mr. Piroolnuruk was the College's coordinator
of Administrative Services from 1986 to 1992.

COMMITTEES OF THE BOARD OF DIRECTORS

Promptly following completion of the Offering, the Board of Directors will
establish an Audit Committee, an Executive Committee and a Compensation
Committee.

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<PAGE> 47

Audit Committee. The Audit Committee will consist of non-management
directors and will make recommendations concerning the engagement of independent
public accountants, review with the independent public accountants the plans and
results of the audit engagement, approve professional services provided by the
independent public accountants and review the adequacy of the Company's internal
accounting controls.

Executive Committee. The Executive Committee will consist of Mr. Bailey
and one or more non-management directors and will exercise such authority as is
delegated to it.

Compensation Committee. The Compensation Committee will consist of Mr.
Bailey and two non-management directors. The Compensation Committee will
determine the compensation of the Company's executive officers, subject to the
provisions of any employment agreements, and will administer the Company's 1996
Stock Option Plan. Mr. Bailey intends to abstain from participating in any
actions of the Compensation Committee affecting his compensation.

COMPENSATION OF THE BOARD OF DIRECTORS

Directors are reimbursed for expenses incurred in connection with their
attendance at Board and Committee meetings, but currently receive no
compensation for serving as directors.

EXECUTIVE COMPENSATION

The following table sets forth the compensation for the last completed
fiscal year paid to the College's Chief Executive Officer. No other executive
officer of the College received salary and bonus exceeding $100,000 in that
fiscal year.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
ANNUAL COMPENSATION
FISCAL ---------------------- ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS(1) COMPENSATION(2)
----------------------------------------- ------ -------- ---------- ---------------
<S> <C> <C> <C> <C>
Ron K. Bailey, President................. 1995 $150,000 $6,175,000 $ 3,181
</TABLE>

- ---------------
(1) The bonus was withheld for payments by Mr. Bailey in respect of income taxes
on undistributed S Corporation income. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Background and
Overview." Other compensation in the form of perquisites and other personal
benefits has been omitted because the aggregate amount of such perquisites
and other personal benefits constituted less than $50,000 or 10% of Mr.
Bailey's total annual salary and bonus.

(2) Reflects (i) $3,043 in matching contributions made by the College to the
College's 401(k) plan for Mr. Bailey and (ii) $138 in premiums paid by the
College for life insurance for Mr. Bailey.

No stock options were granted during the year ended December 31, 1995.

EXECUTIVE EMPLOYMENT AGREEMENTS

Mr. Bailey and the College have entered into an Employment Agreement,
effective as of the Offering closing date, which provides that Mr. Bailey will
serve as President and Chief Executive Officer of the College. For his services,
Mr. Bailey will receive an initial annual salary of $150,000. According to the
terms of the Employment Agreement, Mr. Bailey's salary for successive years may
be increased at the discretion of the College's Board of Trustees. The College
does not currently contemplate payment of bonuses to Mr. Bailey. Future bonuses,
if any, paid to Mr. Bailey will be awarded pursuant to guidelines approved by
the Compensation Committee of the Company's Board of Directors and will be at
levels commensurate with any bonuses paid to other executive officers. The
Employment Agreement provides that in the event that Mr. Bailey's employment is
terminated by the Board of Trustees, Mr. Bailey will be entitled to severance
benefits equal to the amount of his most recent annual salary. The agreement
contains a covenant restricting Mr. Bailey from competing with the College for
three years after the termination of employment.

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<PAGE> 48

The College also has entered into an employment agreement with Mr. Harry T.
Wilkins, Chief Financial Officer of the Company, effective as of the Offering
closing date, which provides for a severance payment equal to one year's salary
if Mr. Wilkins is terminated other than for cause (as defined in the agreement).
The employment agreement also contains a covenant restricting Mr. Wilkins from
competing with the College for three years after the termination of his
employment.

STOCK OPTION PLAN

The Company's 1996 Stock Option Plan (the "Plan") provides for the grant of
options that are intended to qualify as "incentive stock options" under Section
422 of the Internal Revenue Code of 1986, and for grant of non-qualifying
options to directors and employees of the Company. The Plan authorizes the
issuance of up to 1,000,000 Shares pursuant to options granted under the Plan
(subject to anti-dilution adjustments in the event of a stock split,
recapitalization or similar transaction). The Compensation Committee of the
Board of Directors will administer the Plan and will grant options to purchase
Shares.

It is anticipated that options to purchase 700,000 Shares at the initial
public offering price will be granted to employees eligible to participate in
the 401(k) Plan and for all Directors, except for Mr. Bailey, who will not
receive any options under the initial grant. Harry T. Wilkins, the Company's
Chief Financial Officer, will receive options to acquire 200,000 Shares under
the initial grant. All such options will be exercisable at a price equal to the
initial public offering price. Options granted will vest with respect to
one-third of the Shares subject to the option on each of the first, second and
third anniversaries of the date of grant. The options will expire on the fifth
anniversary of the date of grant.

The option exercise price for incentive stock options granted under the
Plan may not be less than 100% of the fair market value of the Shares on the
date of grant of the option (or 110% in the case of an incentive stock option
granted to an optionee beneficially owning more than 10% of the outstanding
Shares). The option exercise price for non-incentive stock options granted under
the Plan may not be less than 100% of the fair market value of the Shares on the
date of grant of the option. The maximum option term is ten years (or five years
in the case of an incentive stock option granted to an optionee beneficially
owning more than 10% of the outstanding Shares). Options may be exercised at any
time after grant, except as otherwise provided in the particular option
agreement. Options covering no more than 500,000 Shares may be granted to any
officer or other employee during the term of the Plan. There is also a $100,000
limit on the value of Shares (determined at the time of grant) covered by
incentive stock options that first become exercisable by an optionee in any
calendar year.

Options granted under the Plan are not transferable and may be exercised
only by the optionee during his or her lifetime. If any optionee's employment
with the Company terminates by reason of death or permanent and total
disability, the optionee's options, whether or not then exercisable, may be
exercised within one year after such death or disability unless otherwise
provided in the option agreement (but not later than the date the option would
otherwise expire). If the optionee's employment terminates for any reason other
than death or disability, options held by such optionee terminate upon such
termination unless otherwise provided in the option agreement or approved by the
Compensation Committee (but not later than the date the option would otherwise
expire). The Compensation Committee may extend the period during which the
option may be exercised (but not later than the date the option would otherwise
expire) by so providing in the option agreement. The options will terminate
within a specified time after the optionee's termination of employment with the
Company.

The Plan provides for formula grants of options to non-employee directors
(an "Eligible Director"). Each Eligible Director at the time of the initial
public offering will be granted an initial option to purchase a number of shares
of Common Stock equal to 1,000 times the number of years the Eligible Director
has served as a director of the Company. Each Eligible Director will also be
granted an additional option to purchase 1,000 shares of Common Stock
immediately after each of the subsequent annual meetings of the Company's
stockholders if the Eligible Director continues to be an Eligible Director.
Options granted to Eligible Directors under the Plan may be exercised with
respect to the shares subject to such option one year after the option is
granted. All options expire five years after the date of grant.

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<PAGE> 49

Upon any dissolution or liquidation of the Company, or upon a
reorganization, merger or consolidation in which the Company is not the
surviving corporation, or upon the sale of all or substantially all of the
assets of the Company to another corporation, or upon any transaction approved
by the Board of Directors which results in any person or entity owning 80% or
more of the total combined voting power of all classes of stock of the Company,
the Plan and the options issued thereunder will terminate, unless provision is
made in connection with such transaction for the continuation of the Plan and/or
the assumption of the options or for the substitution for such options of new
options covering the stock of a successor corporation or a parent or subsidiary
thereof, with appropriate adjustments as to the number and kinds of Shares and
the per Share exercise price. In the event of such termination, all outstanding
options will be exercisable in full during such period immediately prior to the
occurrence of such termination as the Board of Directors in its discretion will
determine.

The Board of Directors may amend the Plan with respect to Shares as to
which options have not been granted. However, the Company's stockholders must
approve any amendment that would: (i) change the requirements as to eligibility
to receive options; (ii) materially increase the benefits accruing to
participants under the Plan; or (iii) materially increase the number of Shares
that may be sold pursuant to options granted under the Plan (except for
adjustments upon changes in capitalization).

401(k) PLAN

The College maintains a retirement plan (the "401(k) Plan") intended to
qualify under Sections 401(a) and 401(k) of the Internal Revenue Code of 1986.
The 401(k) Plan is a defined contribution plan that covers all full-time
employees of the College of at least 21 years of age, employed by the College
for at least one year. Employees may contribute up to 10% of their annual wages
(subject to an annual limit prescribed by the Code) as pretax, salary deferral
contributions. The College may, in its discretion, match employee contributions
up to a maximum of 15% of annual wages. The College's contributions to the
401(k) Plan for the year ended December 31, 1995 and the three months ended
March 31, 1996 were $94,000 and $0, respectively. As of March 31, 1996, 147 of
the College's current employees were participants in the 401(k) Plan.

CERTAIN TRANSACTIONS

LEASE OF CAMPUS FACILITIES

The College currently leases the facilities of five of its eight campuses
from corporations of which Ron K. Bailey, President and a director of the
Company, is the sole stockholder, a director and an executive officer. The
College from time to time has made distributions to the Current Stockholders in
amounts sufficient to provide the equity necessary for campus acquisitions by
Mr. Bailey. See "Dividend Policy." Such distributions totaled $2.0 million in
1993, $2.8 million in 1994, $3.4 million in 1995 and $650,000 in the three
months ended March 31, 1996. Prior to the Offering, Mr. Bailey pursued a
strategy of purchasing campus facilities in order to avoid the incurrence of
debt by the College. Generally, Mr. Bailey obtained mortgage financing for
acquisition of the facilities and the College entered into long-term leases
obligating it to make monthly rent payments approximately equal to the mortgage
payments and other property-specific expenses. Each lease provided that the
College would have the right to purchase the applicable campus, at the fair
value of such facility as determined by an independent appraisal, in the event
of Mr. Bailey's death. In contemplation of the Offering, and effective as of the
Offering closing date, the parties amended the terms of the leases to reflect
current market conditions. Management believes these terms are at least as
favorable to the College as the

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<PAGE> 50

College could obtain from unaffiliated parties. The following table sets forth
certain information regarding the leases as amended.

<TABLE>
<CAPTION>
GROSS ANNUAL
LEASABLE BASE
CAMPUS LANDLORD AREA(1) RENT(2)
----------------------------------- --------------------------------- -------- --------
<S> <C> <C> <C>
Fredericksburg..................... Fredericksburg Investments, Inc. 17,500 $297,840
Manassas........................... Battleview Investments, Inc. 20,800 353,600
Takoma Park........................ Beacon Investments, Inc. 21,800 370,900
Washington, D.C. .................. Central Investments, Inc. 30,000 750,000
Woodbridge......................... Potomac Investments, Inc. 20,800 353,600
</TABLE>

- ---------------
(1) Square feet.

(2) Subject to annual adjustment based on increases in the Consumer Price Index.

Each of the foregoing leases as amended has a ten-year term expiring in
2006, with three five-year renewal terms. The College has the option under each
lease to purchase the related campus facility at any time during the term of the
lease at the fair market value of such facility as determined by an independent
appraiser. No proceeds of the Offering will be used to purchase any such campus
facility.

The following table sets forth information regarding total annual payments
by the College under the foregoing leases during the periods indicated.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, THREE MONTHS
------------------------------------ ENDED
CAMPUS 1993 1994 1995 MARCH 31, 1996
-------------------------------------- -------- ---------- ---------- --------------
<S> <C> <C> <C> <C>
Fredericksburg........................ $336,000 $ 420,000 $ 474,000 $118,000
Manassas.............................. -- 49,000 396,000 99,000
Takoma Park........................... 160,000 240,000 240,000 60,000
Washington, D.C. ..................... -- 310,000 744,000 187,000
Woodbridge............................ -- -- 42,000 126,000
-------- ---------- ---------- -----------
Total....................... $496,000 $1,019,000 $1,896,000 $590,000
======== ========= ========= ===========
</TABLE>

Prior to entering into its current lease for the Washington, D.C. campus,
the College leased that facility from 817 Fourteenth Street Associates Limited
Partnership. Mr. Bailey owned a 10% limited partnership interest in such entity.
The College made lease payments to such entity of $550,000 and $320,000 in 1993
and 1994, respectively.

The College may lease additional campus facilities from entities owned or
controlled by Mr. Bailey. Any such leases will have market terms based on an
independent appraisal and will be subject to approval by a majority of the
Company's independent directors.

TRANSACTIONS WITH ELP

Educational loans under the SEL Program are purchased from the College and
serviced by ELP. See "Business -- SEL Program." Ron K. Bailey, President and a
director of the Company, has been the sole stockholder, a director and an
executive officer of ELP. In the year ended December 31, 1995 and the three
months ended March 31, 1996, ELP purchased loans from the College at 92% of
their principal amount (the 8% discount reflecting ELP's estimated loan losses
and loan servicing costs) for approximately $1.4 million and $650,000,
respectively. The College provided ELP office space on a rent-free basis in 1995
and the three months ended March 31, 1996. Upon completion of the Offering, ELP
will become a wholly-owned subsidiary of the Company.

ELP carries its loan receivables at the stated amount of unpaid principal,
reduced by unamortized purchase discount and an allowance for loan losses. Loans
receivable are charged against the allowance for losses when management believes
that the collectibility of the loans is unlikely. The allowance, which
approximated $22,000 as of March 31, 1996, is an amount that management believes
will be adequate to

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<PAGE> 51

absorb possible losses on existing loans that may become uncollectible, based on
evaluation of the existing loan portfolio and prior experience. The evaluation
takes into account such factors as changes in nature and volume of the
portfolio, overall portfolio quality, review of specific problem receivables,
and current economic conditions that may affect the borrowers' ability to pay.
ELP has not incurred significant losses from uncollectible loans receivable
since it commenced operations.

A portion of the distributions made by the College to the Current
Stockholders has been applied to fund ELP's operations. See "Dividend Policy."
In April 1996, ELP paid Mr. Bailey $960,000 as a return of capital previously
contributed by Mr. Bailey to fund ELP's purchase of loans under the SEL Program.
This amount was not required by ELP because the volume of loan originations
under the SEL Program was less than the College originally had budgeted.

TRANSACTIONS WITH PRK INVESTMENTS, INC.

The College has retained PRK Investments, Inc. ("PRK") to provide it with a
variety of services related to the College's compliance with the HEA and
Department of Education regulations applicable to Title IV Programs. See
"Licensing, Accreditation and Financial Aid Regulation -- Financial Aid
Regulation -- Administrative Capacity." Two-thirds of the PRK common stock is
owned by children of Ron K. Bailey, President and a director of the Company. The
College paid PRK approximately $70,000 and $154,000 for its services in 1995 and
the three months ended March 31, 1996, respectively. Pursuant to a contract with
PRK, the College made monthly payments of $20,000 to PRK for these services
through May 15, 1996. Beginning May 16, 1996, the services performed by PRK for
the College are performed by employees of ELP on the same terms as those under
the PRK contract. The College provided PRK office space on a rent-free basis in
1995 and the three months ended March 31, 1996.

TRANSACTIONS WITH CAREER TRAINING INSTITUTE, INC.

College faculty and other employees have received computer-related
instruction and training in other occupational skills from Career Training
Institute, Inc. ("CTI"). Eighty percent of the CTI common stock is owned by
children of Ron K. Bailey, President and a director of the Company. The College
paid CTI approximately $8,000, $75,000 and $17,000 for its services in 1994,
1995 and the three months ended March 31, 1996, respectively. Management
believes that CTI has provided such services to the College on terms at least as
favorable to the College as the College could obtain from unaffiliated parties.
The Company believes that the instruction provided by CTI is not competitive
with the current programs of the College.

REORGANIZATION TRANSACTIONS

In connection with the Offering, the Company will effect the Reorganization
pursuant to which, among other things, the Company will acquire the College and
ELP. See "Reorganization" and "Use of Proceeds."

Prior to completion of the Offering, the Company will enter into a Tax
Indemnification Agreement with the Current Stockholders in consideration of
their consent to the termination of the College's election to be treated as an S
Corporation and to the use of the closing of the books method. See
"Reorganization -- Termination of S Corporation Status." Pursuant to the Tax
Indemnification Agreement, the Company will agree to make additional payments to
the Current Stockholders equal to approximately 43% of any amount by which the
actual taxable income allocable to the Current Stockholders for the 1996 S
Corporation period (as determined for federal income tax purposes) exceeds the
amount previously estimated to be allocable to the Current Stockholders for such
period (and the Current Stockholders will agree to reimburse the Company if they
receive payments in excess of approximately 43% of such actual taxable income).
Management does not believe any payments which would likely be made under the
Tax Indemnification Agreement would have a material effect on the Company's
financial condition.

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<PAGE> 52

PRINCIPAL STOCKHOLDERS

The following table sets forth certain information regarding the beneficial
ownership of Common Stock prior to and upon completion of the Offering of each
person known by the Company to be the beneficial owner of more than 5% of the
outstanding Common Stock. Except as set forth below, no director, director
nominee or executive officer of the Company beneficially owns any of the
outstanding Common Stock.

<TABLE>
<CAPTION>
PERCENT OF CLASS
AMOUNT OF --------------------
NAME OF BENEFICIAL BEFORE AFTER
BENEFICIAL OWNERS OWNERSHIP OFFERING OFFERING
--------------------------------------------------------- ---------- -------- --------
<S> <C> <C> <C>
Ron K. Bailey and Beverly W. Bailey(1)................... 6,000,000 100% 66.7%
</TABLE>

- ---------------

(1) Prior to the Reorganization, which will be consummated upon completion of
the Offering, Mr. and Mrs. Bailey owned 100% (1,000 shares) of the Common
Stock, as joint tenants with a right of survivorship. In connection with
the Reorganization, Mr. and Mrs. Bailey will acquire 5,999,000 shares of
Common Stock in exchange for 100% of the outstanding capital stock of the
College. See "Reorganization -- Formation of Holding Company."

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<PAGE> 53

DESCRIPTION OF CAPITAL STOCK

The Company's Certificate of Incorporation (the "Charter") authorizes the
Company to issue 20,000,000 shares of Common Stock, $.01 par value, and
5,000,000 shares of Preferred Stock, $.01 par value. On the date of this
Prospectus, the Company has 1,000 shares of Common Stock and no shares of
Preferred Stock outstanding. Upon completion of the Offering and the
Reorganization, there will be 9,000,000 shares of Common Stock outstanding,
including an additional 5,999,000 Shares issued to the Current Stockholders,
plus options to acquire up to 700,000 Shares.

COMMON STOCK

Each holder of Common Stock is entitled to one vote per share on all
matters to be voted upon by the stockholders. Stockholders do not have
cumulative voting rights in the election of directors. Subject to preferences
that may be applicable to any outstanding Preferred Stock, the holders of Common
Stock are entitled to receive ratably such dividends, if any, as may be declared
from time to time by the Board of Directors out of funds legally available
therefor. The Company presently intends to pay regular cash dividends on its
Common Stock. See "Dividend Policy." In the event of a liquidation, dissolution
or winding up of the Company, the holders of Common Stock are entitled to share
ratably in all assets remaining after payment of liabilities, subject to prior
distribution rights of Preferred Stock, if any, then outstanding. The Common
Stock has no preemptive or conversion rights or other subscription rights. All
outstanding shares of Common Stock are, and the Shares of Common Stock offered
hereby will be, when issued and paid for, duly authorized, validly issued, fully
paid and non-assessable. As of the date of this Prospectus, the Current
Stockholders hold all of the outstanding Common Stock.

PREFERRED STOCK

The Company is authorized to issue 5,000,000 shares of undesignated
Preferred Stock. The Board of Directors has the authority to issue the
undesignated Preferred Stock from time to time in one or more series and to
establish the rights, preferences, privileges and restrictions granted to or
imposed upon any wholly unissued shares of undesignated Preferred Stock and to
fix the number of shares constituting any series and the designation of such
series, without any further vote or action by the stockholders. Any future
issuance of Preferred Stock may have the effect of delaying, deferring or
preventing a change in control of the Company without further action by the
stockholders and may adversely affect the voting and other rights of the holders
of Common Stock. At present, the Company has no plans to issue any Preferred
Stock.

CERTAIN CHARTER AND BY-LAW PROVISIONS

Stockholders' rights and related matters are governed by Maryland law, the
Company's Charter and its bylaws. Certain provisions of the Charter and bylaws
of the Company, which are summarized below, may make it more difficult to change
the composition of the Company's Board of Directors and may discourage or make
more difficult any attempt by a person or group to obtain control of the
Company.

Voting Requirements. The Company's Charter may not be amended without the
affirmative vote of a majority of the shares entitled to vote generally in the
election of directors, voting as a single voting group. The Company's bylaws may
be amended either by the affirmative vote of a majority of all shares
outstanding and entitled to vote generally in the election of directors, voting
as a single group, or by an affirmative vote of a majority of the Company's
directors then holding office, unless the stockholders prescribe that any such
bylaw may not be amended or repealed by the Board of Directors.

Special Meetings. Under the Company's bylaws, special meetings of the
stockholders may be called by stockholders only if such stockholders hold
outstanding shares representing at least 25% of all votes entitled to be cast on
any issue proposed to be considered at any such special meeting.

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<PAGE> 54

LIMITATION OF LIABILITY

Under Maryland law a corporation formed in Maryland is permitted to limit,
by provision in its charter, the liability of directors and officers so that no
director or officer of the Company shall be liable to the Company or to any
stockholder for money damages except to the extent that (i) the director or
officer actually received an improper benefit in money, property or services,
for the amount of the benefit or profit in money, property or services actually
received, or (ii) a judgment or other final adjudication adverse to the director
or officer is entered in a proceeding based on a finding in a proceeding that
the director's or officer's action was the result of active and deliberate
dishonesty and was material to the cause of action adjudicated in the
proceeding. The Company's Charter has incorporated the provisions of this law
limiting the liability of directors and officers.

The Company's bylaws require it to indemnify (a) any present or former
director or officer who has been successful, on the merits or otherwise, in the
defense of a proceeding to which he was made a party by reason of his service in
that capacity, against reasonable expenses incurred by him in connection with
the proceeding and (b) any present or former director or officer against any
claim or liability unless it is established that (i) his act or omission was
committed in bad faith or was the result of active or deliberate dishonesty,
(ii) he actually received an improper personal benefit in money, property or
services or (iii) in the case of a criminal proceeding, he had reasonable cause
to believe that his act or omission was unlawful. In addition, the Company's
bylaws require it to pay or reimburse, in advance of final disposition of a
proceeding, reasonable expenses incurred by a present or former director or
officer made a party to a proceeding by reason of his service as a director or
officer provided that the Company shall have received (1) a written affirmation
by the director or officer of his good faith belief that he has met the standard
of conduct necessary for indemnification by the Company as authorized by the
bylaws and (2) a written understanding by or on his behalf to repay the amount
paid or reimbursed by the Company if it shall ultimately be determined that the
standard of conduct was not met. The Company's bylaws also (i) provide that any
indemnification or payment or reimbursement of the expenses permitted by the
bylaws shall be furnished in accordance with the procedures provided for
indemnification and payment of expenses under Section 2-418 of the Maryland
General Corporation Law for directors of Maryland corporations and (ii) permit
the Company such other and further indemnification or payment or reimbursement
of expenses as may be permitted under Section 2-418 of the Maryland General
Corporation Law for directors of Maryland corporations.

CORPORATE ANTI-TAKEOVER PROVISIONS

The Company has elected to include in its Charter provisions exempting it
from the application of the Maryland business combination statute and control
share acquisition statute.

TRANSFER AGENT AND REGISTRAR

The Transfer Agent and Registrar for the Common Stock is American
Securities Transfer, Incorporated.

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<PAGE> 55

SHARES ELIGIBLE FOR FUTURE SALE

Prior to the Offering, there has been no market for the Common Stock. Sales
of substantial amounts of Common Stock in the public market after the Offering
could adversely affect the market price of the Common Stock.

Upon completion of the Offering, the Company will have 9,000,000 shares of
Common Stock outstanding (9,450,000 if the Underwriters' over-allotment option
is exercised in full), excluding 700,000 shares issuable upon exercise of
options held by employees of the Company. Of these shares, the 3,000,000 shares
of Common Stock offered hereby will be freely transferable without restriction
or further registration under the Securities Act, unless purchased by
"affiliates" of the College as that term is defined in Rule 144 under the
Securities Act. All the remaining shares of Common Stock, consisting of the
6,000,000 shares which will be held by the Current Stockholders upon completion
of the Offering, are "restricted securities" within the meaning of Rule 144. The
Company and the Current Stockholders have agreed with Legg Mason Wood Walker,
Incorporated, the Representative of the Underwriters, not to sell or otherwise
dispose of any shares of Common Stock, or any securities convertible into or
exercisable or exchangeable for shares of Common Stock (subject, in the case of
the Company, to an exception for the grant of options under the Company's stock
option plan), for a period of 180 days after the date of this Prospectus without
the consent of the Representative. With the consent of the Representative, such
shares may be sold before expiration of the 180-day period without prior notice
to the Company's other stockholders or to any public market in which the Common
Stock trades. Commencing 90 days after the date of this Prospectus, and subject
to such consent, all but 1,000 of the 6,000,000 shares owned by the Current
Stockholders will be immediately eligible for sale in the public market subject
to compliance with the volume and other restrictions of Rule 144.

In general, under Rule 144 as currently in effect, a person (or persons
whose shares are aggregated), including persons deemed to be affiliates of the
Company, who has beneficially owned shares for at least a two-year period (as
computed under Rule 144) is entitled to sell within any three-month period
commencing 90 days from the date of this Prospectus a number of shares that does
not exceed the greater of (i) 1% of the then outstanding Common Stock (90,000
shares after giving effect to the Offering) or (ii) the average weekly trading
volume in the Common Stock during the four calendar weeks preceding filing of
notice of such sale, and may only sell such shares through unsolicited brokers'
transactions or transactions with a market maker. Sales under Rule 144 are also
subject to certain requirements as to the manner of sale, notice and the
availability of current public information about the Company. However, a person
who is not an affiliate of the issuer for at least 90 days and who has
beneficially owned such shares for at least three years is entitled under Rule
144(k) to sell such shares without regard to the volume or other resale
requirements described above. In addition, Rule 144A under the Securities Act
permits, subject to certain conditions, the sale by the current holders of
restricted securities of all or a portion of their shares to certain "qualified
institutional buyers" as defined in Rule 144A.

The Company is unable to estimate the number of shares of Common Stock that
will be sold under Rule 144 or otherwise because this will depend in part on the
market price for the Common Stock, the personal circumstances of the sellers and
other factors.

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<PAGE> 56

UNDERWRITING

Subject to the terms and conditions of the Underwriting Agreement, a copy
of which has been filed as an exhibit to the Registration Statement of which
this Prospectus is a part, the Underwriters named below have agreed, severally
and not jointly, through Legg Mason Wood Walker, Incorporated, the
Representative of the Underwriters, to purchase from the Company, and the
Company has agreed to sell to the Underwriters, the numbers of Shares set forth
opposite the name of the respective Underwriter at the Price to Public less the
Underwriting Discount set forth on the cover page of this Prospectus:

<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITER SHARES
--------------------------------------------------------------- ------------
<S> <C>
Legg Mason Wood Walker, Incorporated...........................
------------
Total.....................................................
============
</TABLE>

The Underwriting Agreement provides that the obligations of the
Underwriters are subject to certain conditions precedent and that the
Underwriters will purchase all of the Shares offered hereby if any of the Shares
are purchased.

The Underwriters have advised the Company that they propose to offer all or
a part of the Shares offered hereby directly to the public at the Price to
Public set forth on the cover page of this Prospectus, that they may offer
Shares to certain dealers at a price which represents a concession of per
Share, and that they may allow, and such dealers may reallow, a concession of
not more than per Share to certain other dealers. After the commencement
of the Offering, the Price to Public and the concessions may be changed.

The Company has granted the Underwriters a 30-day option to purchase up to
450,000 additional number of Shares at the Price to Public less the Underwriting
Discount set forth on the cover page of this Prospectus. The Underwriters may
exercise the option only to cover over-allotments, if any, in connection with
the offering of the Shares made hereby. To the extent the Underwriters exercise
the option, each of the Underwriters will have a firm commitment, subject to
certain conditions, to purchase approximately the same percentage of additional
Shares of Common Stock as the number of Shares set forth opposite that
Underwriter's name in the preceding table bears to the total number of Shares
listed in such table.

The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act, and to contribute
to payments the Underwriters may be required to make in respect thereof.

The Current Stockholders and the Company each have agreed with the
Representative of the Underwriters not to sell or otherwise dispose of any
shares of Common Stock, or any securities convertible into or exercisable or
exchangeable for shares of Common Stock (subject, in the case of the Company, to
an exception for the grant of options under the Company's stock option plan),
for a period of 180 days after the date of this Prospectus without the written
consent of the Representative. See "Shares Eligible for Future Sale."

The Representative of the Underwriters has advised the Company that the
Underwriters do not intend to confirm sales to any account over which they
exercise discretionary authority.

Prior to the Offering, there has been no public market for the Common
Stock. The initial public offering price for the Common Stock will be determined
by negotiation between the Company and the Representative of the Underwriters.
Among the factors to be considered in such negotiations are prevailing market
conditions, the results of operations of the Company in recent periods, the
market capitalizations and stages of

55
<PAGE> 57

development of other companies which the Company and the Representative of the
Underwriters believe to be comparable to the Company, estimates of the business
potential of the Company, the present state of the Company's development and
other factors deemed relevant. The anticipated initial public offering price set
forth on the cover of this Prospectus is subject to change as a result of market
conditions and other factors.

Legg Mason Wood Walker, Incorporated may perform financial services for the
Company or the College from time to time.

LEGAL MATTERS

The legal validity of the shares of Common Stock offered hereby will be
passed upon for the Company by Hogan & Hartson L.L.P., Baltimore, Maryland.
Certain legal matters will be passed upon for the Underwriters by Shaw, Pittman,
Potts & Trowbridge (a partnership including professional corporations),
Washington, D.C.

EXPERTS

The balance sheet of Strayer Education, Inc. as of May 15, 1996 and the
balance sheets of Strayer College, Inc. as of December 31, 1995 and 1994 and the
related statements of income, stockholders' equity and cash flows for each of
the three years in the period ended December 31, 1995, included in this
Prospectus have been included herein in reliance upon the reports of Coopers &
Lybrand L.L.P., independent public accountants, given upon the authority of that
firm as experts in accounting and auditing. The report for Strayer College, Inc.
includes an explanatory paragraph relating to the restatement of certain
payments to the Current Stockholders.

ADDITIONAL INFORMATION

A Registration Statement on Form S-1, including amendments thereto,
relating to the Common Stock offered hereby has been filed by the Company with
the Securities and Exchange Commission (the "Commission"). This Prospectus does
not contain all the information set forth in the Registration Statement and the
exhibits and schedules thereto, certain parts of which are omitted pursuant to
the rules and regulations of the Commission. Statements contained in this
Prospectus as to the contents of any contract or any other document referred to
are not necessarily complete and in each instance reference is made to the copy
of such contract or other document filed as an exhibit to the Registration
Statement, each such statement being qualified in all respects by such
reference. For further information with respect to the Company and the Common
Stock offered hereby, reference is hereby made to the Registration Statement and
the exhibits and schedules thereto. A copy of the Registration Statement may be
inspected by anyone without charge and may be obtained at prescribed rates at
the Commission at the Public Reference Section of the Commission, maintained by
the Commission at its principal office located at 450 Fifth Street, N.W.,
Washington, D.C. 20549, the Northeast Regional Office located at Seven World
Trade Center, Suite 1300, New York, New York 10048, and the Midwest Regional
Office located at 500 West Madison Street, Suite 1400, Chicago, Illinois 60661.

56
<PAGE> 58

STRAYER EDUCATION, INC.
INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
STRAYER EDUCATION, INC.
Report of Independent Accountants.................................................. F- 2
Balance Sheet as of May 15, 1996................................................... F- 3
Notes to Financial Statement....................................................... F- 4
STRAYER COLLEGE, INC.
Report of Independent Accountants.................................................. F- 5
Balance Sheets as of December 31, 1994 and 1995 and March 31, 1996 (unaudited)..... F- 6
Statements of Income for each of the three years in the period ended December 31,
1995 and for the three months ended March 31, 1995 and 1996 (unaudited)......... F- 7
Statements of Stockholders' Equity for each of the three years in the period ended
December 31, 1995 and for the three months ended March 31, 1996 (unaudited)..... F- 8
Statements of Cash Flows for each of the three years in the period ended December
31, 1995 and for the three months ended March 31, 1995 and 1996 (unaudited)..... F- 9
Notes to Financial Statements...................................................... F-10
</TABLE>

F-1
<PAGE> 59

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Stockholders
Strayer Education, Inc.

We have audited the accompanying balance sheet of Strayer Education, Inc.
as of May 15, 1996. This financial statement is the responsibility of the
Company's management. Our responsibility is to express an opinion on this
financial statement based on our audit.

We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statement referred to above presents fairly,
in all material respects, the financial position of Strayer Education, Inc. as
of May 15, 1996, in conformity with generally accepted accounting principles.

COOPERS & LYBRAND L.L.P.

Washington, D.C.
May 15, 1996

F-2
<PAGE> 60

STRAYER EDUCATION, INC.
BALANCE SHEET
MAY 15, 1996

<TABLE>
<S> <C>
ASSETS
Cash................................................................................ $1,000
------
Total Assets.............................................................. $1,000
======
STOCKHOLDERS' EQUITY
Stockholders' Equity:
Preferred stock, 5,000,000 shares authorized; no shares issued or outstanding..... $ --
Common stock, par value $.01, 20,000,000 shares authorized; 1,000 shares issued
and outstanding................................................................ 10
Additional paid-in capital.......................................................... 990
------
Total stockholders' equity................................................ $1,000
======
</TABLE>

The accompanying notes are an integral part of this statement.

F-3
<PAGE> 61

STRAYER EDUCATION, INC.
NOTES TO FINANCIAL STATEMENT
MAY 15, 1996

1. ORGANIZATION

Strayer Education, Inc. (Company) was formed on May 10, 1996, as a Maryland
corporation, and was capitalized on May 15, 1996 with cash of $1,000. The
Company has not yet commenced operations.

2. INITIAL PUBLIC OFFERING AND PENDING ACQUISITION

The Company is currently undertaking an initial public offering of its
common stock. Pursuant to the offering, the Company will offer 3,000,000 shares
of its common stock for sale to the public. Prior to the closing of the
offering, the Company will exchange 5,999,000 shares of its common stock for
100% of the outstanding common stock of Strayer College, Inc. (the College). The
College is a proprietary accredited institution of higher education that
provides undergraduate and graduate degrees in various fields of study through
its eight campuses in the District of Columbia and Virginia. The Company will
set aside an additional 1,000,000 shares of common stock for the establishment
of a stock option plan.

3. SUBSEQUENT EVENT

Contemporaneously with the closing of the initial public offering, the
Company intends to acquire Education Loan Processing Inc. (ELP) at a purchase
price equal to ELP's net book value ($1,200,000 as of March 31, 1996) at the
date of acquisition. ELP is wholly owned by a stockholder of the Company and was
established to purchase and service student loans from the College. Under
generally accepted accounting principles, ELP's basis in its assets and
liabilities will be carried over to the Company in a manner similar to a pooling
of interests, because this acquisition is a combination of entities under common
control.

F-4
<PAGE> 62

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Trustees and Stockholders
Strayer College, Inc.

We have audited the accompanying balance sheets of Strayer College, Inc. as
of December 31, 1994 and 1995, and the related statements of income,
stockholders' equity and cash flows for each of the three years in the period
ended December 31, 1995. These financial statements are the responsibility of
the College's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Strayer College, Inc. as of
December 31, 1994 and 1995, and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 1995, in conformity
with generally accepted accounting principles.

As discussed in Note 9 to the financial statements, the accompanying
statements of income, stockholders' equity and cash flows for the years ended
December 31, 1993 and 1994 have been restated.

COOPERS & LYBRAND L.L.P.

Washington, D.C.
May 14, 1996

F-5
<PAGE> 63

STRAYER COLLEGE, INC.
BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
DECEMBER 31, PRO FORMA
------------------ MARCH 31, MARCH 31,
1994 1995 1996 1996
------- ------- ----------- -----------
(UNAUDITED) (UNAUDITED
NOTE 2)
<S> <C> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents......................... $ 5,564 $ 8,083 $11,544 $ 9,444
Investments in marketable securities available for
sale, at market................................ 898 1,244 725 725
Short-term investments -- restricted.............. 403 720 778 778
Tuition receivable, net of allowances for doubtful
accounts of $135, $155, and $189,
respectively................................... 8,813 7,873 7,861 7,861
Due from related parties.......................... -- 189 326 326
Inventories....................................... 546 725 718 718
Other current assets.............................. 197 -- -- --
------ ------ ------ ------
Total current assets...................... 16,421 18,834 21,952 19,852
Property and equipment, net....................... 2,400 2,874 2,867 2,867
Investments in marketable securities available for
sale, at market................................ 925 1,890 3,491 3,491
Other assets...................................... 78 72 72 72
------ ------ ------ ------
Total assets.............................. $19,824 $23,670 $28,382 $26,282
====== ====== ====== ======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Trade accounts payable............................ $ 580 $ 344 $ 603 $ 603
Accrued expenses.................................. 458 536 710 710
Unearned tuition.................................. 9,391 9,504 9,423 9,423
Other current liabilities......................... 58 133 307 307
Distribution payable to stockholders.............. 14,042
------ ------ ------ ------
Total current liabilities................. 10,487 10,517 11,043 25,085
------ ------ ------ ------
Commitments and contingencies
Stockholders' Equity:
Common stock, par value $10.00; 500 shares
authorized; 375.5 shares issued and
outstanding.................................... 4 4 4 4
Retained earnings................................. 9,376 13,002 17,080 938
Net unrealized (losses) gains on investments...... (43) 147 255 255
------ ------ ------ ------
Total stockholders' equity................ 9,337 13,153 17,339 1,197
------ ------ ------ ------
Total liabilities and stockholders'
equity.................................. $19,824 $23,670 $28,382 $26,282
====== ====== ====== ======
</TABLE>

The accompanying notes to financial statements are an integral part of these
statements.

F-6
<PAGE> 64

STRAYER COLLEGE, INC.
STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
FOR THE THREE
FOR THE YEAR ENDED DECEMBER MONTHS ENDED MARCH
31, 31,
----------------------------- ------------------
1993 1994 1995 1995 1996
------- ------- ------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenues:
Tuition...................................... $28,545 $33,238 $36,934 $ 9,989 $11,570
Fees and other............................... 823 1,019 1,211 644 805
------ ------ ------ ------ ------
29,368 34,257 38,145 10,633 12,375
------ ------ ------ ------ ------
Costs and Expenses:
Instruction and educational support including
$1,046, $1,339, $1,966, $464 and $744,
respectively for costs and expenses
pursuant to transactions with related
parties................................... 14,185 14,740 16,168 4,042 4,577
Selling and promotion........................ 3,092 3,667 4,281 836 974
General and administration including $0, $8,
$163, $0 and $69, respectively for costs
and expenses pursuant to transactions with
related parties........................... 7,847 10,648 11,576 2,804 2,196
------ ------ ------ ------ ------
25,124 29,055 32,025 7,682 7,747
------ ------ ------ ------ ------
Income from operations....................... 4,244 5,202 6,120 2,951 4,628
Investment and other income.................... 180 350 856 148 100
------ ------ ------ ------ ------
Net income................................... $ 4,424 $ 5,552 $ 6,976 $ 3,099 $ 4,728
====== ====== ====== ====== ======
PRO FORMA INFORMATION (NOTE 2): (UNAUDITED)
Adjustment to compensation expense to
eliminate bonus paid to S Corporation
stockholder in respect to income taxes.... $ 6,175 $ --
------ ------
Income before income taxes after
adjustment................................ 13,151 4,728
Income taxes................................. 5,052 1,837
------ ------
Net income................................... $ 8,099 $ 2,891
====== ======
Net income per share......................... $ 1.07 $ .38
Weighted average shares outstanding.......... 7,548 7,548
</TABLE>

The accompanying notes to financial statements are an integral part of these
statements.

F-7
<PAGE> 65

STRAYER COLLEGE, INC.
STATEMENTS OF STOCKHOLDERS' EQUITY
(IN THOUSANDS)

<TABLE>
<CAPTION>
UNREALIZED
COMMON STOCK GAINS
---------------- RETAINED (LOSSES) ON
SHARES AMOUNT EARNINGS INVESTMENTS TOTAL
------ ------ -------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1992...................... 375.5 $4 $ 4,246 $ -- $ 4,250
Distributions to stockholders................. -- -- (2,046) -- (2,046)
Net income.................................... -- -- 4,424 -- 4,424
--
------ -------- ----------- -----------
Balance, December 31, 1993...................... 375.5 4 6,624 -- 6,628
Distributions to stockholders................. -- -- (2,800) -- (2,800)
Net unrealized losses on investments.......... -- -- -- (43) (43)
Net income.................................... -- -- 5,552 -- 5,552
--
------ -------- ----------- -----------
Balance, December 31, 1994...................... 375.5 4 9,376 (43) 9,337
Distributions to stockholders................. -- -- (3,350) -- (3,350)
Net unrealized gains on investments........... -- -- -- 190 190
Net income.................................... -- -- 6,976 -- 6,976
--
------ -------- ----------- -----------
Balance, December 31, 1995...................... 375.5 4 13,002 147 13,153
Distributions to stockholders................. -- -- (650) -- (650)
Net unrealized gains on investments........... -- -- -- 108 108
Net income.................................... -- -- 4,728 4,728
--
------ -------- ----------- -----------
Balance, March 31, 1996 (unaudited)............. 375.5 $4 $ 17,080 $ 255 $ 17,339
===== ====== ======== =========== ===========
</TABLE>

The accompanying notes to financial statements are an integral part of these
statements.

F-8
<PAGE> 66

STRAYER COLLEGE, INC.
STATEMENTS OF CASH FLOWS
(IN THOUSANDS)

<TABLE>
<CAPTION>
FOR THE THREE
FOR THE YEAR ENDED DECEMBER MONTHS ENDED MARCH
31, 31,
----------------------------- ------------------
1993 1994 1995 1995 1996
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net income................................... $ 4,424 $ 5,552 $ 6,976 $ 3,099 $ 4,728
Adjustments to reconcile net income to cash
provided by operating activities:
Depreciation and amortization............. 369 448 688 151 195
Changes in assets and liabilities:
Short-term investments -- restricted...... -- -- (317) (50) (58)
Tuition receivable, net................... (2,943) 2,230 940 367 12
Inventories............................... (124) 13 (179) (159) 7
Due from related parties.................. -- -- (189) (303) (137)
Other current assets...................... 31 (65) 197 197 --
Trade accounts payable.................... 419 (18) (236) (103) 259
Accrued expenses.......................... 25 153 78 1,444 174
Unearned tuition.......................... (733) 776 113 10 (81)
Other current liabilities................. (132) (14) 75 92 174
------- ------- ------- ------- -------
Net cash provided by operating
activities......................... 1,336 9,075 8,146 4,745 5,273
------- ------- ------- ------- -------
Cash flows used in investing activities:
Purchases of property and equipment.......... (532) (1,500) (1,162) (467) (188)
Purchases of marketable securities........... (4,386) (6,586) (7,507) (1,422) (1,313)
Sales of marketable securities............... 4,305 5,238 6,386 779 339
Other........................................ (21) 8 6 -- --
------- ------- ------- ------- -------
Net cash used in investing
activities......................... (634) (2,840) (2,277) (1,110) (1,162)
------- ------- ------- ------- -------
Cash flows used in financing activities:
Distributions to stockholders................ (2,046) (2,800) (3,350) (725) (650)
Other........................................ (74) (62) -- -- --
------- ------- ------- ------- -------
Net cash used in financing
activities......................... (2,120) (2,862) (3,350) (725) (650)
------- ------- ------- ------- -------
Net (decrease) increase in cash...... (1,418) 3,373 2,519 2,910 3,461
Cash and cash equivalents -- beginning of
year......................................... 3,609 2,191 5,564 5,564 8,083
------- ------- ------- ------- -------
Cash and cash equivalents -- end of year....... $ 2,191 $ 5,564 $ 8,083 $ 8,474 $11,544
======= ======= ======= ======= =======
</TABLE>

The accompanying notes to financial statements are an integral part of these
statements.

F-9
<PAGE> 67

STRAYER COLLEGE, INC.
NOTES TO FINANCIAL STATEMENTS
(INFORMATION AS OF MARCH 31, 1995 AND 1996 IS UNAUDITED)

1. NATURE OF OPERATIONS

Strayer College, Inc. (the College) is a proprietary accredited institution
of higher education that provides undergraduate and graduate degrees in various
fields of study. The College has eight campuses located in the District of
Columbia and Virginia.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Cash and Cash Equivalents

Cash and cash equivalents consist of operating cash and cash invested in
short-term certificates of deposit, commercial paper, and U.S. government
obligations. The College considers all highly liquid instruments purchased with
an original maturity of three months or less to be cash equivalents.

Concentration of Credit Risk

The College places its cash and temporary cash investments with high credit
quality institutions. At times cash and cash equivalent balances may be in
excess of the FDIC insurance limit. The College has not experienced any losses
on its cash and cash equivalents.

Tuition receivables are not collateralized, however, credit risk is
minimized as a result of the diverse nature of the College's student base. The
College establishes an allowance for doubtful accounts based upon factors
surrounding historical trends and other information.

Investments

The College's investments are considered "available-for-sale," and, as
such, are stated at market value. The net unrealized gains and losses are
reported as a component of stockholders' equity. Realized gains or losses from
the sale of marketable securities are based on the specific identification
method.

Property and Equipment

Property and equipment are stated at cost. Depreciation of property and
equipment is calculated using the straight-line method over the estimated useful
lives ranging from 3 to 10 years. Depreciation amounted to $369,000, $448,000
and $688,000 for the years ended December 31, 1993, 1994 and 1995, respectively
and $151,000 and $195,000 for the three months ended March 31, 1995 and 1996,
respectively.

Revenues

Tuition income is deferred at the time of registration and is recognized as
income, net of any refunds or withdrawals, ratably throughout each respective
quarter session. Advance registrations for the next quarter are shown as
unearned tuition.

Inventories

Inventories, which consist of books and supplies held in campus bookstores,
are valued at the lower of cost or market. Cost is determined using the
first-in, first-out (FIFO) method.

Use of Estimates

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and

F-10
<PAGE> 68

STRAYER COLLEGE, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION AS OF MARCH 31, 1995 AND 1996 IS UNAUDITED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)

liabilities at the date of the financial statements and the reported amounts of
expenses during the period reported. Actual results could differ from those
estimates.

Income Taxes and Pro Forma Information (unaudited)

The financial statements of the College do not include a provision for
income taxes because the taxable income of the College was included in the
income tax returns of the stockholders under the S Corporation election.

In connection with the formation of Strayer Education, Inc. (Company), the
initial public offering of the Company's common stock (Offering), and the
proposed acquisition of the College by the Company, the College will no longer
be treated as an S Corporation for tax purposes. The Company will be subject to
federal and state income taxes and it will recognize deferred taxes in
accordance with Statement of Financial Accounting Standards No. 109, "Accounting
for Income Taxes" ("SFAS No. 109"). SFAS No. 109 requires companies subject to
income taxes to adjust their deferred tax assets and liabilities based on
temporary differences between financial statement and tax bases of assets and
liabilities using enacted tax rates in effect in the year in which the
differences are expected to reverse. Based upon temporary differences existing
as of December 31, 1995 and March 31, 1996, the net deferred income tax assets
are insignificant individually and in total.

The components of the pro forma income tax provisions are as follows (in
thousands):

<TABLE>
<CAPTION>
THREE MONTHS
ENDED
YEAR ENDED MARCH 31, 1996
DECEMBER 31, 1995 --------------
----------------- (UNAUDITED)
<S> <C> <C>
Current
Federal................................... $ 4,097 $1,516
State..................................... 917 329
------- -------
5,014 1,845
Deferred....................................... 38 (8)
------- -------
$ 5,052 $1,837
============= ===========
</TABLE>

The effective pro forma income tax rate differs from the 34% statutory
federal rate principally as a result of state income taxes.

For informational purposes, the statements of income for the year ended
December 31, 1995 and the three-month period ended March 31, 1996 include pro
forma information reflecting the following adjustments:

- Pro forma net income gives effect to the reduction of costs and expenses
for the year ended December 31, 1995 by $6,175,000, which represents
distributions to an S Corporation stockholder, who also serves as
President of the College, for payment of 1995 income taxes on
undistributed S Corporation income. This adjustment is made solely as a
result of the change in the income tax status of the College that will
become effective subsequent to the proposed acquisition of the College by
the Company. As President and Chief Executive Officer of the College
after the acquisition, the stockholder's duties and responsibilities will
not diminish. However, the taxable income of the College will no longer
be included in the income tax return of the stockholders, but will be
paid directly by the College or the Company, as C Corporation tax payors.
The College believes this adjustment is

F-11
<PAGE> 69

STRAYER COLLEGE, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION AS OF MARCH 31, 1995 AND 1996 IS UNAUDITED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)

necessary for investors to realistically assess the impact of the
acquisition and related change in income tax status on the results of
operations of the College.

- Pro forma income taxes reflect the application of statutory corporate
income tax rates to the College's net income as if the termination of the
College's S Corporation status had occurred on January 1, 1995. The
effective derived income tax rates for the year ended December 31, 1995
and for the three-month period ended March 31, 1996 were 38.4% and 38.9%,
respectively.

- Pro forma net income per share and weighted average shares outstanding
reflect the acquisition of the College by the Company in exchange for
5,999,000 shares of common stock, and the net proceeds from the issuance
of 1,548,181 shares of common stock in connection with the Offering
necessary to pay the $14,042,000 S Corporation distribution based on the
estimated amount of previously recognized and undistributed S Corporation
income through March 31, 1996, as if those events had occurred on January
1, 1995. Historical earnings per share of the College have not been
presented because such amounts are not meaningful in light of the pending
transactions described above.

The pro forma balance sheet as of March 31, 1996 reflects the following
adjustments as if those adjustments occurred March 31, 1996:

- The April 26, 1996 distribution of $2,100,000 discussed in Note 8.

- The recognition of a liability for the estimated S Corporation
distribution of $14,042,000 (which is subject to adjustment) to be paid
from the proceeds of the Offering.

Interim Financial Statements

The results of operations for the three months ended March 31, 1995 and
1996 are not necessarily indicative of the results to be expected for the full
fiscal year. All information as of March 31, 1996 and for the three months ended
March 31, 1995 and 1996 is unaudited but, in the opinion of management, contains
all adjustments, consisting only of normal recurring adjustments, necessary to
present fairly the financial position, results of operations and cash flows of
the College.

3. INVESTMENTS

Short-Term Investments -- Restricted

The U.S. Department of Education requires Title IV Program loan funds
collected in excess of amounts due for tuition to be kept in a separate cash or
cash equivalent account until such amounts can be remitted to students. These
funds are invested in short-term U.S. Treasury Notes with maturities of three
months or less.

Investments in Marketable Securities

Effective January 1, 1994, the College adopted Statement of Financial
Accounting Standards No. 115, "Accounting for Certain Investments in Debt and
Equity Securities" (SFAS 115). The effect of adopting SFAS No. 115 was not
material. Under SFAS 115, the College's marketable securities have been
classified as available for sale and are carried at market.

F-12
<PAGE> 70

STRAYER COLLEGE, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION AS OF MARCH 31, 1995 AND 1996 IS UNAUDITED)

3. INVESTMENTS -- (CONTINUED)

The cost and market value for each class of investments at December 31,
1994 and 1995 are as follows (in thousands):

<TABLE>
<CAPTION>
1994 1995
----------------------------------------- -----------------------------------------
GROSS GROSS GROSS GROSS
UNREALIZED UNREALIZED MARKET UNREALIZED UNREALIZED MARKET
COST GAINS LOSS VALUE COST GAINS LOSS VALUE
------ ---------- ---------- ------ ------ ---------- ---------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. Government
obligations.............. $ 934 $-- $(10) $ 924 $2,012 $ 69 $-- $2,081
Equity securities.......... 932 -- (33) 899 975 78 -- 1,053
-- --
------ ----- ------ ------ ---- ------
Total................. $1,866 $-- $(43) $1,823 $2,987 $147 $-- $3,134
====== === ===== ====== ====== ==== === ======
</TABLE>

The cost and market value for each class of investment at March 31, 1996 is
as follows (in thousands):

<TABLE>
<CAPTION>
GROSS GROSS
UNREALIZED UNREALIZED MARKET
COST GAINS LOSSES VALUE
------ ---------- ---------- ------
<S> <C> <C> <C> <C>
U.S. Government obligations..................... $1,640 $ 31 $-- $1,671
Equity securities............................... 2,468 77 -- 2,545
--
------ ---- ------
Total...................................... $4,108 $108 $-- $4,216
====== ==== == ======
</TABLE>

The contractual maturities of U.S. Government obligations at December 31,
1995 are as follows (in thousands):

<TABLE>
<CAPTION>
MARKET
COST VALUE
------ ------
<S> <C> <C>
Due in one year or less..................................... $ 191 $ 191
Due after one year through five years....................... 1,351 1,402
Due after five years through 10 years....................... 470 488
------ ------
Total.................................................. $2,012 $2,081
====== ======
</TABLE>

Included in investment income for the years ended December 31, 1994 and
1995 and for the three months ended March 31, 1995 and 1996, were the following
proceeds from the sale of securities:

<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
---------------- ------------
1994 1995 1995 1996
------ ------ ---- ----
<S> <C> <C> <C> <C>
Gross realized gains................................... $ -- $ -- $ -- $ --
Gross realized losses.................................. 29 -- -- --
Proceeds............................................... 5,238 6,386 779 339
</TABLE>

F-13
<PAGE> 71

STRAYER COLLEGE, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION AS OF MARCH 31, 1995 AND 1996 IS UNAUDITED)

4. PROPERTY AND EQUIPMENT

The composition of property and equipment is as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------- MARCH 31,
1994 1995 1996
----------- ----------- -----------
<S> <C> <C> <C>
Furniture and equipment............... $ 2,965,000 $ 3,910,000 $ 4,097,000
Leasehold improvements................ 894,000 1,092,000 1,093,000
Vehicles.............................. 44,000 63,000 63,000
----------- ----------- -----------
3,903,000 5,065,000 5,253,000
Less -- accumulated depreciation.... (1,503,000) (2,191,000) (2,386,000)
----------- ----------- -----------
$ 2,400,000 $ 2,874,000 $ 2,867,000
=========== =========== ===========
</TABLE>

5. COMMITMENTS AND CONTINGENCIES

Federal Financial Assistance Programs

The College participates in various federal student financial assistance
programs which are subject to audit. Management believes that the potential
effects of audit adjustments, if any, for the periods currently under audit and
for the periods not yet audited will not have a material adverse effect on the
College's financial position, results of operations or cash flows.

Lease Commitments

The College has long-term noncancelable operating leases for its various
campus locations. Rent expense was $2,406,000, $3,309,000 and $3,227,000 for the
years ended December 31, 1993, 1994 and 1995, respectively, and $787,000 and
$826,000 for the three months ended March 31, 1995 and 1996, respectively. The
College has the option to buy certain of these campus properties at their fair
market value as determined by independent appraisal. The Washington D.C.
campuses and three of the Virginia campuses are leased from a stockholder of the
College. Rent paid to the stockholder was $1,046,000, $1,339,000 and $1,896,000
for the years ended December 31, 1993, 1994 and 1995, respectively, and $464,000
and $590,000 for the three months ended March 31, 1995 and 1996, respectively.

The rents on these leases are subject to an annual increase based on a
stipulated price index. The minimum rental commitments for the College as of
December 31, 1995 are as follows:

<TABLE>
<CAPTION>
AMOUNT PAYABLE
TO STOCKHOLDER
TOTAL INCLUDED IN TOTAL
----------- -----------------
<S> <C> <C>
1996............................................. $ 3,328,000 $ 2,118,000
1997............................................. 3,312,000 2,118,000
1998............................................. 3,173,000 2,118,000
1999............................................. 2,904,000 2,118,000
2000............................................. 2,730,000 2,118,000
Thereafter....................................... 15,135,000 14,109,000
----------- -----------------
Total....................................... $30,582,000 $24,699,000
========== ============
</TABLE>

In connection with the Offering, the College is negotiating with a
stockholder to modify the terms of the leases beginning in 1996.

F-14
<PAGE> 72

STRAYER COLLEGE, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION AS OF MARCH 31, 1995 AND 1996 IS UNAUDITED)

6. PROFIT SHARING PLAN AND TRUST

The College has a 401(k) profit sharing trust covering all eligible
employees. Participants may defer a percentage of their salaries or make
contributions up to 10% of their total compensation. Employee contributions are
voluntary. Discretionary contributions are made by the College in the fourth
quarter of each year, and were $44,000, $88,000 and $94,000 for the years ended
December 31, 1993, 1994 and 1995, respectively.

7. RELATED PARTY TRANSACTIONS

The College sold loans receivable on a non-recourse basis from its students
totaling $1,359,000 and $654,000 at 92% of their face value to Education Loan
Processing, Inc. (ELP) during the year ended December 31, 1995 and the three
months ended March 31, 1996, respectively. The loss on the sale of receivables
of $88,000 and $52,000 has been included in general and administration expense
for the year ended December 31, 1995 and the three months ended March 31, 1996,
respectively. ELP is owned by a stockholder of the College. Included in other
current assets are amounts due from ELP for student loans sold totaling $189,000
at December 31, 1995 and $326,000 at March 31, 1996.

The College provides office space to ELP at no cost at an estimated cost to
the College of $18,000 and $5,000 for the year ended December 31, 1995 and the
three months ended March 31, 1996, respectively.

Beginning in 1995, the College retained PRK Investments, Inc. ("PRK") to
provide it with a variety of services related to the College's compliance with
the HEA and Department of Education regulations applicable to Title IV Programs.
Two thirds of the PRK common stock is owned by children of the stockholders of
the College. The College paid PRK $70,000 and $154,000 for its services for the
year ended December 31, 1995 and the three months ended March 31, 1996,
respectively. Pursuant to a contract with PRK, the College will make monthly
payments of $20,000 to PRK for such services through May 15, 1996. Beginning May
16, 1996, the services performed by PRK for the College are performed by
employees of ELP on the same terms as those under the PRK contract. The College
provided PRK office space at its old Huntington Campus location at no cost in
1995 and the first quarter of 1996 at an estimated cost to the College of
$18,000 and $5,000 for the year ended December 31, 1995 and the three months
ended March 31, 1996, respectively.

Beginning in 1994, College faculty and other employees have received
computer-related instruction and training in other occupational skills from
Career Training Institute, Inc. ("CTI"). Eighty percent of the CTI common stock
is owned by children of the stockholders of the College. The College paid CTI
$8,000, $75,000 and $17,000 for its services for the years ended December 31,
1994 and 1995 and for the three months ended March 31, 1996, respectively.

Also, see Note 5 for additional related party transactions.

8. SUBSEQUENT EVENT

In April, 1996, the College distributed $2.1 million to its stockholders
for expected tax liabilities in respect to estimated income earned by the
College during the period January 1, 1996 to May 31, 1996.

9. PRIOR PERIOD ADJUSTMENTS

Historically, the College has made distributions to the stockholders which
the stockholders used to fund the acquisition of campus facilities later leased
to the College. (See Note 5.) In 1995, the stockholders also used a portion of
the distributions to establish and capitalize ELP. Total distributions during
the years ended December 31, 1993, 1994 and 1995 were $2,046,000, $2,800,000 and
$3,350,000, respectively.

F-15
<PAGE> 73

STRAYER COLLEGE, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION AS OF MARCH 31, 1995 AND 1996 IS UNAUDITED)

9. PRIOR PERIOD ADJUSTMENTS -- (CONTINUED)

Previously, the distributions for the years ended December 31, 1993 and
1994 were reported as general and administrative expenses, however these
distributions were not paid as compensation to a stockholder. These
distributions have been reported as distributions to stockholders in the
accompanying statements of income, stockholders equity and cash flows, so that
the classification is consistent with the nature of the transactions.

F-16
<PAGE> 74

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

NO PERSON HAS BEEN AUTHORIZED IN CONNECTION WITH THE OFFERING MADE HEREBY
TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY UNDERWRITER. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF ANY OFFER
TO BUY ANY OF THE SECURITIES OFFERED HEREBY TO ANY PERSON OR BY ANYONE IN ANY
JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE ANY SUCH OFFER OR SOLICITATION.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER
ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN
IS CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE HEREOF.

------------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary..................... 3
Risk Factors........................... 7
The Company............................ 12
Reorganization......................... 12
Use of Proceeds........................ 14
Capitalization......................... 15
Dividend Policy........................ 15
Dilution............................... 16
Selected Financial Data................ 17
Management's Discussion and Analysis of
Financial Condition and Results of
Operations........................... 19
Business............................... 24
Licensing, Accreditation and Financial
Aid Regulation....................... 33
Management............................. 44
Certain Transactions................... 48
Principal Stockholders................. 51
Description of Capital Stock........... 52
Shares Eligible for Future Sale........ 54
Underwriting........................... 55
Legal Matters.......................... 56
Experts................................ 56
Additional Information................. 56
Financial Statements................... F-1
</TABLE>

UNTIL , 1996 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL
DEALERS EFFECTING TRANSACTIONS IN THE COMMON STOCK, WHETHER OR NOT PARTICIPATING
IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN
ADDITION TO THE OBLIGATIONS OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS
UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

[STRAYER LOGO]

STRAYER EDUCATION, INC.

COMMON STOCK
------------------------

PROSPECTUS

------------------------
LEGG MASON WOOD WALKER
INCORPORATED
, 1996

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 75

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following table sets forth the fees and expenses in connection with the
issuance and distribution of the securities being registered hereunder. Except
for the SEC registration fee and NASD filing fee, all amounts are estimates.

<TABLE>
<S> <C>
SEC registration fee............................................... $13,086
NASD filing fee.................................................... *
Nasdaq National Market Listing Fee................................. *
Accounting fees and expenses....................................... *
Legal fees and expenses............................................ *
Blue Sky fees and expenses (including counsel fees)................ *
Printing and Engraving expenses.................................... *
Transfer Agent and Registrar fees and expenses..................... *
Miscellaneous Expenses............................................. *
-------
Total.................................................... *
=======
</TABLE>

- ---------------
* To be supplied by amendment.

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

The Company's Charter provides that, to the fullest extent that limitations
on the liability of directors and officers are permitted by the Maryland General
Corporation Law, no director or officer of the College shall have any liability
to the College or its stockholders for monetary damages. The Maryland General
Corporation Law provides that a corporation's charter may include a provision
which restricts or limits the liability of its directors or officers to the
corporation or its stockholders for money damages except: (1) to the extent that
it is provided that the person actually received an improper benefit or profit
in money, property or services, for the amount of the benefit or profit in
money, property or services actually received, or (2) to the extent that a
judgment or other final adjudication adverse to the person is entered in a
proceeding based on a finding in the proceeding that the person's action, or
failure to act, was the result of active and deliberate dishonesty and was
material to the cause of action adjudicated in the proceeding. The Company's
Charter and By-laws provide that the Company shall indemnify and advance
expenses to its currently acting and its former directors to the fullest extent
permitted by the Maryland General Corporation Law and that the Company shall
indemnify and advance expenses to its officers to the same extent as its
directors and to such further extent as is consistent with law.

The Charter and By-laws provide that the Company will indemnify its
directors and officers and may indemnify employees or agents of the Company to
the fullest extent permitted by law against liabilities and expenses incurred in
connection with litigation in which they may be involved because of their
offices with the Company. In addition, the Company's Charter provides that its
directors and officers will not be liable to stockholders for money damages,
except in limited instances. However, nothing in the Charter or By-laws of the
Company protects or indemnifies a director, officer, employee or agent against
any liability to which he would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office. To the extent that a director has been
successful in defense of any proceeding, the Maryland General Corporation Law
provides that he shall be indemnified against reasonable expenses incurred in
connection therewith.

The form of underwriting agreement, filed as Exhibit 1.1 hereto, contains
provisions by which the Underwriters agree to indemnify the Registrant and each
officer, director and controlling person of the Registrant against certain
liabilities.

II-1
<PAGE> 76

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.

On May 15, 1996, the Company issued 1,000 shares of Common Stock to Mr. and
Mrs. Ron K. Bailey, as joint tenants with a right of survivorship for $1,000 in
cash. No underwriting discount or commission was paid in connection with the
sale. The sale was effected without registration under the Securities Act in
reliance on the exemption provided by Section 4(2) of the Securities Act.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

(a) Exhibits:

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ -------------------------------------------------------------------------
<C> <S> <C>
1.01 -- Proposed form of Underwriting Agreement.
3.01 ** -- Certificate of Incorporation of the Company.
3.02 ** -- By-laws of the Company.
4.01 * -- Specimen Stock Certificate.
5.01 * -- Opinion of Hogan & Hartson L.L.P. as to the legality of the Common Stock
being registered.
10.01 -- Lease Agreement, dated as of June 1, 1996 between Strayer College, Inc.
and Fredericksburg Investments, Inc.
10.02 -- Lease Agreement, dated as of June 1, 1996 between Strayer College, Inc.
and Beacon Investments, Inc.
10.03 -- Lease Agreement, dated as of June 1, 1996 between Strayer College, Inc.
and Battleview Investments, Inc.
10.04 -- Lease Agreement, dated as of June 1, 1996 between Strayer College, Inc.
and Central Investments, Inc.
10.05 -- Lease Agreement, dated as of June 1, 1996, between Strayer College, Inc.
and Potomac Investments, Inc.
10.06 * -- Lease Agreement, dated as of April 22, 1991, between Strayer College,
Inc. and Cross Creek Associates Limited Partnership.
10.07 * -- Lease Agreement, dated as of October 1, 1991, between Strayer College,
Inc. and GLM-Highland Building Limited Partnership.
10.08 * -- Lease Agreement, dated as of June 15, 1993, between Strayer College, Inc.
and Alexandria Tech Center I.
10.09 -- Employment Agreement, dated as of June 1, 1996, between Strayer
Education, Inc. and Ron K. Bailey.
10.10 -- Employment Agreement, dated as of June 1, 1996, between Strayer College,
Inc. and Harry T. Wilkins.
10.11 -- 1996 Stock Option Plan
10.12 -- Form of Tax Indemnification Agreement
23.01 * -- Consent of Hogan & Hartson L.L.P. (contained in Exhibit 5.01).
23.02 -- Consent of Coopers & Lybrand L.L.P.
24.01 -- Power of Attorney (contained in signature page).
27 **+ -- Financial Data Schedule.
99.01 ** -- Consents of Stanley G. Elmore, Todd A. Milano, Dr. Jennie D. Seaton,
Roland Carey, Donald T. Benson, G. Thomas Waite, III, Dr. Donald Stoddard
and Dr. Charlotte Beason.
</TABLE>

- ---------------
* To be filed by amendment.

** Previously filed.

+ Included in electronic filing via EDGAR.

II-2
<PAGE> 77

(b) Financial Statement Schedules:

ITEM 17. UNDERTAKINGS.

The undersigned registrant hereby undertakes:

(1) To file, during any period in which offers or sales are being,
made, a post-effective amendment to this registration statement; (i) to
include any prospectus required by Section 10(a)(3) of the Securities Act
of 1933 (the "Securities Act"); (ii) to reflect in the prospectus any facts
or events arising after the effective date of the registration statement
(or the most recent post-effective amendment thereof) which, individually
or in the aggregate, represent a fundamental change in the information set
forth in the registration statement; (iii) to include any material
information with respect to the plan of distribution not previously
disclosed in the registration statement or any material change to such
information in the registration statement.

(2) That, for the purpose of determining any liability under the
Securities Act, each such post effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.

(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.

(4) If the registrant is a foreign private issuer, to file a
post-effective amendment to the registration statement to include any
financial statements required by Rule 3-19 of this chapter at the start of
any delayed offering or throughout a continuous offering. Financial
statements and information otherwise required by Section 10(a)(3) of the
Securities Act need not be furnished, provided, that the registrant
includes in the prospectus, by means of a post effective amendment,
financial statements required pursuant to this paragraph (a) (4) and other
information necessary to ensure that all other information in the
prospectus is at least as current as the date of those financial
statements.

The Registrant hereby undertakes to provide to the Underwriters at the
closing specified in the Underwriting Agreement certificates in such
denominations and registered in such names as required by the Underwriters to
permit prompt delivery to each purchaser.

Insofar as indemnification by the Registrant for liabilities arising under
the Securities Act may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer, or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer, or controlling person
in connection with the securities being registered hereunder, the Registrant
will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.

The Registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this Registration Statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.

II-3
<PAGE> 78

SIGNATURES AND POWER OF ATTORNEY

Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Amendment to Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Washington, District of Columbia, on July 3, 1996.

STRAYER EDUCATION, INC.

By: /s/ RON K. BAILEY
---------------------------------
Ron K. Bailey
Chief Executive Officer and
President

Pursuant to the requirements of the Securities Act of 1933, as amended,
this Amendment to Registration Statement has been signed by the following
persons in the capacities and on the date indicated.

<TABLE>
<C> <S> <C>
/s/ RON K. BAILEY Chief Executive Officer, President July 3, 1996
- ------------------------------------- and Director (Principal Executive
Ron K. Bailey Officer)

/s/ HARRY T. WILKINS Chief Financial Officer (Principal July 3, 1996
- ------------------------------------- Financial Officer and Principal
Harry T. Wilkins Accounting Officer)
</TABLE>

II-4
<PAGE> 79

STRAYER COLLEGE, INC.
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
(IN THOUSANDS)

<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
BALANCE ADDITIONS BALANCE
BEGINNING OF CHARGED TO END OF
DESCRIPTION PERIOD EXPENSE DEDUCTIONS PERIOD
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Deduction from asset account:
Allowance for doubtful accounts:
Three months ended March 31, 1996 (unaudited)... $155 $101 $ (67) $ 189
Year ended December 31, 1995.................... 135 655 (635) 155
Year ended December 31, 1994.................... 453 665 (983) 135
Year ended December 31, 1993.................... 210 853 (610) 453
</TABLE>

S-1
<PAGE> 80

INDEX TO EXHIBITS

<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
- ------ ---------------------------------------------------------------------- ------------
<C> <S> <C>
1.01 -- Proposed form of Underwriting Agreement...............................
3.01 ** -- Certificate of Incorporation of the Company...........................
3.02 ** -- By-laws of the Company................................................
4.01 * -- Specimen Stock Certificate............................................
5.01 * -- Opinion of Hogan & Hartson L.L.P. as to the legality of the Common
Stock being registered................................................
10.01 -- Lease Agreement, dated as of June 1, 1996 between Strayer College,
Inc. and Fredericksburg Investments, Inc. ............................
10.02 -- Lease Agreement, dated as of June 1, 1996 between Strayer College,
Inc. and Beacon Investments, Inc. ....................................
10.03 -- Lease Agreement, dated as of June 1, 1996 between Strayer College,
Inc. and Battleview Investments, Inc. ................................
10.04 -- Lease Agreement, dated as of June 1, 1996 between Strayer College,
Inc. and Central Investments, Inc. ...................................
10.05 -- Lease Agreement, dated as of June 1, 1996, between Strayer College,
Inc. and Potomac Investments, Inc. ...................................
10.06 * -- Lease Agreement, dated as of April 22, 1991, between Strayer College,
Inc. and Cross Creek Associates Limited Partnership...................
10.07 * -- Lease Agreement, dated as of October 1, 1991, between Strayer College,
Inc. and GLM-Highland Building Limited Partnership....................
10.08 * -- Lease Agreement, dated as of June 15, 1993, between Strayer College,
Inc. and Alexandria Tech Center I.....................................
10.09 -- Employment Agreement, dated as of June 1, 1996, between Strayer
Education, Inc. and Ron K. Bailey.....................................
10.10 -- Employment Agreement, dated as of June 1, 1996, between Strayer
College, Inc. and Harry T. Wilkins....................................
10.11 -- 1996 Stock Option Plan................................................
10.12 -- Form of Tax Indemnification Agreement.................................
23.01 * -- Consent of Hogan & Hartson L.L.P. (contained in Exhibit 5.01).........
23.02 -- Consent of Coopers & Lybrand L.L.P. ..................................
24.01 -- Power of Attorney (contained in signature page).......................
27 **+ -- Financial Data Schedule...............................................
99.01 ** -- Consents of Stanley G. Elmore, Todd A. Milano, Dr. Jennie D. Seaton,
Roland Carey, Donald T. Benson, G. Thomas Waite, III, Dr. Donald
Stoddard and Dr. Charlotte Beason.....................................
</TABLE>

- ---------------
* To be filed by amendment.

** Previously filed.

+ Included in electronic filing via EDGAR.

<PAGE> 1

EXHIBIT 1.01

3,000,000 Shares
STRAYER EDUCATION, INC.
Common Stock

UNDERWRITING AGREEMENT
_________, 1996
Legg Mason Wood Walker, Incorporated
As Representative of the several Underwriters
named in Schedule I hereto
Legg Mason Tower
111 South Calvert Street, 20th Floor
Baltimore, Maryland 21202

Ladies and Gentlemen:

Strayer Education, Inc., a Maryland corporation (the "Company"), proposes
to issue and sell 3,000,000 shares (the "Firm Shares") of the Company's common
stock, $.01 par value (the "Common Stock"), to the several underwriters named
in Schedule I hereto (the "Underwriters") for whom you are acting as
representative (the "Representative"). The Company also is granting to the
Underwriters, solely for the purpose of covering over-allotments in the
offering of the Firm Shares, the option described in Section 2(b) to purchase
up to 450,000 additional shares of Common Stock (the "Option Shares"). The
Firm Shares and the Option Shares are hereinafter collectively referred to as
the "Shares."

In connection with the offering of the Shares, the Company will acquire
(i) all of the outstanding shares of capital stock of Strayer College, Inc., a
Maryland corporation (the "College"), from Ron K. Bailey and Beverly Bailey as
joint tenants with rights of survivorship (collectively, the "Current
Stockholders"), and (ii) all of the outstanding shares of capital stock of
Education Loan Processing, Inc., a Virginia corporation ("ELP"), from Ron K.
Bailey. The transactions in which the Company will acquire the capital stock
of the College and the capital stock of ELP are hereinafter collectively
referred to as the "Reorganization." The College and ELP are hereinafter
collectively referred to as the "Subsidiaries."

The Company wishes to confirm as follows its agreement with you and the
other several Underwriters on whose behalf you are acting in connection with
the several purchases of the Shares by the Underwriters.

1. Registration Statement and Prospectus. The Company has prepared and
filed with the Securities and Exchange Commission (the "Commission") in
conformity with the provisions of the Securities Act of 1933, as amended (the
"Act"), and the rules and regulations of the Commission thereunder (the "Rules
and Regulations") a registration statement on Form S-1 (File No. 333-03967)
with respect to the Shares (the "registration statement"). The Company has
heretofore delivered to you copies of the registration statement and any
amendments thereto, including all forms of the related prospectuses contained
therein.
<PAGE> 2
The term "Registration Statement" as used in this Agreement means the
registration statement (including all financial statements and exhibits
thereto), as amended at the time it becomes effective, or, if the registration
statement became effective prior to the execution of this Agreement, as
supplemented or amended prior to the execution of this Agreement (including, if
the prospectus included in the registration statement omits information in
reliance on Rule 430A under the Act, the information deemed to be a part of the
registration statement at the time it became effective pursuant to Rule 430A
under the Act). If a post-effective amendment to the registration statement is
filed and declared effective, the term "Registration Statement" as used in this
Agreement also means the registration statement as amended by such
post-effective amendment. The term "Prospectus" as used in this Agreement
means the prospectus in the form included in the Registration Statement (or, if
the prospectus included in the Registration Statement omits information in
reliance on Rule 430A under the Act and such information is included in a
prospectus filed with the Commission pursuant to Rule 424(b) under the Act, the
prospectus in the form included in the Registration Statement as supplemented
by the addition of the Rule 430A information contained in the prospectus filed
with the Commission pursuant to Rule 424(b)), together with any supplements or
amendments thereto provided to the Underwriters by the Company for use in
connection with the offering of the Shares. The term "Prepricing Prospectus"
as used in this Agreement means the prospectus subject to completion in the
form included in the registration statement at the time of the initial filing
of the registration statement with the Commission, and as such prospectus shall
have been amended from time to time prior to the date of the Prospectus.

2. Purchase and Delivery of the Shares.

(a) Subject to all of the terms and conditions set forth herein, the
Company agrees to issue and sell to each Underwriter and, upon the basis of the
representations, warranties and covenants of the Company contained herein and
subject to all of the terms and conditions set forth herein, each Underwriter
agrees, severally and not jointly, to purchase from the Company, at a price of
[$_____] per share, the number of Firm Shares set forth opposite the name of
such Underwriter in Schedule I hereto, subject to adjustment in accordance with
Section 9.

Payment for the Firm Shares to be purchased by the Underwriters hereunder
shall be made in same-day funds against delivery of the certificates for the
Firm Shares to the Representative for the several accounts of the Underwriters.
Such payment and delivery shall be made at the offices of Legg Mason Wood
Walker, Incorporated, Legg Mason Tower, 111 South Calvert Street, 20th Floor,
Baltimore, Maryland at 10:00 a.m., Baltimore time, on [______________], 1996
(such time and date being herein referred to as the "Closing Date"). The
Closing Date and the location of delivery of the certificates for the Firm
Shares may be varied by agreement between the Company and the Representative.

The certificates for the Firm Shares shall be delivered in such
denominations and in such registrations as the Representative shall request in
writing not later than the second full business day prior to the Closing Date.
The Company shall make such certificates available for inspection by the
Representative at least one full business day prior to the Closing Date.

You have advised the Company, and the Company is relying upon your
representation, that each Underwriter has authorized you, for its account, to
accept delivery of, and to make

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<PAGE> 3
payment of the purchase price for, the Shares that it has agreed to purchase.
It is understood that Legg Mason Wood Walker, Incorporated, individually, and
not as Representative of the several Underwriters, may (but shall not be
obligated to) make payment of the purchase price on behalf of any Underwriter
or Underwriters whose check or checks shall not have been received by the
Representative prior to the Closing Date for the Firm Shares (or prior to any
Option Closing Date, as defined below, for the Option Shares) to be purchased
by such Underwriter or Underwriters. Any such payment by Legg Mason Wood
Walker, Incorporated shall not relieve any such Underwriter or Underwriters of
any of its or their obligations hereunder.

(b) The Company hereby grants an option (the "over-allotment
option") to the several Underwriters to purchase up to 450,000 Option Shares at
the same price per share as the price per share for the Firm Shares set forth
in Section 2(a). The over-allotment option may be exercised solely to cover
over-allotments in the offering of the Firm Shares by the Underwriters. The
over-allotment option may be exercised as to all or any part of the Option
Shares at any time, and from time to time, prior to the Closing Date but on
only one (1) occasion after the Closing Date, upon written notice given as
provided below within thirty (30) days after the date of the Prospectus. The
Underwriters shall not be under any obligation to purchase any of the Option
Shares prior to the exercise of the over-allotment option. You, as
Representative of the several Underwriters, may cancel the over-allotment
option at any time prior to its expiration by giving written notice of such
cancellation to the Company.

The Representative may exercise the over-allotment option by giving
written notice of such exercise to the Company setting forth the number of
Option Shares as to which the several Underwriters are exercising the option
and the time and date for delivery of and payment for such Option Shares. Any
such date of delivery shall be determined by the Representative, but shall not
be earlier than three (3) full business days nor later than ten (10) full
business days after the exercise of the over-allotment option and, in any
event, shall not be earlier than the Closing Date. If the date of exercise of
the over-allotment option is three (3) or more days before the Closing Date,
the notice of exercise shall set the Closing Date as the Option Closing Date.
The time and date set forth in such notice, or such other time and date as the
Representative and the Company may agree upon, is hereinafter referred to as
the "Option Closing Date" with respect to the Option Shares specified in such
notice. Upon any exercise of the over-allotment option, the Company agrees,
subject to all of the terms and conditions set forth herein, to issue and sell
to each Underwriter and, upon the basis of the representations, warranties and
covenants of the Company contained herein and subject to all of the terms and
conditions set forth herein, each Underwriter agrees, severally and not
jointly, to purchase from the Company, the number of Option Shares (subject to
such adjustments as the Representative may determine in order to avoid
fractional shares) which bears the same proportion to the number of Option
Shares to be sold by the Company as the number of Firm Shares set forth
opposite the name of such Underwriter in Schedule I hereto (or such number of
Firm Shares increased in accordance with Section 9) bears to the aggregate
number of Firm Shares to be sold by the Company.

Payment for any Option Shares to be purchased by the Underwriters
hereunder shall be made on the Option Closing Date in same-day funds against
delivery of the certificates for the Option Shares to the Representative for
the several accounts of the Underwriters. Such payment and delivery shall be
made at the offices of Legg Mason Wood Walker, Incorporated, Legg Mason Tower,
111 South Calvert Street, 20th Floor, Baltimore, Maryland. The location of

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<PAGE> 4
delivery of the certificates for the Option Shares may be varied by agreement
between the Company and the Representative.

The certificates for the Option Shares shall be delivered in such
denominations and in such registrations as the Representative shall request in
writing not later than the second full business day prior to the Option Closing
Date. The Company shall make such certificates available for inspection by the
Representative at least one full business day prior to the Option Closing Date.

Upon exercise of the over-allotment option, the obligations of the several
Underwriters to purchase the Option Shares covered by such exercise shall be
subject to the conditions specified in Section 7.

3. Public Offering by the Underwriters. The Company has been advised
that the several Underwriters propose to make a public offering of the Firm
Shares as soon after the Registration Statement and this Agreement have become
effective as in the Representative's judgment it is advisable to do so. The
Firm Shares are to be initially offered to the public at the public offering
price set forth in the Prospectus. The Representative may from time to time
thereafter change the public offering price and other selling terms. To the
extent, if at all, that any Option Shares are purchased pursuant to Section
2(b), the Underwriters shall offer the Option Shares to the public on the
foregoing terms.

4. Covenants of the Company. The Company covenants and agrees (and
solely with respect to paragraph (m) below the College covenants and agrees)
with the several Underwriters as follows:

(a) If, at the time this Agreement is executed and delivered, it is
necessary for the Registration Statement or a post-effective amendment thereto
to be declared effective before the offering of the Shares may commence, the
Company shall endeavor to cause the Registration Statement or such
post-effective amendment to become effective as soon as possible and shall
advise you promptly and, if requested by you, shall confirm such advice in
writing, when the Registration Statement or such post-effective amendment has
become effective.

(b) The Company shall advise you promptly and, if requested by you,
shall confirm such advice in writing: (i) of the receipt of any comments from
the Commission regarding the Registration Statement; (ii) of the receipt of any
request by the Commission for any amendment of or a supplement to the
Registration Statement, any Prepricing Prospectus or the Prospectus or for
additional information; (iii) of the receipt of notice of issuance by the
Commission of any stop order suspending the effectiveness of the Registration
Statement, or of the suspension of qualification of the Shares for offering or
sale in any jurisdiction, or the initiation of any proceeding for any such
purpose; and (iv) within the period of time referred to in paragraph (f) below,
of any change in the condition (financial or other), business, prospects,
properties, net worth or results of operations of the Company or the College,
or of the happening of any event, which makes any statement of a material fact
made in the Registration Statement or the Prospectus untrue or which requires
the making of any additions to or changes in the Registration Statement or the
Prospectus in order to state a material fact required by the Act or the Rules
and Regulations to be stated therein or necessary in order to make the
statements therein not misleading, or of the necessity to amend or supplement
the Prospectus to comply with the Act or any other law. If at any time the
Commission shall issue any stop order suspending the

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<PAGE> 5
effectiveness of the Registration Statement, the Company shall make every
reasonable effort to obtain the withdrawal of such order at the earliest
possible time.

(c) The Company shall furnish to you, without charge, one manually
signed copy of the registration statement as originally filed with the
Commission and of each amendment thereto, including all financial statements
and exhibits thereto, and shall furnish to you, without charge, such number of
conformed copies of the registration statement as originally so filed and of
each amendment thereto, but without exhibits, as you may reasonably request.
The Company shall also furnish to you copies of all correspondence to and from,
and all documents issued to and by, the Commission in connection with the
registration of the Shares under the Act.

(d) The Company shall not (i) file any amendment to the Registration
Statement or make any amendment or supplement to the Prospectus of which you
shall not previously have been advised or to which you shall reasonably object
after being so advised or (ii) so long as, in the opinion of counsel for the
Underwriters, a Prospectus is required to be delivered in connection with sales
by any Underwriter or dealer, file any information, documents or reports
pursuant to the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), without delivering a copy of such information, documents or reports to
you, as Representative of the several Underwriters, prior to or concurrently
with such filing.

(e) Prior to the execution and delivery of this Agreement, the
Company has delivered to you, without charge, in such quantities as you have
requested, copies of each form of the Prepricing Prospectus. The Company
consents to the use, in accordance with the provisions of the Act and the
securities or Blue Sky laws of the jurisdictions in which the Shares are
offered by the several Underwriters and by dealers, prior to the date of the
Prospectus, of each Prepricing Prospectus so furnished by the Company.

(f) As soon after the execution and delivery of this Agreement as
possible and thereafter from time to time for such period as in the opinion of
counsel for the Underwriters a prospectus is required by the Act to be
delivered in connection with sales by any Underwriter or dealer, the Company
shall expeditiously deliver to each Underwriter and each dealer, without
charge, as many copies of the Prospectus as you may reasonably request. The
Company consents to the use of the Prospectus in accordance with the provisions
of the Act and the securities or Blue Sky laws of the jurisdictions in which
the Shares are offered by the several Underwriters and by all dealers to whom
Shares may be sold, both in connection with the offering and sale of the Shares
and for such period of time thereafter as the Prospectus is required by the Act
to be delivered in connection with sales by any Underwriter or dealer. If
during such period any event shall occur that in the judgment of the Company or
in the opinion of counsel for the Underwriters is required to be set forth in
the Prospectus or should be set forth therein in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, or if it is necessary to supplement or amend the Prospectus to
comply with the Act or any other law, the Company shall forthwith prepare and,
subject to the provisions of paragraph (d) above, file with the Commission an
appropriate supplement or amendment thereto, and shall expeditiously furnish to
the Underwriters and dealers a reasonable number of copies thereof.

(g) The Company shall cooperate with you and with counsel for the
Underwriters in connection with the registration or qualification of the Shares
for offering and sale by the several Underwriters and by dealers under the
securities or Blue Sky laws of such

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<PAGE> 6
jurisdictions as you may designate, and shall file such consents to service of
process or other documents as may be necessary or appropriate in order to
effect such registration or qualification; provided, that in no event shall the
Company be obligated to qualify to do business in any jurisdiction where it is
not now so qualified or to take any action which would subject it to service of
process in suits, other than suits arising out of the offering or sale of the
Shares, or to taxation in any jurisdiction where it is not now so subject. The
Company shall prepare and file from time to time such statements and reports as
are or may be required of it, as the issuer of the Shares, to continue such
registration and qualification in effect for so long a period as the
Representative may reasonably request for the distribution of the Shares. The
Company shall advise the Representative promptly after the Company becomes
aware of the suspension of the registration or qualification of the Common
Stock for offering, sale or trading in any jurisdiction or of the initiation or
threat of any proceeding for any such purpose, and in the event of the issuance
of any order suspending such registration or qualification, the Company shall,
with the cooperation of the Representative, make every reasonable effort to
obtain the withdrawal of such order at the earliest possible time.

(h) The Company shall make generally available to its security
holders a consolidated earnings statement, which need not be audited, covering
a period of twelve (12) consecutive months commencing not later than the first
day of the fiscal quarter following the fiscal quarter that includes the
Closing Date, as soon as practicable after the end of such period, but in any
event not later than one hundred twenty (120) days after the end of such
period, which consolidated earnings statement shall satisfy the provisions of
Section 11(a) of the Act (including Rule 158 thereunder).

(i) During the period of three (3) years after the date of this
Agreement, the Company shall deliver to the Representative (i) as soon as
available, copies of each annual report and of all other reports, documents and
information (A) furnished by the Company to its stockholders, (B) filed with
the Nasdaq Stock Market pursuant to the requirements thereof or (C) filed with
the Commission pursuant to the Act or the Exchange Act and (ii) from time to
time, such other information concerning the Company as you may reasonably
request.

(j) The Company shall apply the net proceeds from the sale of the
Shares as set forth in the Prospectus under the caption "Use of Proceeds" and
shall file such reports with the Commission with respect to the sale of the
Shares and the application of the proceeds therefrom as may be required by Rule
463 under the Act.

(k) If Rule 430A under the Act is employed, the Company shall timely
file the Prospectus pursuant to Rule 424(b) under the Act and shall advise you
of the time and manner of such filing.

(l) Except for (i) the offering, issuance and sale of Shares as
provided in this Agreement, (ii) the issuance of shares of Common Stock to the
Current Stockholders in connection with the Reorganization and (iii) the grant
of options to purchase shares of Common Stock under the Company's 1996 Stock
Option Plan, the Company shall not sell, offer to sell, solicit an offer to
buy, contract to sell, grant any option or warrant to purchase, or otherwise
transfer or dispose of, any shares of Common Stock, or any securities
convertible into or

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<PAGE> 7
exercisable or exchangeable for shares of Common Stock, for a period of 180
days after the date of the Prospectus, without the prior written consent of the
Representative.

(m) If the transactions contemplated hereby are not consummated by
reason of any failure, refusal or inability on the part of the Company to
perform any agreement on its part to be performed hereunder or to fulfill any
condition of the Underwriters' obligations hereunder (other than by reason of a
material default by any of the Underwriters), or if the Company shall terminate
this Agreement pursuant to Section 10(a), or if the Underwriters shall
terminate this Agreement pursuant to Section 10(b)(i), the Company and the
College, jointly and severally, shall reimburse the several Underwriters for
all reasonable out-of-pocket expenses (including reasonable fees and
disbursements of counsel for the Underwriters) incurred by the Underwriters in
investigating or preparing to market or in marketing the Shares.

(n) Except as stated in this Agreement and as disclosed in the
Prepricing Prospectus and the Prospectus, the Company has not taken, nor shall
the Company take, directly or indirectly, any action designed to or that might
reasonably be expected to cause or result in stabilization or manipulation of
the price of the Common Stock to facilitate the sale or resale of the Shares.

(o) The Company shall use its best efforts to have the Common Stock
listed, subject to notice of issuance, on the Nasdaq Stock Market concurrently
with the effectiveness of the registration statement and to maintain such
listing thereafter.

(p) Not later than immediately prior to the closing of the purchase
of the Firm Shares by the Underwriters pursuant to Section 2(a), the Company
shall consummate the Reorganization in the manner described in the Registration
Statement and the Prospectus. Prior to the date of this Agreement, the Company
has furnished to you and to counsel for the Underwriters executed copies of all
documents to be delivered by the parties to the Reorganization in connection
therewith.

(q) The Company has furnished to you an executed "lock-up" letter
signed by each of the Current Stockholders.

5. Representations and Warranties of the Company. The Company
represents and warrants to each Underwriter as follows:

(a) Each Prepricing Prospectus included as part of the registration
statement as originally filed or as part of any amendment or supplement
thereto, or filed pursuant to Rule 424 under the Act, complied when so filed in
all material respects with the provisions of the Act and the Rules and
Regulations. The Commission has not issued any order preventing or suspending
the use of any Prepricing Prospectus nor instituted proceedings for the
purpose.

(b) The Registration Statement and the Prospectus and any amendment
or supplement thereto (i) complied or will comply in all material respects with
the provisions of the Act and the Rules and Regulations and (ii) did not or
will not at any such times contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading (in the case of the Prospectus, in
the light of the circumstances under which they were made), except that this
representation and warranty does not apply to statements in or omissions from
the Registration Statement or the Prospectus

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<PAGE> 8
made in reliance upon and in conformity with information furnished to the
Company by or on behalf of any Underwriter through you expressly for use
therein.

(c) All of the outstanding shares of Common Stock of the Company
have been duly authorized and validly issued, are fully paid and nonassessable
and are free of any preemptive or similar rights; all of the shares of Common
Stock to be issued to the Current Stockholders in the Reorganization have been
duly authorized and, when issued and delivered to the Current Stockholders in
exchange for the outstanding capital stock of the College in the
Reorganization, will be validly issued, fully paid and nonassessable and free
of any preemptive or similar rights; the Shares have been duly authorized and,
when issued and delivered to the Underwriters against payment therefor in
accordance with the terms hereof, will be validly issued, fully paid and
nonassessable and free of any preemptive or similar rights; and the capital
stock of the Company conforms to the description thereof in the Registration
Statement and the Prospectus.

(d) From May 15, 1996 through the date hereof, the Current
Stockholders (i) have been the sole record and beneficial owners of the
outstanding shares of Common Stock of the Company and (ii) have owned all such
shares as joint tenants with rights of survivorship.

(e) The Company is a corporation duly organized and validly existing
in good standing under the laws of the State of Maryland with full corporate
power and authority to own, lease and operate its properties and to conduct its
business as described in the Registration Statement and the Prospectus, and is
duly registered and qualified to conduct its business and is in good standing
in each jurisdiction where the nature of its properties or the conduct of its
business requires such registration or qualification, except where the failure
so to register or qualify does not or would not have a material adverse effect
on the condition (financial or other), business, properties, net worth or
results of operations of the Company and the Subsidiaries taken as a whole.
The Company does not own or control, directly or indirectly, any corporation,
association or other entity, other than the Subsidiaries upon consummation of
the Reorganization.

(f) Each of the Subsidiaries is a corporation duly organized,
validly existing and in good standing in the jurisdiction of its incorporation,
with full corporate power and authority to own, lease and operate its
properties and to conduct its business, as described in the Registration
Statement and the Prospectus, and is duly registered and qualified to conduct
its business and is in good standing in each jurisdiction where the nature of
its properties or the conduct of its business requires such registration or
qualification, except where the failure so to register or qualify does not or
would not have a material adverse effect on the condition (financial or other),
business, properties, net worth or results of operations of such Subsidiary;
and all of the outstanding shares of capital stock of each of the Subsidiaries
have been duly authorized and validly issued, are fully paid and nonassessable,
and, upon consummation of the Reorganization, all of the outstanding shares of
capital stock of each of the Subsidiaries will be owned by the Company
directly, free and clear of any lien, adverse claim, security interest, equity
or other encumbrance.

(g) The College is (A) accredited by the Commission on Higher
Education of the Middle States Association of Colleges and Schools ("Middle
States"), (B) licensed by the D.C. Education Licensure Commission to operate
and to grant degrees and diplomas to students in the District of Columbia,
licensed by the Virginia State Council of Higher Education to operate and to
grant degrees and diplomas to students in the Commonwealth of Virginia and
approved by

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<PAGE> 9
the Maryland Higher Education Commission to operate in the State of Maryland as
an out-of-state institution, and (C) eligible and certified to participate in
federal aid programs under Title IV ("Title IV Programs") of the Higher
Education Act of 1965, as amended (the "HEA"). None of Middle States, any of
the foregoing District of Columbia, Virginia or Maryland licensing bodies or
the U.S. Department of Education has initiated or, to the knowledge of the
Company, threatened proceedings for the suspension, limitation, revocation or
termination of such accreditation by Middle States, any such license or
approval by such licensing bodies or such certification to participate in Title
IV programs, as the case may be.

(h) There are no legal or governmental proceedings pending or, to
the knowledge of the Company, threatened, against the Company or either of the
Subsidiaries, or to which the Company, either of the Subsidiaries or any of
their respective properties is subject, that are required by the Act or the
Rules and Regulations to be described in the Registration Statement or the
Prospectus but are not described as required, and there are no agreements,
contracts, indentures, leases or other instruments that are required by the Act
or the Rules and Regulations to be described in the Registration Statement or
the Prospectus or to be filed as an exhibit to the Registration Statement that
are not described or filed as required by the Act or the Rules and Regulations.

(i) Neither the Company nor either of the Subsidiaries is (i) in
violation of its articles of incorporation or by-laws, (ii) in violation of any
law, ordinance, administrative or governmental rule or regulation or any Middle
States standard applicable to the Company or either of the Subsidiaries, the
violation of which has, or would have, individually or in the aggregate, a
material adverse effect on the Company and the Subsidiaries taken as a whole,
(iii) in violation of any decree of any court or governmental agency or body
having jurisdiction over the Company or either of the Subsidiaries, the
violation of which has, or would have, individually or in the aggregate, a
material adverse effect on the Company and the Subsidiaries taken as a whole or
(iv) in default in any material respect in the performance of any obligation,
agreement or condition contained in any bond, debenture, note or any other
evidence of indebtedness or in any agreement, indenture, lease or other
instrument to which the Company or either of the Subsidiaries is a party or by
which any of them or any of their respective properties may be bound, the
default in the performance of which has, or would have, individually or in the
aggregate, a material adverse effect on the Company or either of the
Subsidiaries.

(j) Neither the issuance and sale of the Shares, the execution,
delivery or performance of this Agreement or any of the agreements entered into
by the Company or either Subsidiary in connection with the Reorganization, nor
the consummation by the Company and the Subsidiaries of the transactions
contemplated hereby, thereby or in the Reorganization: (i) requires any
consent, approval, authorization or other order of, registration or filing
with, or notice to Middle States or any court, regulatory body, administrative
agency or other governmental body, agency or official (except for such as may
be required for the registration of the Shares under the Act, the registration
of the Common Stock under the Exchange Act and compliance with the securities
or Blue Sky laws of various jurisdictions, all of which have been or will be
effected in accordance with this Agreement, such as may be required by the
National Association of Securities Dealers, Inc. (the "NASD") and such other
consents, approvals, authorizations, registrations, filings and notices as have
been obtained or effected by the Company or the College); (ii) constitutes or
will constitute a change of control under any federal or state

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<PAGE> 10
statute, law, regulation or standard or any Middle States standard applicable
to the College; (iii) conflicts or will conflict with or constitutes or will
constitute a breach of, or a default under, the articles of incorporation or
by-laws of the Company or either of the Subsidiaries; (iv) conflicts or will
conflict with or constitutes or will constitute a breach of, or a default
under, any agreement, indenture, lease or other instrument to which the Company
or either of the Subsidiaries is a party or by which any of them or any of
their respective properties may be bound; (v) violates or will violate any
statute, law, regulation or filing or judgment, injunction, order or decree
applicable to the Company or either of the Subsidiaries or any of their
respective properties; or (vi) will result in the creation or imposition of any
lien, charge or encumbrance upon any property or assets of the Company or
either of the Subsidiaries pursuant to the terms of any agreement or instrument
to which any of them is a party or by which any of them may be bound or to
which any of the property or assets of any of them is subject.

(k) Coopers & Lybrand L.L.P., who have certified or shall certify
the financial statements included in the Registration Statement and the
Prospectus, are independent public accountants as required by the Act and the
Rules and Regulations.

(l) The audited financial statements, together with related
schedules and notes, included in the Registration Statement and the Prospectus
comply as to form with the requirements of the Act and the Rules and
Regulations. Such audited financial statements present fairly the financial
position of the Company and the financial position, results of operations and
cash flows of the College on the basis stated in the Registration Statement at
the respective dates or for the respective periods to which they apply, in
accordance with generally accepted accounting principles consistently applied
throughout the periods involved, except as disclosed therein. The historical
financial and statistical information and data included in the Registration
Statement and the Prospectus under the captions "Prospectus Summary -- Summary
Financial and Operating Information" and "Selected Financial Data" and
elsewhere therein present fairly the financial information shown therein and
are prepared on a basis consistent with such audited financial statements and
the books and records of the Company and the College. The pro forma financial
data included in the Registration Statement and the Prospectus have been
prepared in conformity with the applicable published rules and regulations of
the Commission with respect to pro forma financial information; the entries
reflected in such pro forma financial data have been properly applied; and the
assumptions used in such pro forma financial data are reasonable. All
financial statements and schedules required by the Act and the Rules and
Regulations to be included in the Registration Statement and the Prospectus
have been included therein.

(m) The execution and delivery of, and the performance by each of
the Company and the College of its obligations under, this Agreement have been
duly and validly authorized by the Company and the College, respectively, and
this Agreement has been duly executed and delivered by the Company and the
College and, assuming due authorization, execution and delivery by you,
constitutes the valid and legally binding agreement of the Company and the
College, enforceable against the Company and the College in accordance with its
terms, except as rights to indemnity and contribution hereunder may be limited
by federal or state securities laws or the policies underlying such laws and
subject to the qualification that the enforceability of the obligations of the
Company and the College hereunder may be limited by

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<PAGE> 11
bankruptcy, fraudulent conveyance, insolvency, reorganization, moratorium and
other laws relating to or affecting creditors' rights generally and by general
equitable principles.

(n) Except as disclosed in the Registration Statement and the
Prospectus, subsequent to the respective dates as of which such information is
given in the Registration Statement and the Prospectus, neither the Company nor
either of the Subsidiaries has incurred any liability or obligation, direct or
contingent, or entered into any transaction, not in the ordinary course of
business, that is material to the Company and the Subsidiaries taken as a
whole, and there has not been any change in the capital stock, or material
increase in the short-term debt or long-term debt, of the Company or either of
the Subsidiaries, or any material adverse change, in the condition (financial
or other), business, net worth or results of operations of the Company and the
Subsidiaries taken as a whole.

(o) Each of the Company and the Subsidiaries has good and marketable
title to all property (real and personal) described in the Prospectus as being
owned by it, free and clear of all liens, claims, security interests or other
encumbrances (collectively, "liens") except for such liens as are not material
to the Company or either of the Subsidiaries and except for such liens as are
described in the Registration Statement and the Prospectus or in a document
filed as an exhibit to the Registration Statement, and all of the property
described in the Prospectus as being held under lease by the College is held by
the College under valid, subsisting and enforceable leases.

(p) The Company and each of the Subsidiaries has such permits,
licenses, franchises and authorizations of governmental or regulatory
authorities or accrediting commissions, including, without limitation, all
permits, licenses, franchises and authorizations required for participation
Title IV Programs (collectively, "permits"), as are necessary to own its
respective properties and to conduct its business in the manner described in
the Prospectus, subject to such qualifications as may be set forth in the
Prospectus; the Company and each of the Subsidiaries has fulfilled and
performed all its material obligations with respect to such permits and no
event has occurred or will occur in connection with the transactions
contemplated hereby which allows, or after notice or lapse of time would allow,
revocation or termination thereof or results, or will result, in any other
material impairment of the rights of the holder of any such permit, subject in
each case to such qualification as may be set forth in the Prospectus; and,
except as described in the Prospectus, none of such permits contains any
restriction that is materially burdensome to the Company or either of the
Subsidiaries.

(q) Each of the Company and the College maintains a system of
internal accounting controls sufficient to provide reasonable assurances that:
(i) transactions are executed in accordance with management's general or
specific authorization; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain accountability for assets; (iii) access
to assets is permitted only in accordance with management's general or specific
authorization; and (iv) the recorded accountability for assets is compared with
existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.

(r) To the knowledge of the Company, neither the Company nor either
of the Subsidiaries nor any employee or agent of the Company or either
Subsidiary has made any payment of funds of the Company or either Subsidiary or
received or retained any funds in

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<PAGE> 12
violation of any law, rule or regulation, which payment, receipt or retention
of funds is of a character required to be disclosed in the Prospectus.

(s) Each of the Company and each Subsidiary has filed all required
federal, state, local and foreign income, payroll, franchise and other tax
returns and has paid all taxes shown as due thereon or with respect to any of
its properties, and there is no tax deficiency that has been or, to the
knowledge of the Company, is likely to be asserted against the Company, either
Subsidiary or any of their respective properties or assets that does or would
have a material adverse effect on the condition (financial or other), business,
net worth or results of operations of the Company and the Subsidiaries taken as
a whole.

(t) Except as disclosed in the Registration Statement and the
Prospectus, neither the Company nor the College is involved in any labor
dispute nor, to the knowledge of the Company, is any such dispute threatened.
The Company is not aware that (i) any executive officer, key employee or
significant group of employees of the College plans to terminate employment
with the College or (ii) any executive officer or other employee of the College
named in the Prospectus is subject to any noncompete, nondisclosure,
confidentiality, employment, consulting or similar agreement that has been
violated or would be violated by the past, present or proposed business
activities of the College or of the activities of such officer or employee on
behalf of the College. With respect to each employee benefit plan, program and
arrangement (including, without limitation, any "employee benefit plan" as
defined in Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA")), maintained or contributed to by the Company or the
Subsidiaries, or with respect to which the Company or the Subsidiaries could
incur any liability under ERISA (collectively, the "benefit plans"), no event
has occurred and there exists no condition or set of circumstances in
connection with which the Company or the Subsidiaries could be subject to any
liability under the terms of such benefit plan or applicable law (including,
without limitation, ERISA and the Internal Revenue Code of 1986, as amended)
that could materially adversely affect the condition (financial or other),
business, net worth or results of operations of the Company and the
Subsidiaries taken as a whole.

(u) The Company and the Subsidiaries are in compliance with all
applicable existing federal, state, local and foreign laws and regulations
relating to the protection of human health or the environment or imposing
liability or requiring standards of conduct concerning any hazardous materials
(collectively, "environmental laws"). The term "hazardous materials" means (i)
any "hazardous substance" as defined by the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended, (ii) any
"hazardous waste" as defined by the Resource Conservation and Recovery Act, as
amended, (iii) any petroleum or petroleum product, (iv) any polychlorinated
biphenyl and (v) any pollutant or contaminant or hazardous, dangerous or toxic
chemical, material, waste or substance regulated under or within the meaning of
any other environmental law.

(v) The Company and the Subsidiaries own or possess all patents,
trademarks, trademark registrations, service marks, service mark registrations,
trade names, copyrights, licenses, inventions, trade secrets and rights
necessary for the conduct of their respective businesses, and the Company is
not aware of any claim to the contrary or any challenge by any other person to
the rights of the Company and the Subsidiaries with respect to the foregoing.

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<PAGE> 13
(w) No holder of any security of the Company or the College has any
right to require registration of shares of Common Stock or any other security
of the Company because of the filing of the registration statement or the
consummation of the transactions contemplated by this Agreement.

(x) The Company is not now, and after sale of the Shares to be sold
by it hereunder and application of the net proceeds from such sale as described
in the Prospectus under the caption "Use of Proceeds" will not be, an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended,

(y) The Company has complied and shall comply with all provisions of
Sec. 517.075 Florida Statutes, as amended, and all regulations promulgated
thereunder relating to doing business with Cuba.

(z) The Company has not distributed and, prior to the later to occur
of (i) the Closing Date and (ii) completion of the distribution of the Shares,
the Company will not distribute any offering material in connection with the
offering and sale of the Shares other than the Registration Statement, the
Prepricing Prospectus, the Prospectus or other materials, if any, permitted by
the Act.

(aa) To the knowledge of the Company, after due inquiry, none of the
officers, directors or 5% or greater shareholders of the Company has any
affiliations with any member of the NASD.

6. Indemnification and Contribution.

(a) The Company and the College, jointly and severally, agree
to indemnify and hold harmless each Underwriter, each person, if any, who
controls such Underwriter within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act, and the officers, directors, partners,
employees and agents of such Underwriter from and against all claims,
liabilities, losses or damages, joint or several, to which any such indemnified
person may become subject under the Act or otherwise, insofar as such claims,
liabilities, losses or damages (or actions or proceedings in respect thereof)
arise out of, are related to or are based upon (i) any breach by the Company of
any representation, warranty, covenant or agreement made by it in this
Agreement or in any certificate delivered by or on behalf of the Company
pursuant hereto, (ii) any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement or any amendment or
supplement thereto, or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading or (iii) any untrue statement or alleged untrue
statement of a material fact contained in any Prepricing Prospectus or the
Prospectus or any amendment or supplement thereto, or the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, and agree to reimburse each
indemnified person for any legal or other expenses reasonably incurred by it,
as and when incurred, in connection with investigating or defending any such
claim, liability, loss, damage, action or proceeding; provided, however, that
neither the Company nor the College shall be liable in any such case to the
extent that any such claim, liability, loss or damage (or action or proceeding
in respect thereof) arises out of, is related to or is based upon an untrue
statement or alleged untrue statement or omission or alleged

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<PAGE> 14
omission made in the Registration Statement, such Prepricing Prospectus or the
Prospectus, or any such amendment or supplement thereto, in reliance upon, and
in conformity with, written information furnished to the Company by or on
behalf of any Underwriter through the Representative expressly for use in the
preparation thereof or for inclusion therein. This indemnity agreement shall
be in addition to any liability which the Company or the College may otherwise
have.

(b) Each Underwriter, severally and not jointly, agrees to
indemnify and hold harmless the Company, each person, if any, who controls the
Company within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act, each director of the Company and each officer of the Company who
signed the Registration Statement from and against all claims, liabilities,
losses or damages, joint or several, to which such indemnified person may
become subject under the Act or otherwise, insofar as such claims, liabilities,
losses or damages (or actions or proceedings in respect thereof) arise out of,
are related to or are based upon (i) any breach by any Underwriter of any
representation, warranty, covenant or agreement made by it in this Agreement,
(ii) any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement or any amendment or supplement thereto,
or the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein nor misleading
or (ii) any untrue statement or alleged untrue statement of a material fact
contained in any Prepricing Prospectus or the Prospectus or any amendment or
supplement thereto, or the omission or alleged omission to state therein a
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, in the case of
clauses (ii) and (iii) of this Section 6(b) to the extent, but only to the
extent, that such untrue statement or alleged untrue statement or omission or
alleged omission was made in reliance upon, and in conformity with, written
information furnished to the Company by or on behalf of any Underwriter through
the Representative expressly for use in the preparation thereof or for
inclusion therein, and agrees to reimburse the Company for any legal or other
expenses reasonably incurred by the Company, as and when incurred, in
connection with investigating or defending any such claim, liability, loss,
damage, action or proceeding. This indemnity agreement shall be in addition to
any liability which any Underwriter otherwise may have.

(c) If any action, suit or proceeding (including any
governmental investigation) shall be brought against any person in respect of
which indemnity may be sought under this Section 6, such indemnified person
shall promptly notify the indemnifying person in writing of the commencement
thereof, but the omission so to notify the indemnifying person shall not
relieve such indemnifying person from any liability which it may have to any
indemnified person. Upon the request of the indemnified person, the
indemnifying person shall assume the defense of such action, suit or proceeding
with counsel reasonably satisfactory to the indemnified person and shall pay
all fees and expenses of such counsel as and when they were incurred. Such
indemnified person shall have the right to employ separate counsel in any such
action, suit or proceeding and to participate in the defense thereof, but the
fees and expenses of such counsel shall be at the expense of such indemnified
person unless (i) the indemnifying person has agreed in writing to pay such
fees and expenses, (ii) the indemnifying person has failed to assume the
defense of such action, suit or proceeding with counsel reasonably
satisfactory to such indemnified person or (iii) the named parties to any such
action, suit or proceeding (including any impleaded parties) include

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<PAGE> 15
both such indemnified person and the indemnifying person and such indemnified
person shall have been advised by its counsel that representation of such
indemnified person and the indemnifying person by the same counsel would be
inappropriate under applicable standards of professional conduct (whether or
not such representation by the same counsel has been proposed) due to actual or
potential differing interests between them (in which case the indemnifying
person shall not have the right to assume the defense of such action, suit or
proceeding on behalf of such indemnified person). In connection with any one
such action, suit or proceeding or separate but substantially similar or
related actions, suits or proceedings in the same jurisdiction arising out of
the same general allegations or circumstances, the indemnifying person shall be
liable for the reasonable fees and expenses of only one separate firm of
attorneys (in addition to any local counsel) at any time for all indemnified
persons not having actual or potential differing interests with the
indemnifying person or among themselves. Such separate firm of attorneys shall
be designated in writing by the Representative on behalf of the Underwriters,
and all such fees and expenses of such firm shall be reimbursed as and when
they are incurred. The indemnifying person shall not be liable for any
settlement of any such action, suit or proceeding effected without its written
consent, but if settled with such written consent, or if there be a final
judgment for the plaintiff in any such action, suit or proceeding, the
indemnifying person agrees to indemnify and hold harmless any indemnified
person in each case to the extent provided in Section 6(a) or (b) from and
against any claim, liability, loss, damage, action or proceeding by reason of
such settlement or judgment.

(d) If the indemnification provided for in this Section 6 is
unavailable to or insufficient to hold harmless an indemnified person under
Section 6(a) or (b) in respect of any claims, liabilities, losses or damages
(or actions or proceedings in respect thereof) referred to therein, each
indemnifying person shall contribute to the amount paid or payable by such
indemnified person as a result of such claims, liabilities, losses or damages
(or actions or proceedings in respect thereof) in such proportion as is
appropriate to reflect the relative benefits received by the Company or the
College on the one hand and the Underwriters on the other hand from the
offering of the Shares. If, however, the allocation provided by the next
preceding sentence is not permitted by applicable law, each indemnifying person
shall contribute to such amount paid or payable by such indemnified person in
such proportion as is appropriate to reflect not only the relative benefits
referred to in the next preceding sentence but also the relative fault of the
Company on the one hand and the Underwriters on the other hand in connection
with the statements or omissions that resulted in such claims, liabilities,
losses or damages (or actions or proceedings in respect thereof), as well as
any other relevant equitable considerations. The relative benefits received
by the Company or the College on the one hand and the Underwriters on the other
hand shall be deemed to be in the same proportion as the total net proceeds
from the offering of the Shares (before deducting expenses) received by the
Company bear to the total underwriting discounts and commissions received by
the Underwriters, in each case as set forth in the table on the cover page of
the Prospectus. The relative fault of the Company on the one hand and the
Underwriters on the other hand shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or
the omission or alleged omission to state a material fact relates to
information supplied by the Company on the one hand or the Underwriters on the
other hand and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission.

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<PAGE> 16
(e) The Company, the College and the Underwriters agree that it
would not be just and equitable if contribution pursuant to this Section 6 were
determined by a pro rata allocation (even if the Underwriters were treated as
one entity for such purpose) or by any other method of allocation which does
not take account of the equitable considerations referred to in paragraph (d)
above. The amount paid or payable by an indemnified person as a result of the
claims, liabilities, losses or damages (or actions or proceedings in respect
thereof) referred to in paragraph (d) above shall be deemed to include, subject
to the limitations set forth above, any legal or other expenses reasonably
incurred by such indemnified person in connection with investigating any such
claim or defending any such action or proceeding. Notwithstanding the
provisions of this Section 6, no Underwriter shall be required to contribute
any amount in excess of the amount by which the total price of the Shares
underwritten by it and distributed to the public exceeds the amount of any
damages which such Underwriter has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission. No
person guilty of a fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Underwriters' obligations in
this Section 6 to contribute are several in proportion to the respective
numbers of Firm Shares set forth opposite their names in Schedule I hereto (or
such numbers of Firm Shares increased in accordance with Section 9) and not
joint.

(f) In any proceeding relating to the Registration Statement,
any Prepricing Prospectus, the Prospectus or any supplement or amendment
thereto, each party against whom contribution may be sought under this Section
6 hereby consents to the jurisdiction of any court having jurisdiction over any
other contributing party, agrees that process issuing from such court may be
served upon it by any other contributing party and consents to the service of
such process, and agrees that any other contributing party may join it as an
additional defendant in any such proceeding in which such other contributing
party is a party.

(g) Each indemnifying person agrees that it will not settle or
compromise or consent to the entry of any judgment in any pending or threatened
claim, action, suit or proceeding in respect of which indemnification may be
sought from it by an indemnified person (whether any indemnified person is an
actual or potential party to such claim, action, suit or proceeding) unless
such settlement, compromise or consent includes an unconditional release of
each indemnified person hereunder from all liability arising out of such claim,
action, suit or proceeding.

7. Conditions of Underwriters' Obligations. The obligations of the
several Underwriters to purchase the Firm Shares hereunder are subject to the
following conditions:

(a) If, at the time this Agreement is executed and delivered,
it is necessary for the registration statement or a post-effective amendment
thereto to be declared effective before the offering of the Shares may
commence, the registration statement or such post-effective amendment shall
have become effective not later than 5:30 p.m., Baltimore time, on the date
hereof, or at such later date and time as shall be consented to by you, and all
filings, if any, required by Rules 424 and 430A under the Act shall have been
timely made; no stop order suspending the effectiveness of the Registration
Statement shall have been issued and no proceeding for that purpose shall have
been instituted or, to the knowledge of the Company or any Underwriter,
threatened by the Commission; and any request of the Commission for

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<PAGE> 17
additional information (to be included in the Registration Statement or the
Prospectus or otherwise) shall have been complied with to your satisfaction.

(b) Subsequent to the effective date of this Agreement, there
shall not have occurred (i) any material change, or any development involving a
prospective material change, in or affecting the condition (financial or
other), business, properties, net worth or results of operations of the Company
or the College not contemplated by the Prospectus, which in your opinion, as
Representative of the several Underwriters, would materially adversely affect
the market for the Shares, or (ii) any event or development relating to or
involving the Company, the College or any officer or director of the Company
which makes any statement in the Prospectus untrue or which, in the opinion of
the Company and its counsel or the Underwriters and their counsel, requires the
making of any addition to or change in the Prospectus in order to state a
material fact required by the Act or any other law to be stated therein or
necessary in order to make the statements therein not misleading, if amending
or supplementing the Prospectus to reflect such event or development would, in
your opinion, as Representative of the several Underwriters, materially
adversely affect the market for the Shares.

(c) All corporate proceedings and other legal matters in
connection with this Agreement, the form of Registration Statement and
Prospectus, and the registration, authorization, issue, sale and delivery of
the Shares shall have been reasonably satisfactory to counsel for the
Underwriters, and such counsel shall have been furnished with such papers and
information as they may reasonably have requested to enable them to pass upon
the matters referred to in this Section 7.

(d) You shall have received on the Closing Date, an opinion of
Hogan & Hartson, counsel for the Company, dated the Closing Date and addressed
to you, as Representative of the several Underwriters, to the effect that:

(i) The Company is a corporation duly organized and
validly existing in good standing under the laws of the State of Maryland with
full corporate power and authority to own, lease and operate its properties and
to conduct its business as described in the Registration Statement and the
Prospectus.

(ii) Each of the Subsidiaries is a corporation duly
incorporated and validly existing in good standing under the laws of the
jurisdiction of its incorporation, with full corporate power and authority to
own, lease, and operate its properties and to conduct its business as described
in the Registration Statement and the Prospectus.

(iii) The Company and each of the Subsidiaries is duly
qualified or licensed to do business as a foreign corporation by, and is in
good standing in, each jurisdiction in which its ownership, leasing, licensing
or use of property and assets or the conduct of its business makes such
licensing or qualification necessary, except in those jurisdictions where the
failure, individually or in the aggregate, to be so licensed or qualified or in
good standing would not have a material adverse effect on the financial
condition, business, properties, net worth or results of operations of the
Company and the Subsidiaries taken as a whole.

(iv) The Reorganization has been consummated in the
manner described in the Registration Statement and the Prospectus. All of the
outstanding shares of capital stock of each of the Subsidiaries have been duly
authorized and validly issued, are fully paid and

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<PAGE> 18
nonassessable, and are owned by the Company directly free and clear of any
perfected security interest or, to such counsel's knowledge, after inquiry, any
other security interest, lien, adverse claim, equity or other encumbrance. To
such counsel's knowledge, after inquiry, there are no outstanding options,
warrants or other rights calling for the issuance of, or any commitment, plan
or arrangement to issue, any shares of capital stock of either of the
Subsidiaries or any security convertible into or exchangeable or exercisable
for any shares of capital stock of either of the Subsidiaries.

(v) The authorized capital stock of the Company is as
set forth in the Prospectus under the caption "Capitalization" and conforms in
all material respects as to legal matters to the description thereof contained
in the Prospectus under the caption "Description of Capital Stock." All of the
shares of capital stock of the Company issued to the Current Stockholders have
been duly authorized and validly issued and are fully paid and nonassessable
and free of preemptive rights under the Maryland General Corporation Law.

(vi) The Shares have been duly authorized and, when
issued and delivered to the Underwriters against payment therefor in
accordance with the terms of this Agreement, will be validly issued, fully paid
and nonassessable and free of preemptive rights under the Maryland General
Corporation Law. To such counsel's knowledge, after inquiry, except as
described in the Registration Statement and the Prospectus, when issued and
delivered to the Underwriters against payment therefor in accordance with the
terms of this Agreement, (A) the Shares will be free of any contractual
preemptive rights or similar rights that would entitle any person to acquire
any Shares upon the issuance thereof by the Company, (B) there are no
outstanding options, warrants or other rights calling for the issuance of, or
any commitment, plan or arrangement to issue, any shares of capital stock of
the Company or any security convertible into or exchangeable or exercisable for
capital stock of the Company and (C) no holder of any security of the Company
or any other person has the right, contractual or otherwise, to cause the
Company to sell or otherwise issue to them, or to permit them to underwrite the
sale of, the Shares or the right to have any shares of Common Stock or other
securities of the Company included in the Registration Statement or the right,
as a result of the filing of the Registration Statement, to require
registration under the Act of any shares of Common Stock or other securities of
the Company.

(vii) The form of certificate evidencing the Shares and
filed as an exhibit to the Registration Statement conforms to the requirements
of the Maryland General Corporation Law.

(viii) Neither the issuance and sale of the Shares, the
execution, delivery or performance of this Agreement or any of the agreements
entered into by the Company or either Subsidiary in connection with the
Reorganization, nor the consummation by the Company and the Subsidiaries of the
transactions contemplated hereby, thereby or in the Reorganization: (i)
requires any consent, approval, authorization or other order of, registration
or filing with, or notice to any court, regulatory body, administrative agency
or other governmental body, agency or official (except for such as may be
required for the registration of the Shares under the Act, the registration of
the Common Stock under the Exchange Act and compliance with the securities or
Blue Sky laws of various jurisdictions, all of which have been or will be
effected in accordance with this Agreement, such as may be required by the NASD
and such other consents, approvals,

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<PAGE> 19
authorizations, registrations, filings and notices as have been obtained or
effected by the Company or the College); (ii) conflicts or will conflict with
or constitutes or will constitute a breach of, or a default under, the articles
of incorporation or by-laws of the Company or either of the Subsidiaries; (iii)
conflicts or will conflict with or constitutes or will constitute a breach of,
or a default under, any agreement, indenture, lease or other instrument of
which such counsel has knowledge, after inquiry, to which the Company or either
of the Subsidiaries is a party or by which any of them or any of their
respective properties may be bound; (iv) violates or will violate any statute,
law, regulation or filing or judgment, injunction, order or decree applicable
to the Company or either of the Subsidiaries or any of their respective
properties; or (v) will result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the Company or either of
the Subsidiaries pursuant to the terms of any agreement or instrument to which
any of them is a party or by which any of them may be bound or to which any of
the property or assets of any of them is subject.

(ix) Each of the Company and the College has the
corporate power and authority to enter into this Agreement, this Agreement has
been duly authorized, executed and delivered by the Company and the College,
and, assuming due authorization, execution and delivery by you, this Agreement
is a valid, legal and binding agreement of the Company and the College,
enforceable against the Company and the College in accordance with its terms,
except as enforcement of rights to indemnity and contribution hereunder may be
limited by federal or state securities laws or principles of public policy and
subject to the qualification that the enforceability of the obligations of the
Company and the College hereunder may be limited by bankruptcy, fraudulent
conveyance, insolvency, reorganization, moratorium, and other laws relating to
or affecting creditors' rights generally and by general equitable principles.

(x) The College is (A) accredited by Middle States,
(B) licensed by the D.C. Education Licensure Commission to operate and to grant
degrees and diplomas to students in the District of Columbia, licensed by the
Virginia State Council of Higher Education to operate and to grant degrees and
diplomas to students in the Commonwealth of Virginia and approved by the
Maryland Higher Education Commission to operate in the State of Maryland as an
out-of-state institution, and (C) eligible and certified to participate in
Title IV Programs.

(xi) The Company and each of the Subsidiaries has all
necessary governmental and accrediting commission authorizations, approvals,
orders, licenses, certificates, franchises and permits of and from all
governmental regulatory officials and bodies and accrediting commissions,
including, without limitation, all authorizations required for participation in
Title IV Programs (except where the failure so to have any such authorizations,
approvals, orders, licenses, certificates, franchises or permits, individually
or in the aggregate, would not have a material adverse effect on the financial
condition, business, properties, net worth or results of operations of the
Company and the Subsidiaries taken as a whole), to own their respective
properties and to conduct their respective businesses as described in the
Registration Statement and the Prospectus.

(xii) Other than as described in the Registration
Statement and the Prospectus, there are no legal, governmental or regulatory
proceedings pending or, to such counsel's knowledge, after inquiry, threatened
against the Company or either of the Subsidiaries,

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<PAGE> 20
or to which the Company or either of the Subsidiaries, or any of their
respective properties, is subject, which are required to be so described.

(xiii) To such counsel's knowledge, after inquiry, there
are no agreements, contracts, indentures, leases or other instruments that are
required to be described in the Registration Statement or the Prospectus or to
be filed as an exhibit to the Registration Statement that are not described or
filed as required.

(xiv) The Registration Statement and all post-effective
amendments thereto, if any, have become effective under the Act and, to such
counsel's knowledge, after inquiry, no stop order suspending the effectiveness
of the Registration Statement has been issued. Any required filing of the
Prospectus pursuant to Rule 424(b) under the Act has been made in accordance
with Rule 424(b).

(xv) The Registration Statement and the Prospectus
(except for the financial statements and the notes thereto and the schedules
and other financial data included therein, as to which such counsel need not
express any opinion) comply as to form in all material respects with the
requirements of the Act and the Rules and Regulations.

(xvi) The statements in the Registration Statement and
the Prospectus with respect to written contracts, agreements or other legal
documents, to the extent that they involve matters of law or legal conclusions,
have been prepared or reviewed by such counsel and are accurate in all material
respects.

(xvii) The statements in the Registration Statement and
the Prospectus set forth under the captions "Risk Factors - Potential Adverse
Effects of Regulation," "Business - Accreditation and Approvals" and
"Licensing, Accreditation and Financial Aid Regulation," to the extent that
they involve matters of law or legal conclusions, have been prepared or
reviewed by such counsel and are accurate in all material respects.

(xviii) Neither the Company nor either of the
Subsidiaries is an "investment company" or a person "controlled by" an
"investment company" with the meaning of the Investment Company Act of 1940, as
amended.

In addition, such counsel shall state that, although such counsel has not
undertaken, except as otherwise indicated in their opinion, to determine
independently, and does not assume any responsibility for, the accuracy or
completeness of the statements in the Registration Statement, such counsel has
participated in the preparation of the Registration Statement and the
Prospectus, including review and discussion of the contents thereof, and
nothing has come to the attention of such counsel that has caused it to believe
(A) that, at the time the Registration Statement became effective, the
Registration Statement contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein not misleading or (B) that the Prospectus and any
amendment or supplement to the Prospectus, as of its respective date, and as of
the Closing Date, contained any untrue statement of a material fact or omitted
to state a material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading (it
being understood that such counsel need express no opinion with respect to the

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<PAGE> 21
financial statements and the notes thereto and the schedules and other
financial data included in the Registration Statement or the Prospectus).

.References to the Prospectus or the Registration Statement in this
paragraph (d) include any amendment or supplement thereto.

(e) You shall have received on the Closing Date an opinion
of Shaw, Pittman, Potts & Trowbridge, counsel for the Underwriters, dated the
Closing Date and addressed to you, as Representative of the several
Underwriters, with respect to such matters as you may request.

(f) You shall have received letters addressed to the
Company and to you, as Representative of the several Underwriters, and dated as
of the date hereof and the Closing Date, from Coopers & Lybrand L.L.P.,
independent certified public accountants, and Wooden & Benson, independent
certified public accountants, substantially in the forms heretofore approved by
you.

(g) You shall have received on the Closing Date a
certificate, dated the Closing Date and signed by the Chief Executive Officer
and the Chief Financial Officer of the Company, to the effect that, as of the
Closing Date: (i) no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that purpose have
been taken or, to the knowledge of such officer, are contemplated by the
Commission at or prior to the Closing Date; (ii) there has not been any change
in the capital stock of the Company nor any material increase in the short-term
or long-term debt of the Company or either Subsidiary (other than in the
ordinary course of business) from that set forth or contemplated in the
Registration Statement or the Prospectus (or any amendment or supplement
thereto); (iii) there has not been, since the respective dates as of which
information is given in the Registration Statement and the Prospectus (or any
amendment or supplement thereto), except as may otherwise be stated in the
Registration Statement and Prospectus (or any amendment or supplement thereto),
any material adverse change in the condition (financial or other), business,
prospects, properties, net worth or results of operations of the Company and
the Subsidiaries taken as a whole; (iv) the Company and the Subsidiaries do not
have any liabilities or obligations, direct or contingent (whether or not in
the ordinary course of business), that are material to the Company and the
Subsidiaries taken as a whole, other than those reflected in the Registration
Statement or the Prospectus (or any amendment or supplement thereto); (v) all
of the representations and warranties of the Company contained in this
Agreement are true and correct; (vi) such officer has carefully examined the
Registration Statement and the Prospectus and, to such officer's knowledge, as
of the effective date of the Registration Statement, (A) (1) the Registration
Statement did not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading and (2) the Prospectus did not contain any
untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading, and (B) since
the effective date of the Registration Statement, no event has occurred which
should have been set forth in a supplement or an amendment to the Prospectus
which has not been so set forth in such supplement or amendment.

(h) The Reorganization shall have been consummated in the
manner described in the Registration Statement and the Prospectus.

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<PAGE> 22
(i) The Company shall not have failed at or prior to the
Closing Date to have performed or complied with any of its agreements herein
contained and required to be performed or complied with by it hereunder at or
prior to the Closing Date.

(j) No suit, proceeding or other action by Middle States
or any governmental or regulatory body (including the U.S. Department of
Education, the D.C. Education Licensure Commission, the Virginia State Council
of Higher Education or the Maryland Higher Education Commission) affecting the
Company or the College which is material and adverse to the Company or the
College or which affects or may affect adversely the ability of the Company or
the College to perform its obligations under this Agreement shall have been
instituted or threatened, and there shall have occurred no material adverse
development in action, suit or proceeding or other action instituted prior to
the effective date of the Registration Statement.

(k) The NASD shall have indicated that it has no
objection to the underwriting arrangements pertaining to the sale of the Shares
and the participation by the Underwriters in the sale of the Shares.

(l) The Shares shall have been listed or approved for
listing subject to notice of issuance on the Nasdaq Stock Market.

(m) The Company shall have furnished or caused to be
furnished to you such further certificates and documents as you shall have
reasonably requested.

All such opinions, certificates, letters and other documents shall be
in compliance with the provisions hereof only if they are satisfactory in form
and substance to you and counsel for the Underwriters.

Any certificate or document signed by any officer of the Company and
delivered to you, as Representative of the several Underwriters, or to counsel
for the Underwriters, shall be deemed a representation and warranty by the
Company to each Underwriter as to the statements made therein.

The several obligations of the Underwriters to purchase Option Shares
hereunder are subject to the satisfaction on and as of any Option Closing Date
of the conditions set forth in this Section 7, except that, if any Option
Closing Date is other than the Closing Date, the certificates, opinions and
letters referred to in paragraphs (d) through (g) above shall be dated as of
such Option Closing Date and the opinions referred to in paragraphs (d) and (e)
above shall be revised to reflect the sale of such Option Shares.

8. Payment of Costs, Fees and Expenses. The Company and the
College shall pay (directly or by reimbursement) all costs, fees and expenses
incurred in connection with or incident to the performance of the Company's
obligations hereunder and in connection with the transactions contemplated
hereby, including, without limitation, the following: (i) the costs and
expenses incident to the preparation, printing (or reproduction) and filing
with the Commission of the registration statement (including all financial
statements and exhibits thereto), each Prepricing Prospectus, the Prospectus,
and each amendment or supplement to any of them; (ii) the costs and expenses
associated with the printing (or reproduction) and delivery (including postage,
air freight charges and charges for counting and packaging) of such copies of
the registration statement, each Prepricing Prospectus, the Prospectus, and all
amendments or supplements to any of them as

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<PAGE> 23
may be reasonably requested for use in connection with the offering and sale of
the Shares; (iii) the costs and expenses associated with the preparation,
printing, authentication, issuance and delivery of certificates for the Shares,
including any stamp taxes in connection with the original issuance and sale of
the Shares; (iv) the printing (or reproduction) and delivery of this Agreement,
the Agreement Among Underwriters, the Selected Dealer Agreement, the
Underwriters' Questionnaire, the Power of Attorney, the Preliminary Blue Sky
Memorandum and any supplement thereto and all other agreements or documents
printed (or reproduced) and delivered in connection with the offering of the
Shares; (v) the costs and expenses incident to the registration of the Common
Stock under the Exchange Act and the listing of the Shares on the Nasdaq Stock
Market; (vi) the costs, fees and expenses incurred in connection with the
registration or qualification of the Shares for offer and sale under the
securities or Blue Sky laws of the various jurisdictions as provided in Section
4(g) (including the reasonable fees, expenses and disbursements of counsel for
the Underwriters relating to the preparation, printing (or reproduction) and
delivery of the Preliminary Blue Sky Memorandum and any supplement thereto and
such registration and qualification); (vii) the filing fees and the fees and
expenses of counsel for the Underwriters incurred in connection with any
filings required to be made with the NASD; (viii) the transportation and other
expenses incurred by or on behalf of representatives of the Company in
connection with presentations to prospective purchasers of the Shares; (ix) the
fees and expenses of the Company's accountants and the fees and expenses of
counsel for the Company; and (x) the costs and charges for any transfer agent
for the Shares.

9. Substitution of Underwriters. If on the Closing Date or the
Option Closing Date, as the case may be, any Underwriter shall fail to purchase
and pay for the portion of the Shares which such Underwriter has agreed to
purchase and pay for on such date (otherwise than by reason of any default on
the part of the Company), you, as Representative of the several Underwriters,
shall use your best efforts to procure within twenty-four (24) hours thereafter
one or more of the other Underwriters, or any others, to purchase from the
Company such amounts as may be agreed upon and upon the terms set forth
herein, the Firm Shares or the Option Shares, as the case may be, which the
defaulting Underwriter or Underwriters failed to purchase. If during such
twenty-four (24) hours you shall not have procured such other Underwriters, or
any others, to purchase the Firm Shares or the Option Shares, as the case may
be, agreed to be purchased by the defaulting Underwriter or Underwriters, then
(i) if the aggregate number of Shares with respect to which such default shall
occur does not exceed 10% of such Firm Shares or Option Shares, as the case may
be, the other Underwriters shall be obligated, severally, in proportion to the
respective numbers of Firm Shares or Option Shares, as the case may be, which
they are obligated to purchase hereunder, to purchase the Firm Shares or Option
Shares, as the case may be, which such defaulting Underwriter or Underwriters
failed to purchase, or (ii) if the aggregate number of Shares with respect to
which such default shall occur exceeds 10% of such Firm Shares or Option
Shares, as the case may be, you, as Representative of the several Underwriters,
shall have the right, by written notice given within the next 24-hour period to
the parties to this Agreement, to terminate this Agreement without liability on
the part of the non-defaulting Underwriters or of the Company or the College,
except to the extent provided in Sections 6 and 8. In the event of a default
by any Underwriter or Underwriters, as set forth in this Section 9, the Closing
Date or Option Closing Date, as the case may be, may be postponed for such
period, not exceeding seven (7) days, as you may determine in order that the
required changes in the Registration Statement or in the Prospectus or in any
other documents or arrangements may be

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<PAGE> 24
effected. The term "Underwriter" as used in this Agreement includes any person
substituted for a defaulting Underwriter. Any action taken under this Section
9 shall not relieve any defaulting Underwriter from liability in respect of any
default of such Underwriter under this Agreement.

Any notice under this Section 9 may be given by telegram, telecopy or
telephone, but shall be subsequently confirmed by letter.

10. Effective Date and Termination of Agreement.

(a) This Agreement shall become effective: (i) upon the
execution and delivery hereof by the parties hereto; or (ii) if, at the time
this Agreement is executed and delivered, it is necessary for the registration
statement or a post-effective amendment thereto to be declared effective before
the offering of the Shares may commence, when notification of the effectiveness
of the registration statement or such post-effective amendment has been
released by the Commission. Until such time as this Agreement shall have
become effective, it may be terminated by the Company, by notifying you, or by
you, as Representative of the several Underwriters, by notifying the Company.

(b) This Agreement shall be subject to termination in your
absolute discretion, without liability on the part of any Underwriter to the
Company, by notice to the Company, if prior to the Closing Date or any Option
Closing Date (if different from the Closing Date and then only as to the Option
Shares), as the case may be, (i) the Company shall have failed, refused or
been unable to perform any agreement on its part to be performed, or because
any other condition of the Underwriters' obligations hereunder required to be
fulfilled is not fulfilled, including, without limitation, any change in the
condition (financial or otherwise), business, properties, net worth, results of
operations or business prospects of the Company and the Subsidiaries taken as a
whole from that set forth in the Registration Statement or the Prospectus,
which, in your sole judgment, is material and adverse, (ii) trading in
securities generally on the New York Stock Exchange, the American Stock
Exchange or the Nasdaq Stock Market shall have been suspended or materially
limited, (iii) a general moratorium on commercial banking activities in the
State of New York or the State of Maryland shall have been declared by either
federal or state authorities or (iv) there shall have occurred any outbreak or
escalation of hostilities or other international or domestic calamity, crisis
or significant adverse change in political, financial or economic conditions,
the effect of which on the financial markets of the United States is such as to
make it, in your judgment, impracticable or inadvisable to commence or continue
the offering of the Shares at the offering price to the public set forth on the
cover page of the Prospectus or to enforce contracts for the resale of the
Shares by the Underwriters. Notice of such termination may be given to the
Company by telegram, telecopy or telephone and shall be subsequently confirmed
by letter.

11. Information Furnished by the Underwriters. The statements set
forth in the last paragraph on the cover page, the stabilization legend on the
inside cover page, and the statements in the first, third and eighth paragraphs
under the caption "Underwriting" in any Prepricing Prospectus and in the
Prospectus, constitute the only information furnished by or on behalf of the
Underwriters through you as such information is referred to in Sections 5(b)
and 6.

12. Representations, Warranties, Covenants and Agreements to Survive
Delivery. All representations, warranties, covenants and agreements of the
Company, the College and the

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<PAGE> 25
Underwriters herein or in certificates delivered pursuant hereto and the
indemnity and contribution agreements contained in Section 6 shall remain
operative and in full force and effect regardless of any investigation made by
or on behalf of any Underwriter or any controlling person within the meaning of
the Act or the Exchange Act, or by or on behalf of the Company or any of its
officers, directors or controlling persons within the meaning of the Act or the
Exchange Act, and shall survive the delivery of the Shares to the several
Underwriters hereunder or the termination of this Agreement.

13. Covenants and Agreements of the College. Notwithstanding any
contrary provision in this Agreement, any and all obligations of the College
under its covenants and agreements in Sections 4(m), 6 and 8 shall cease and
terminate effective upon consummation of the Reorganization.

14. Miscellaneous. Except as otherwise provided in Sections 4, 9
and 10, notice given pursuant to any provision of this Agreement shall be in
writing and shall be delivered as follows: (i) if to the Company, at the
offices of the Company at 1025 15th Street, N.W., Washington, D.C. 20005,
Attention: Ron K. Bailey; (ii) if to the College, at the offices of the
College at 1025 15th Street, N.W., Washington, D.C. 20005, Attention: Ron K.
Bailey; or (iii) if to you, as Representative of the several Underwriters, care
of Legg Mason Wood Walker, Incorporated, Legg Mason Tower, 111 South Calvert
Street, 20th Floor, Baltimore, Maryland 21202, Attention: [________________].

This Agreement has been and is made solely for the benefit of the
several Underwriters, the Company, its directors and officers, and the
successors and assigns of the Company, to the extent provided herein, and no
other person shall acquire or have any right under or by virtue of this
Agreement. Neither the term "successor" nor the term "successors and assigns"
as used in this Agreement shall include a purchaser from any Underwriter of any
of the Shares in his status as such purchaser.

15. Applicable Law; Counterparts. This Agreement shall be governed
by and construed in accordance with the laws of the State of Maryland without
giving effect to the choice of law or conflicts of laws principles thereof.

This Agreement may be signed in various counterparts which together
constitute one and the same instrument. If signed in counterparts, this
Agreement shall not become effective unless at least one counterpart hereof
shall have been executed and delivered on behalf of each party hereto.

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<PAGE> 26

Please confirm that the foregoing correctly sets forth the agreement
among the Company, the College and the several Underwriters.

Very truly yours,

STRAYER EDUCATION, INC.

By:
------------------------
Chief Executive Officer

STRAYER COLLEGE, INC.

By:
------------------------
Chief Executive Officer

Confirmed as of the date first above
specified on behalf of itself and the other
several Underwriters named in Schedule I
hereto

As Representative of the several
Underwriters

By: LEGG MASON WOOD WALKER,
INCORPORATED

By:
------------------------------
[Title]

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<PAGE> 27
SCHEDULE I

Schedule of Underwriters

<TABLE>
<CAPTION>
Underwriter Number of Firm Shares
----------- To be Purchased
--------------------------
<S> <C>
Legg Mason Wood Walker, Incorporated
</TABLE>

-27-

<PAGE> 1
EXHIBIT 10.01

DEED OF LEASE

1. PARTIES. This Deed of Lease ("Lease") dated as of the 1st day
of June, 1996, is between STRAYER COLLEGE, INC., a Maryland Corporation, as
TENANT; and FREDERICKSBURG INVESTMENTS, INC., a Virginia Corporation, as
LANDLORD.

2. Premises.

(a) Landlord hereby leases to Tenant, and Tenant hereby leases
from Landlord, for the term and upon the conditions hereinafter set forth, the
Premises ("Premises"), located in the County of Spotsylvania, Virginia, and
consisting of space comprising an area of approximately 17,520 square feet, and
known as 4500 Plank Road, Fredericksburg, Virginia. The Premises are located
in that portion of the office building designated on the attached and
incorporated Exhibit "A" as the "Building Addition".

(b) In addition to the Premises, the Tenant shall have a
license to use in common with others such automobile parking areas, driveways,
footways, and other facilities as may be designated from time to time by the
Landlord; subject, however, to the terms and conditions hereof and to
reasonable rules and regulations for the use thereof prescribed by the Landlord
and distributed to Tenant. The Tenant shall not use or permit its employees to
use at any time the sixteen (16) parking spaces designated on Exhibit A
attached hereto as "RESERVED".

3. TERM. The primary term of this Lease shall commence on the
date set forth in Paragraph 1 above (the "Lease Commencement Date"), and shall
continue for a period of ten (10) years ("Term") thereafter, unless sooner
terminated or extended as hereafter provided.

4. BASE RENT.

(a) Beginning on the Lease Commencement Date, Tenant
shall pay to Landlord a Base Rent at the rate of TWO HUNDRED NINETY SEVEN
THOUSAND EIGHT HUNDRED FORTY AND NO/100 DOLLARS ($297,840.00), for each year of
the primary Term, subject to increase pursuant to Paragraph 29 below, all of
which said rent shall be payable in equal monthly installments of TWENTY FOUR
THOUSAND EIGHT HUNDRED TWENTY AND NO/100 DOLLARS($24,820.00), in advance on the
first day of each and every month during the primary Term, subject to increase
pursuant to Paragraph 29 below. Rent shall be paid without any reduction or
setoff whatsoever. Tenant shall pay an additional five percent (5%) late
charge for any rent installments not received by Landlord within seven (7) days
of the due date. If said late charge is not allowable by law, Tenant shall pay
the maximum late charge allowable by law. In addition, Tenant shall pay as
additional rent to Landlord a fee of $50.00 for any check given to Landlord for
any reason which is returned or dishonored.

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<PAGE> 2

(b) This is a net lease, and the Base Rent, additional
rent, and all other sums payable hereunder by Tenant shall be paid without
notice or demand (except as otherwise provided herein), and without set-off,
counterclaim, abatement (except as otherwise provided herein), suspension,
deduction or defense. Tenant covenants that all sums, liabilities and
obligations which the Tenant assumes or agrees to pay or discharge pursuant to
this Lease, together with every expense and cost which may be added for
nonpayment or late payment thereof, shall constitute "additional rent"
hereunder.

(c) Tenant agrees that it shall remain obligated
hereunder, and that it shall not take any action to terminate, rescind, or
avoid this Lease, notwithstanding (i) any bankruptcy, insolvency, liquidation,
reorganization, dissolution, winding-up or other such proceeding affecting
Landlord, or any assignee of Landlord, or (ii) any action with respect hereto
which may be taken by any trustee or receiver of Landlord, or of any assignee
of Landlord in any such proceeding, or by any court in any such proceeding.

5. ADDITIONAL CHARGES.

(a) Except as specifically set forth below with respect
only to Capital Repairs, Tenant shall be responsible for maintaining and
operating the Premises, including, but not limited to trash collection, keeping
parking areas and travel lanes clean and clear of snow and ice and in
maintaining the Premises including landscaping, repainting of signs, poles,
parking lot surface and other like items, cleaning all plate glass, water and
sewer charges, repair of all plumbing, electrical, and HVAC systems,
maintenance and repair of the roof of the Premises, and the cost of insuring
the Premises. Landlord shall have the right, but not the obligation, to perform
any such maintenance or repairs if Tenant fails to perform the same within ten
(10) business days after receipt of written notice from Landlord specifying the
nature of such required maintenance or repair (or, if such maintenance or
repair is not reasonably capable of being performed within such ten
(10)-business day period, if Tenant commences such maintenance or repair within
such ten (10)-business day period and diligently pursues such maintenance or
repair to completion), in which event Tenant shall reimburse Landlord for the
reasonable out-of-pocket costs incurred in connection therewith, within thirty
(30) days after receipt of an invoice substantiating such costs; provided,
however, that Landlord shall have no duty to give such notice prior to
performing any such maintenance or repairs of an emergency nature or which are
required to prevent imminent damage to the Premises. Notwithstanding anything
to the contrary contained in this Lease, Landlord shall repair and maintain in
good working order and condition only the structural components of the building
located on the Premises (the "Capital Repairs"), and Tenant shall have no
obligation with respect thereto. Tenant shall have the right, but not the
obligation, to perform any such Capital Repairs only if Landlord fails to
perform the same within ten (10) business days after receipt of written notice
from Tenant specifying the nature of such required Capital Repairs (or, if such
Capital Repairs are not reasonably capable of being performed within such ten
(10)-business day period, if Landlord commences such capital repairs within
such ten (10)-business day period and diligently pursues such Capital

2
<PAGE> 3
Repairs to completion), in which event Landlord shall reimburse Tenant for the
reasonable out-of-pocket costs incurred in connection therewith, within thirty
(30) days after the receipt of an invoice substantiating such costs. Tenant
shall notify Landlord immediately upon Tenant's becoming aware of the need for
any Capital Repairs. Except with respect to the Capital Repairs, Tenant shall
be responsible for all costs of maintaining and operating the Premises
regardless of whether the actual work is performed by or at the direction of
the Tenant or Landlord. Tenant shall be responsible for paying directly or
reimbursing Landlord for Landlord's share of any and all costs shared among the
building of which the Premises is a part and the other buildings located in the
vicinity of the Premises pursuant to that Easement Agreement recorded among the
land records of Spotsylvania County, Virginia in Deed Book 1090, at page 328.

(b) Tenant shall pay in advance the real estate taxes for
the Premises, in accordance with the following: At the commencement of the
Term of this Lease and at the beginning of each calendar year, Landlord will
deliver to Tenant a reasonable estimate of said real estate taxes. Tenant
shall pay monthly one-twelfth (1/12) of the estimated annual cost in addition
to the monthly rent. Failure by Tenant to pay said taxes on a monthly basis
shall be a default hereunder. After the first calendar year, the estimated
taxes for the next succeeding year and for each year thereafter shall be deemed
to be the actual taxes for the preceding year. On or before the forty-fifth
(45th) day following each December 31st during the Term, Landlord shall provide
Tenant with a statement reflecting the actual real estate taxes for the
Premises for the preceding year or portion thereof. If the actual tax due is
less than the total amount of the estimated tax paid in advance, Landlord shall
credit such excess against the next due payment of taxes; and if the actual tax
due exceeds the advance estimated tax paid over the year, Tenant shall pay
Landlord for the difference within thirty (30) days following receipt by Tenant
of such statement. Advance estimated tax shall be prorated for any partial
calendar year. Failure by Landlord to deliver to Tenant the statement of
actual real estate taxes within the time frame set forth above shall not
relieve Tenant of the obligation to make monthly estimated payments in
accordance with the last estimate of real estate taxes, nor shall it be deemed
a waiver by Landlord of the right to collect the difference between Tenant's
estimated payments and the actual real estate taxes for the preceding year;
provided, however, that if Landlord fails to deliver to Tenant such
reconciliation within the 45-day period provided herein, any excess payments
made by Tenant shall be credited to Tenant along with a late charge in the
amount of five percent (5%) of the amount of the overpayment.

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<PAGE> 4
stoppage or other interference with service involving water, heat, air
conditioning, electric current for light and power, telephone or any other
service; except to the extent the same results from Landlord's failure to
perform its obligations pursuant to Section 8 below, in which event, if such
interruption, stoppage or other impairment of utilities or services renders the
Premises reasonably unacceptable for the use of the Premises contemplated by
this Lease, then the monthly Base Rent and additional rent payable under this
Lease shall be abated until the Premises may reasonably be used for the
purposes contemplated hereunder.

7. PERSONAL PROPERTY TAXES. Tenant agrees to pay all taxes
levied upon the personal property located within the Premises, including trade
fixtures and inventory.

8. MAINTENANCE. Tenant shall be responsible for all maintenance,
repairs and replacement of the interior and exterior of the Premises, and pest
control, all at Tenant's expense, with the exception of all Capital Repairs.

9. RULES AND REGULATIONS. By the signature affixed hereto, Tenant
agrees that the following rules and regulations shall apply to the Premises,
subject to change in the sole discretion of Landlord, provided, however, that
(i) any changes to such rules and regulations shall be reasonable and shall not
diminish Tenant's benefits under this Lease nor modify the economic terms of
this Lease, (ii) Tenant shall be provided with at least ten (10) days prior
written notice of such changes, and (iii) Tenant shall be provided a reasonable
period of time to comply with any such changes:

(a) Tenant shall pay the cost of removal of any of
Tenant's refuse or rubbish.

(b) Tenant shall keep the Premises at a temperature
sufficiently high to prevent freezing of water in pipes and fixtures.

(c) The plumbing facilities shall not be used for any
other purpose than that for which they are constructed, and no foreign
substance of any kind shall be placed therein, and the expense of any breakage,
stoppage, or damage resulting from a violation of this provision shall be borne
by Tenant.

The foregoing rules and regulations shall remain in full force
and effect for the duration of this Lease unless amended by Landlord; and
further, no waiver shall be effective unless signed by Landlord, and any such
waiver shall not relieve Tenant from the obligation to comply with such rule or
regulation in the future unless expressly consented to by Landlord.

10. ENTRY BY LANDLORD. Tenant shall permit the Landlord, its
agent or attorney, to enter the Premises at all reasonable and proper times for
the purpose of

4
<PAGE> 5
inspection of the same, or for the performance of repairs required by the terms
of this Lease, upon reasonable prior notice to Tenant, except in the event of
an emergency.

11. ALTERATIONS. Tenant shall not make any alterations or
improvements involving structural changes or otherwise without securing
Landlord's written consent; provided, however, that Landlord's consent to any
non-structural alterations requested by Tenant shall not be unreasonably
withheld, conditioned or delayed. Any alterations or additions authorized to
be made by Tenant are to be done in a good and workmanlike manner without cost
to Landlord. In addition, Tenant shall obtain all necessary permits to
complete improvements to the Premises. Any mechanics lien filed against the
Premises resulting from work performed at the direction of Tenant shall be an
event of default hereunder, unless Tenant shall bond off such mechanics lien(s)
within five (5) days after receiving written notice of the filing of such lien
and hold Landlord harmless from any loss, including attorneys fees incurred to
defend against such lien(s).

12. TRADE AND OTHER FIXTURES; SIGNS.

(a) Tenant may install or cause to be installed such
equipment and trade and other fixtures as are reasonable or necessary for the
operation of its business. Such equipment and trade or other fixtures shall
remain personal property and title thereto shall continue in the owner thereof.
However, if the removal of any said items would cause any damage to the demised
Premises, it is hereby deemed real estate and shall not be removed, and upon
the termination of this Lease shall become and be the property of the Landlord.
Notwithstanding anything to the contrary contained in the immediately preceding
sentence, such equipment and trade fixtures shall remain the property of
Tenant, and Tenant shall be permitted to remove the same, provided that Tenant
promptly repairs all damage to the Premises caused by such removal. In the
event such equipment and trade or other fixtures are subject to a lien or title
retention instrument, the holder of such lien or title retention instrument
shall have only the rights and be able to enforce the same as stated herein.
Under no circumstances and in no event shall Landlord be responsible for loss
or damage to trade items, fixtures or other personal property belonging to the
Tenant due to fire or other casualty, theft, or the like, except in the event
of Landlord's gross negligence or willful misconduct. This provision shall not
obligate Landlord to provide any special electrical service or plumbing
fixtures or fittings to accommodate Tenant's use on the Premises.

(b) No sign, advertisement or notice shall be affixed or
displayed on the outside of the Premises without the Landlord's written
permission, which shall not be unreasonably withheld. If such consent is
granted, Tenant must first obtain any and all permits required by any law,
ordinance or regulation of the jurisdiction in which the Premises is located.
If any unauthorized sign, advertisement or notice is erected, Landlord shall
have the right to remove the same at the expense of Tenant.

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<PAGE> 6
13. CASUALTY DAMAGE. In the event the Premises is subject
to any mortgage or deed of trust, all proceeds of property insurance required
under this Lease shall be payable solely to the Landlord's first mortgagee
("First Mortgagee"), to be applied by the First Mortgagee in accordance with
the terms of this paragraph and said mortgage or deed of trust. Except as
hereafter provided, the proceeds of any loss payable under the casualty policy
described in this Lease, at the sole option of the First Mortgagee, shall be
applied, in whole or in part, either in satisfaction of the indebtedness owing
to such mortgagee, with the balance of the loss proceeds, if any, being paid to
the Landlord, or to the costs of repairing, restoring, renovating, or replacing
the Premises or the damage thereto. In the event the First Mortgagee makes the
proceeds of insurance available for repairing, restoring, renovating or
replacing the Premises, or the event there is no First Mortgagee at the time of
such casualty, then in the event of total damage or destruction to the Premises
due to fire or other casualty (total destruction hereby deemed to be damage
greater than fifty percent (50%) to the Premises), then the Landlord in its
sole discretion may opt to repair or replace the Premises by written notice
thereof to Tenant within thirty (30) days after the date of the damage, in
which event the rent shall fully abate for the repair or construction period.
In the event the Landlord chooses not to repair or replace the Premises, then
this Lease shall terminate and all parties shall be released from any further
liability hereunder. In the event of partial damage or destruction by fire or
other casualty (partial destruction hereby deemed to be damage to less than
fifty percent (50%) of the Premises as determined by Landlord), then the rent
shall be reduced proportionately for that period necessary to repair or replace
the damaged portion of the Premises. Notwithstanding anything to the contrary
contained in this Section 13, if Landlord so elects to restore the Premises to
the condition existing prior to the damage, such restoration shall be completed
with due diligence and, in all events, within twelve (12) months after the date
of the damage. If (a) Landlord does not elect to restore the Premises, or (b)
notwithstanding Landlord's election to restore the Premises, the restoration is
reasonably expected to require more than twelve (12) months to complete, or (c)
Landlord's restoration of the Premises is not completed within twelve (12)
months of the date of the damage, then, in any of such events, Tenant shall
have the right to terminate the Lease upon written notice thereof to Landlord
within thirty (30) days after the occurrence of the event described in clause
(a), (b), or (c) above, whichever is applicable, in which event the parties
shall be released from all liability accruing under the Lease from and after
the date of such termination. In the event such damage or destruction to the
Premises was caused by the act or omission of Tenant or its employees, agents,
or invitees, than Tenant shall not be entitled to any abatement in rent, and
Tenant shall pay Landlord's deductible and the amount by which such restoration
expenses exceed the insurance proceeds, if any, actually received by Landlord
on account of such damage or destruction. Notwithstanding anything herein to
the contrary, Landlord and Tenant each shall have the right to terminate this
Lease if (1) insurance proceeds are insufficient to pay the full cost of such
repair and restoration (2) the First Mortgagee fails or refuses to make such
insurance proceeds available for such repair and restoration, or (3) zoning or
other applicable governmental laws and regulations do not permit such repair
and restoration, upon written notice to the

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other party within thirty (30) days after the determination that clause (1),
(2) or (3) above is applicable.

14. INSURANCE.

(a) Tenant shall, at its sole expense, obtain and keep in
force throughout the term of this Lease, full replacement value fire and
extended coverage or "all-risk" coverage insurance naming Landlord and Tenant,
as their interests may appear, and such other parties as Landlord and Tenant
may designate as additional insured, in the customary form utilized in the
northern Virginia area for buildings and improvements of similar character, on
all improvements now or after this date located on the Premises.

(b) Tenant shall, at its sole expense, obtain and keep in
force during the term of this Lease commercial general liability insurance with
limits of not less than One Million Dollars ($1,000,000.00) per occurrence and
Three Million Dollars ($3,000,000.00) in the aggregate as to liability for
personal injury to or death of any person, and for damage to property, insuring
against any and all liability of Landlord and Tenant, including, without
limitation, coverage for contractual liability and broad form property damage
with respect to the Premises, or arising out of the maintenance, use, or
occupancy of the Premises.

(c) All insurance required in this Lease shall be issued
by companies rated at least A or A+ non-contingent rating by A.M. Best's
Insurance Reports. The fire and extended coverage or "all-risk" coverage
insurance shall be payable to Landlord, Tenant, and any Mortgagee as their
interests may appear. The "all-risk" coverage insurance and the general
liability insurance shall be carried in the joint names of Tenant, Landlord,
and such other parties having an interest in the Premises as Landlord and
Tenant may designate. All insurance policies shall (i) be subject to approval
by Landlord and any mortgagee as to form and amount; (ii) expressly provide
that such policies shall not be canceled or altered without thirty (30) days'
prior written notice to Landlord and any Mortgagee; (iii) provide that no act
or omission of Tenant that would otherwise result in forfeiture or reduction of
the insurance shall affect or limit the obligation of the insurance company to
pay the amount of any loss sustained; and (iv) to the extent obtainable,
contain a waiver by the insurer of its rights of subrogation against Landlord
and Tenant. Upon issuance, each such insurance policy or a certified copy of
such policy shall be delivered to the Landlord and any lender whom Landlord
designates. Tenant may satisfy its obligation under this paragraph by
appropriate endorsements of its blanket insurance policies.

15. COMPLIANCE WITH LAWS, RULES AND REGULATIONS. Tenant will
promptly comply with all applicable and valid laws, ordinances and regulations
of Federal, State, County, Municipal or other lawful authority, pertaining to
the use and occupancy of the Premises. Tenant shall also comply with all rules
and regulations adopted from time to time by Landlord relating to the Premises.

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<PAGE> 8
16. RIGHT TO ASSIGN OR SUBLET. The Tenant will not sublet the
Premises or any part thereof or transfer possession or occupancy thereof to any
person, firm or corporation or transfer or assign this Lease without the prior
written consent of the Landlord, nor shall any subletting or assignment hereof
be effected by operation of law or otherwise than by the prior written consent
of the Landlord, which consent Landlord shall not unreasonably withhold,
condition or delay.

17. BANKRUPTCY. Should Tenant make an assignment for the benefit
of creditors or file for bankruptcy such action shall constitute a breach of
this Lease for which Landlord, at its option, may terminate all rights of
Tenant or its successors in interest under this Lease, and exercise all other
remedies for breach available to Landlord.

18. CONDEMNATION. Tenant agrees that if the said Premises or any
part thereof, shall be taken or condemned for public or quasi-public use or
purpose by any competent authority, Tenant shall have no claim against the
Landlord and shall not have any claim or right to any portion of the amount
that may be awarded as damages or paid as a result of any such condemnation
with reference to the land and improvements thereof; and all rights of the
Tenant to damages therefor, if any, are hereby assigned by the Tenant to the
Landlord. If such condemnation or taking is of such a substantial nature as to
prevent the Tenant from carrying on its business, then the Lease shall cease
and terminate from the date of such governmental taking or condemnation, and
the Tenant shall have no claim against the Landlord for the value of any
unexpired Term of this Lease. If this Lease is not terminated as above provided
as a result of a governmental taking, Tenant and Landlord shall agree upon an
equitable reduction of the rental. If the parties fail to agree upon reduction
within sixty (60) days from the date of the final award or payment for the part
of the Leased Premises so taken or conveyed, Landlord and Tenant shall each
choose one arbitrator and the two arbitrators so chosen shall choose a third
arbitrator. The decision of any two of the arbitrators as to the rental
reduction, if any, shall be binding on Tenant and Landlord and any expense or
fees involved shall be divided equally between Tenant and Landlord.

19. DEFAULT.

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notice thereof to Tenant; and provided further, if such failure is not
reasonably capable of being cured within such ten (10)-day period, then the
period in which Tenant may cure such failure shall be extended for such period
of time as is reasonably necessary for such cure, provided Tenant promptly
commences and diligently pursues the cure of such failure to completion. Upon
the occurrence of an Event of Default, Landlord may enforce performance in any
manner provided by law, including, without limitation, resumption of possession
of the Premises by Landlord and reletting the same for the remainder of the
Term at the best rental Landlord can obtain for the account of Tenant, who
shall pay any deficiency. In such event, Landlord shall pursue reletting of
the Premises with commercially reasonable diligence. If an Event of Default
shall be continuing with regard to the performance of any covenant, condition
or agreement in this Lease, Landlord shall have the right, but not the
obligation, to perform any act of Tenant required under such covenant,
condition or agreement.

(b) As security for the performance of Tenant's obligations
under this Lease, Tenant grants to Landlord a lien upon and a security interest
in Tenant's personal property located in the Premises. Landlord may exercise
all rights in connection with such lien and security interest, at any time or
from time to time, in accordance with all applicable laws, including without
limitation, the Uniform Commercial Code in effect in the Commonwealth of
Virginia. Landlord agrees to subordinate such lien and security interest to
any lien or security interest granted by Tenant in or to any of its personal
property as security for indebtedness secured for the purpose of financing the
purchase or leasing of any such personal property; provided, however, the
secured party agrees (i) to provide notice of any defaults under such financing
to Landlord, and (ii) to promptly repair any and all damage to the Premises
that occurs if the secured party removes its collateral.

(c) No termination of this Lease nor repossession of the
Premises pursuant to this paragraph or otherwise, and no reletting of the
Premises or any part thereof, shall relieve Tenant of its liabilities and
obligations hereunder, all of which shall survive such termination,
repossession or reletting.

(i) In the event of any such termination or
repossession, the Tenant shall pay to the Landlord the Base Rent, additional
rent and other sums required to be paid by the Tenant until and including the
date of such termination or repossession; and thereafter, until the end of what
would have been the term of this Lease in the absence of such termination or
repossession, and whether or not the Premises or any part thereof shall have
been re-let, the Tenant shall be liable to Landlord for, and shall pay to
Landlord, as liquidated current damages: (1) the Base Rent, additional rent
and other sums which would be payable under this Lease by Tenant in the absence
of such termination or repossession, less (2) the net proceeds, if any, of any
re-letting actually effected for the account of Tenant, after deducting from
such proceeds all of Landlord's expenses incurred in connection with such
re-letting (including, without limitation, all brokerage commission, attorneys'
fees, and expenses of preparation for such re-letting). Tenant shall pay such
current damages on the days on which the Base Rent would have been payable
under this

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<PAGE> 10
Lease in the absence of such termination or repossession, and Landlord shall be
entitled to recover the same from Tenant on each such day.

(ii) At any time after any such termination or
repossession by reason of an Event of Default, whether or not Landlord shall
have collected any current damages pursuant to the preceding paragraph (c) (i),
Landlord shall be entitled to recover from Tenant, and Tenant shall pay to
Landlord on demand, as liquidated final damages for Tenant's default, and in
lieu of all current damages beyond the date of such demand (it being agreed
that it would be impracticable or extremely difficult to fix the actual
damages), the amount by which (A) the Base Rent, additional rent and other sums
which would be payable under this Lease from the date of such demand, for what
would be the then unexpired term of this Lease in the absence of such
termination or repossession, discounted at the rate of 8% per annum, exceeds
(B) the then fair net rental value of the Premises for the same period,
discounted at the rate of 8% per annum. If any statute or rule of law limits
the amount of such liquidated final damages to less than the amount above
agreed upon, Landlord shall be entitled to the maximum amount allowable under
such statute or rule of law.

These remedies are cumulative with each other and with all
other remedies provided by law, and no exercise by Landlord of any one or more
remedies available to Landlord shall be deemed to be a waiver of any other
remedies. The Landlord is not obligated to exercise any or all of the remedies
set forth herein. No waiver by the Landlord of any breach of any covenant,
condition or agreement herein contained shall be construed to be a waiver of
the covenant, condition or agreement itself or any subsequent breach thereof.
All costs incurred by Landlord in enforcing the terms of this Lease, including
reasonable attorney's fees, shall be paid to Landlord by Tenant and shall be
considered to be additional rent hereunder. Notwithstanding anything to the
contrary contained in this Lease, in the event suit shall be brought by either
party hereto against the other to enforce any of the provisions of this Lease,
the prevailing party in any such action shall be entitled to recover from the
other party all of its expenses incurred in connection with such action,
including reasonable attorneys' fees, disbursements and actual costs.

20. LANDLORD'S COVENANTS. Landlord covenants that, so long as
Tenant is not in breach hereof, Tenant shall have quiet enjoyment of the
Premises. Landlord makes no warranty that the use of the Premises as
contemplated by Tenant is permissible under any law or regulation.

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of Trust encumbering the Premises of the remedies provided for by law or by
such Deed of Trust, Tenant will, upon request of any person succeeding to the
interest of Landlord as the result of such enforcement, automatically become
the lessee of such successor in interest, without any change in the terms or
other provisions of this Lease; provided, however, that any such successor in
interest shall not be bound by any amendment or modification of this Lease made
without the consent of the Beneficiary under any such Deed of Trust or any such
successor in interest, and Tenant shall, upon request by such successor in
interest, execute and deliver an instrument or instruments confirming its
attornment and acknowledgment of such successor as Landlord hereunder.
Notwithstanding anything to the contrary contained herein, except as to any
mortgages or Deeds of Trust encumbering the Premises as of the date of this
Lease, the terms of this Section 21 shall be subject and conditioned upon
receipt by Tenant of a subordination, non-disturbance and attornment agreement
from each lender holding a mortgage or Deed of Trust encumbering the Premises,
on commercially reasonable terms.

22. NOTICES. Any notice required or permitted to be delivered
hereunder must be in writing and shall be deemed to be delivered upon receipt,
if hand delivered, one business day after deposit with a national overnight
delivery service, or three business days after deposit in the United States
Mail, certified or registered (return receipt requested), postage fully
prepaid, to the addresses for the respective parties set forth hereinafter, or
to such other address as either party may designate in writing and deliver as
herein provided.

LANDLORD: Fredericksburg Investments, Inc.
6801 Lois Drive
Springfield, VA 22150

TENANT: Strayer College, Inc.
1025 Fifteenth Street, N.W.
Washington, D.C. 20005

23. SURRENDER OF PREMISES. It is agreed that upon the termination
of this Lease by whatever cause, the Tenant will surrender the Premises to the
Landlord in as good condition as they were when occupancy was taken hereunder,
natural wear and depreciation from reasonable use thereof and damage or
destruction by fire or acts of God excepted. Prior to said termination or
within fifteen (15) days thereafter, if Landlord so directs by written notice
to Tenant, Tenant shall promptly remove the additions, improvements, fixtures,
trade fixtures and installations which were placed in the Premises by Tenant,
and which are designated in said notice, and repair any damage occasioned by
such removals. In default thereof, Landlord may effect said removal and
repairs at Tenant's expense. Any floor covering that is cemented or otherwise
adhesively affixed to the floor of the Premises shall not be considered a trade
fixture. All trade fixtures not

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removed by Tenant shall become property of the Landlord. Notwithstanding
anything to the contrary contained herein, Tenant shall not be required to
remove any alteration to the Premises unless, at the time Tenant requests
Landlord's approval of such alteration, Landlord specifies in writing that such
alteration must be removed from the Premises at the expiration or termination
of the Lease Term.

24. HOLDOVER. If the Tenant shall occupy the Premises with the
consent of the Landlord after the expiration of this Lease, and rent is
accepted from said Tenant, such occupancy and payment shall be construed as an
extension of this Lease for the term of one (1) month only from the date of
such expiration, and occupation thereof shall operate to extend the term of
this Lease for but one (1) month at a time unless other terms of such extension
are endorsed hereon in writing and signed by the parties hereto. In such event
if either Landlord or Tenant desires to terminate said occupancy at the end of
any month after the termination of this Lease, the party so desiring to
terminate the same shall give the other party at least thirty (30) days written
notice to that effect. Failure on the part of the Tenant to give such notice
shall obligate it to pay rent for an additional calendar month.

Notwithstanding the foregoing provisions of this paragraph, in
the event that Tenant shall hold over after the expiration of the term hereby
created, and if Landlord shall desire to regain possession of the Premises
promptly at the expiration of the term of this Lease, then at any time prior to
Landlord's acceptance of rent from Tenant as a monthly Tenant hereunder,
Landlord at its option may forthwith re-enter and take possession of the
Premises without process or by any legal process in force in the jurisdiction
in which the Premises are located.

25. LANDLORD'S LIABILITY. In the event Landlord should ever become
liable to Tenant for the payment of any sums hereunder, Tenant agrees to look
solely to the Landlord's estate and interest in the Premises, and the real
estate upon which the said Premises are situated, and the improvements of which
it is a part, or the proceeds thereof, for satisfaction of any such sums, and
in no event shall Landlord incur any individual liability for such obligations.

26. INDEMNIFICATION.

(a) Tenant shall reimburse Landlord for, and shall
indemnify, defend upon request and hold harmless from and against, all costs,
damages, claims, liabilities, expenses (including reasonable attorneys' fees,
disbursements and actual costs), losses and court costs suffered by or claimed
against Landlord, based on or arising out of (i) Tenant's use and occupancy of
the Premises or (ii) any breach of Tenant's obligations under the Lease.

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and court costs suffered by or claimed against Tenant, based on or arising out
of the gross negligence or willful misconduct of Landlord in discharging its
obligations under this Lease.

27. USE OF PREMISES. The Premises shall be used by Tenant solely
as an educational institution, or for any other use permitted under applicable
law. No other uses shall be permitted on the Premises without the prior
written consent of Landlord, which Landlord may grant or withhold at its sole
discretion.

28. RENEWAL OPTION.

(a) Tenant shall have and is hereby granted the option to
extend the Term for three (3) periods of five (5) additional Lease Years each
(each, an "Extension Period") provided Tenant gives written notice to Landlord
of its election to exercise each such extension option no later than one
hundred eighty (180) days prior to the expiration of the last Lease Year of the
term or the then-current Extension Period, as applicable.

(b) All terms and conditions of this Lease shall remain
in full force and effect during each Extension Period, except that monthly Base
Rent payable during each Extension Period shall be at the current market rental
rate with respect to comparable space (the "Current Market Rental Rate") at the
time of the commencement of the Extension Period, with subsequent escalations
in monthly Base Rent thereafter to be determined by market practice with
respect to comparable space. Landlord and Tenant shall negotiate in good faith
to determine the amount of monthly Base Rent for the applicable Extension
Period within thirty (30) days of the date of Landlord's receipt of Tenant's
written notice of its election to exercise the applicable extension option.

(c) In the event Landlord and Tenant are unable to agree
upon the monthly Base Rent for the applicable Extension Period within said
thirty (30)-day period, then the monthly Base Rent for the applicable Extension
Period shall be the Current Market Rental Rate determined by a board of three
(3) licensed real estate brokers, one of whom shall be named by Landlord, one
by Tenant, and the two so appointed shall select a third. Each member of the
board of brokers shall be licensed in the Commonwealth of Virginia as a real
estate broker, specializing in the field of commercial office leasing, having
no less that ten (10) years' experience in such field, and recognized as
ethical and reputable within the field. Landlord and Tenant agree to make
their appointments promptly within five (5) days after the expiration of the
thirty (30)-day period, or sooner if mutually agreed upon. The two brokers
selected by Landlord and Tenant shall promptly select a third broker within ten
(10) days after they both have been appointed, and each broker, within fifteen
(15) days after the third broker is selected, shall submit his or her
determination of said Current Market Rental Rate. The Current Market Rental
Rate shall be the mean of the two closest rental rate determinations. Landlord
and Tenant shall each pay the fee of the broker selected by it, and they shall
equally share the payment of the fee of the third broker.

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(d) Upon determination of the Current Market Rental Rate
with respect to the applicable Extension Period, Tenant and Landlord shall each
have the right to terminate Tenant's election to extend the Term of the Lease
upon written notice thereof to the other party within five (5) days after
receipt of the Current Market Rental Rate. If neither Tenant nor Landlord
elects to terminate such election in accordance with the foregoing, an addendum
amending this Lease to set forth the monthly Base Rent for the Premises during
the applicable Extension Period shall be executed by Landlord and Tenant within
ten (10) days of the parties' agreement, or, in the alternative, within fifteen
(15) days of the brokers' determination of the monthly Base Rent for the
applicable Extension Period. If either Tenant or Landlord terminates Tenant's
election to extend the Term in accordance with the foregoing, the Lease Term
shall expire on the date originally scheduled therefor, as if such extension
election had not taken place.

29. INCREASES IN THE BASE RENT. The amount of Base Rent to be
paid pursuant to this Lease shall be increased at the beginning of each Lease
Year beginning with the second Lease Year to account for increases in the
Consumer Price Index. Beginning with the second Lease Year and continuing for
each subsequent Lease Year, the Base Rent shall be determined by the following
formula:

(a) The United States Department of Labor, Consumer Price
Index, all items, for all urban households for the Washington, D.C., area for
all urban consumers, "1982-84 equals 100" for the last month of the Lease Year
prior to the then-current Lease Year, hereinafter referred to as the "Base
Index", shall be determined.

(b) The United States Department of Labor, Consumer Price
Index, all items, for all urban households for the Washington, D.C., area for
all urban consumers, "1982-84 equals 100" for the last month of the Lease Year
prior to the Lease Year for which the rent is being determined, hereinafter
referred to as the "Comparison Index", shall be determined.

Comparison Index x current year's = Base Rent for the
---------------- rent ensuing Lease Year
Base Index

(d) Should the Bureau of Labor Statistics establish a new
base period other than "1982-84 equals 100", then and in that event, a
conversion factor will be determined to relate the index after such new base
period is determined to the old base period of "1982-84 equals 100", so that
any index used for the purpose of this clause shall be converted to the
"1982-84 equals 100" index.

(e) Notwithstanding anything to the contrary contained
herein, in no event shall the Base Rent payable with respect to any Lease Year
ever be less than the Base

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Rent paid in the immediately preceding Lease Year, nor shall any such Base Rent
be more than three and one-half percent (3.5%) in excess of the Base Rent
payable with respect to the immediately preceding Lease Year.

30. PURCHASE OPTION. For and in consideration of the sum of Ten
Dollars ($10.00) paid to Landlord by Tenant, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Landlord hereby grants Tenant the option to purchase the Premises from
Landlord, such option to be exercisable by Tenant at any time during the term
of this Lease, including any extensions of such Term as permitted by this
Lease. Tenant shall exercise such option by giving written notice to Landlord
of its intent to exercise the option. The purchase price for the Premises
shall be determined as follows: Landlord and Tenant shall each obtain, at
their own cost, an appraisal of the fair market value of the Premises (such
determination expressly agreed to be made without regard to the current use of
the Premises as an educational institution, and without regard to this Lease)
performed by an MAI appraiser. If the two appraisals are within 15% of each
other, the average of the two appraisals shall be the purchase price for the
Premises. If the appraisals are not within 15% of each other, the two
appraisers performing such appraisals shall select a third appraiser, who shall
prepare an appraisal of the Premises, the cost of such appraisal being shared
equally by Landlord and Tenant, and the third appraisal and the previous
appraisal closest to the third appraisal in value shall be averaged and such
average value shall be the purchase price of the Premises. However, if the
third appraisal shall be the arithmatic mean value between the previous two
appraisals, then the value stated in such third appraisal shall be the purchase
price of the Premises. Upon determination of the purchase price in accordance
with the foregoing, Landlord or Tenant shall have the right to terminate
Tenant's election to purchase the Premises for any reason whatsoever upon
written notice thereof to the other party within thirty (30) days after receipt
of such determination. If Tenant's election is not terminated in accordance
with the foregoing, title to the Premises shall be conveyed by special warranty
deed, subject to all matters of record; provided, however, that the Premises
shall be conveyed free and clear of all monetary liens and encumbrances. All
costs and expenses associated with the Premises which are typically prorated in
the sale of commercial real estate, including without limitation real estate
taxes, shall be apportioned as of the date of closing. Closing on the purchase
of the Premises by Tenant shall take place within ninety (90) days following
the determination of the purchase price in accordance with the foregoing. At
closing, Tenant shall pay the purchase price to Landlord in cash, unless other
terms and conditions for payment have been agreed to in writing by Tenant and
Landlord. Landlord shall pay the cost of preparation of the deed of conveyance
and the State grantor's tax, and all other costs of settlement shall be paid by
Tenant.

31. COUNTERPARTS. This Lease may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.

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32. CAPTIONS. The captions in this Lease are inserted for
convenience of reference only and in no way define, describe or limit the scope
or intent of this Agreement or any of the provisions hereof.

33. COMPLETE AGREEMENT. This Lease contains a complete expression
of the agreement between the parties and there are no promises, representations
or inducements except as herein provided; and this Lease may be amended only in
writing. This Lease shall inure to the benefit of, and be binding upon, the
parties hereto and their respective heirs, legal representatives, successors
and assigns.

34. SEVERABILITY. In the event any provision of this Agreement
shall be held invalid or unenforceable by any court of competent jurisdiction,
such provision shall be deemed to be modified to the minimum extent necessary
to render such provision enforceable or valid, and any such holdings shall not
invalidate or render unenforceable any other provision hereof.

35. APPLICABLE LAW. This Lease and all questions of construction
of the provisions hereof and of the rights and liabilities of the parties
hereunder shall be construed and determined in accordance with the applicable
laws of the Commonwealth of Virginia.

36. TIME FOR PERFORMANCE. Whenever the last day for the
performance of any act required by either party under this Lease shall fall
upon a Saturday, Sunday or legal holiday, the date for the performance of any
such act shall be extended to the next succeeding business day which is not a
Saturday, Sunday or legal holiday. The Term "business day" as herein use shall
mean any day which is not a Saturday, Sunday or legal holiday.

37. PARTIES. All references herein to parties may be in the
masculine gender, and are intended to include the feminine gender, the neutral
gender, and plurals, as the case may appear from context.

38. RECORDATION. Upon request of Landlord, Tenant shall execute a
recordable memorandum of this Lease. Tenant shall not record this Lease, nor a
memorandum hereof, and recordation of either by Tenant shall be an Event of
Default.

39. TERMINATION OF PRIOR LEASE. Upon the Effective Date of this
Lease, all existing leases between Landlord and Tenant for the Premises shall
be considered terminated and superseded by the terms of this Lease, and any
such leases prior to the date hereof shall have no further force and effect and
shall not be binding on the parties thereto.

40. AUTHORITY. Each individual executing this Lease on behalf of
Landlord or Tenant hereby represents and warrants that he is duly authorized to
execute and deliver

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this Lease; that Landlord or Tenant, as applicable, is duly organized,
qualified to do business in the Commonwealth of Virginia, and has the power and
authority and has obtained all necessary consents to enter into and perform its
obligations under this Lease; and that all action required to authorize
Landlord or Tenant, as applicable, to enter into this Lease has been duly
taken.

41. EFFECTIVE DATE. This Lease shall be effective as of the date
of the closing of the initial public offering of common stock by Strayer
Education, Inc.

EXECUTED BY LANDLORD THIS 1st DAY OF JUNE, 1996.

FREDERICKSBURG INVESTMENTS, INC.,
a Virginia Corporation

BY: /s/ RON K. BAILEY
--------------------------------
Ron K. Bailey, President

EXECUTED BY TENANT THIS 1st DAY OF JUNE, 1996.

STRAYER COLLEGE, INC.,
a Maryland Corporation

By: /s/ HARRY T. WILKINS
--------------------------------------
Harry T. Wilkins
Chief Financial Officer

(NOTARIAL ACKNOWLEDGMENTS ON FOLLOWING PAGE)

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<PAGE> 18
State of Virginia

County/City of Arlington, to-wit:

The foregoing Deed of Lease dated as of the 1st day of June, 1996
was acknowledged before me, the undersigned Notary Public in and for the
aforesaid jurisdiction, by Ron K. Bailey, as President of Fredericksburg
Investments, Inc., a Virginia Corporation, this 1st day of June, 1996.

My commission expires: 9/30/99
------------------.

/s/ JANENE LYNETTE EIGHMEY-CABATIC
--------------------------------------
Notary Public
State of Virginia

County/City of Arlington, to-wit:

The foregoing Deed of Lease dated as of the 1st day of June, 1996
was acknowledged before me, the undersigned Notary Public in and for the
aforesaid jurisdiction, by Harry T. Wilkins, as Chief Financial Officer of
Strayer College, Inc., a Maryland Corporation, this 1st day of June,
1996.

My commission expires: 9/30/99
--------------------.

/s/ JANENE LYNETTE EIGHMEY-CABATIC
------------------------------------
Notary Public

<PAGE> 1
EXHIBIT 10.02

AGREEMENT OF LEASE

1. PARTIES. This Agreement of Lease ("Lease") dated as of the
1st day of June, 1996, is between STRAYER COLLEGE, INC., a Maryland
Corporation, as Tenant; and BEACON INVESTMENTS, INC., a Virginia Corporation,
as LANDLORD.

2. PREMISES.

(a) Landlord does hereby lease to Tenant, and Tenant does
hereby lease from Landlord, for the term and upon the conditions hereinafter
provided, the building known as the South Building (the "Premises") located at
6830 Laurel Street, N.W., Washington, D.C., containing 21,818 square feet of
floor area. The Premises are outlined in red on the attached Exhibit A.

(b) Throughout the Term, Tenant shall have the
non-exclusive right, in common with others, to use the off-street parking
areas, private streets and alleys available to be utilized by Tenant (as the
same may exist from time to time during the Term), and the lawns, sidewalks,
and landscaped areas adjacent to the Premises (collectively, the "Adjacent
Areas"). The Adjacent Areas as they existed on the date hereof are highlighted
in blue on Exhibit A. Tenant acknowledges that Landlord may be compelled under
the Deed of Easement and Cost Sharing Agreement (the "Parking Easement") among
Roberts, Munz & Associates ("RMA"), Landlord, and Takoma Station Limited
Partnership dated April 29, 1993 to substitute a portion of the parking shown
on Exhibit A for other parking within a reasonable walking distance of the
Premises.

4. BASE RENT.

(a) Beginning on the Lease Commencement Date, Tenant
shall pay to Landlord a Base Rent at the rate of THREE HUNDRED SEVENTY THOUSAND
NINE HUNDRED SIX AND 80/100 DOLLARS ($370,906.80), for each year of the primary
Term, subject to increase pursuant to Paragraph 29 below, all of which said
rent shall be payable in equal monthly installments of THIRTY THOUSAND NINE
HUNDRED EIGHT AND 84/100 DOLLARS ($30,908.84), in advance on the first day of
each and every month during the primary Term, subject to increase pursuant to
Paragraph 29 below. Rent shall be paid without any reduction or setoff
whatsoever. Tenant shall pay an additional five percent (5%) late charge for
any rent installments not received by Landlord within seven (7) days of the due
date. If said late charge is not allowable by law, Tenant shall pay the

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<PAGE> 2
maximum late charge allowable by law. In addition, Tenant shall pay as
additional rent to Landlord a fee of $50.00 for any check given to Landlord for
any reason which is returned or dishonored.

5. ADDITIONAL CHARGES.

(a) Except as specifically set forth below with respect
only to Capital Repairs, Tenant shall be responsible for maintaining and
operating the Premises and Adjacent Areas, including, but not limited to trash
collection, keeping parking areas and travel lanes clean and clear of snow and
ice and in maintaining the Premises and Adjacent Areas including landscaping,
repainting of signs, poles, parking lot surface and other like items, cleaning
all plate glass, water and sewer charges, repair of all plumbing, electrical,
and HVAC systems, maintenance and repair of the roof of the Premises, and the
cost of insuring the Premises and Adjacent Areas. Landlord shall have the
right, but not the obligation, to perform any such maintenance or repairs if
Tenant fails to perform the same within ten (10) business days after receipt of
written notice from Landlord specifying the nature of such required maintenance
or repair (or, if such maintenance or repair is not reasonably capable of being
performed within such ten (10)-business day period, if Tenant commences such
maintenance or repair within such ten (10)-business day period and diligently
pursues such maintenance or repair to completion), in which event Tenant shall
reimburse Landlord for the reasonable out-of-pocket costs incurred in
connection therewith, within thirty (30) days after receipt of an invoice
substantiating such costs; provided, however, that Landlord shall have no duty
to give such notice prior to performing any such maintenance or repairs of an
emergency nature or which are required to prevent imminent damage to the
Premises and Adjacent Areas. Notwithstanding anything to the contrary
contained in this Lease, Landlord shall repair and maintain in good working
order and condition only the structural components of the building located on
the Premises (the "Capital Repairs"), and Tenant shall have no obligation with
respect thereto. Tenant shall

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<PAGE> 3
have the right, but not the obligation, to perform any such Capital Repairs
only if Landlord fails to perform the same within ten (10) business days after
receipt of written notice from Tenant specifying the nature of such required
Capital Repairs (or, if such Capital Repairs are not reasonably capable of
being performed within such ten (10)-business day period, if Landlord commences
such capital repairs within such ten (10)-business day period and diligently
pursues such Capital Repairs to completion), in which event Landlord shall
reimburse Tenant for the reasonable out-of-pocket costs incurred in connection
therewith, within thirty (30) days after the receipt of an invoice
substantiating such costs. Tenant shall notify Landlord immediately upon
Tenant's becoming aware of the need for any Capital Repairs. Except with
respect to the Capital Repairs, Tenant shall be responsible for all costs of
maintaining and operating the Premises regardless of whether the actual work is
performed by or at the direction of the Tenant or Landlord.

(c) Landlord and Tenant acknowledge that the Premises is
part of a larger development called Battlefield Business Park, which is subject
to a Declaration of Covenants, Conditions and Restrictions recorded among the
land records of Prince William County, Virginia at Deed Book 1455, page 339
("Declaration"). The Declaration provides for annual and special assessments
for maintenance of common areas located within Battlefield Business Park.
Tenant agrees to pay to Landlord, within thirty (30) days

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<PAGE> 4
following Landlord's written notice to Tenant and as additional rent, all
annual and special assessments which may be assessed against Landlord and the
Premises in accordance with the Declaration.

6. UTILITIES. Tenant agrees to pay, before delinquency, all
charges for water, electricity, telephone and any other utilities used by
Tenant; provided that Tenant is able to contract directly with the provider of
such utilities. In the event any such providers refuse to allow Tenant to
contract directly for such utilities, and Landlord contracts directly with the
provider of any such utilities, Tenant shall pay all charges for such services
incurred with respect to the Premises within twenty (20) days after receipt of
an invoice substantiating such charges. Landlord shall not be under any
responsibility or liability in any way whatsoever for the quality, quantity,
impairment, interruption, stoppage or other interference with service involving
water, heat, air conditioning, electric current for light and power, telephone
or any other service; except to the extent the same results from Landlord's
failure to perform its obligations pursuant to Section 8 below, in which event,
if such interruption, stoppage or other impairment of utilities or services
renders the Premises reasonably unacceptable for the use of the Premises
contemplated by this Lease, then the monthly Base Rent and additional rent
payable under this Lease shall be abated until the Premises may reasonably be
used for the purposes contemplated hereunder. As of the Lease Commencement
Date, the heating, ventilation and air conditioning for the Premises are
provided by a heating plant that serves an adjacent building as well as the
Premises. At any time after the Lease Commencement Date, Landlord may provide
an independent heating, ventilating and air conditioning system for the
Premises, a reasonable allocation of the cost of which shall be charged to and
paid by Tenant as additional rent hereunder.

7. PERSONAL PROPERTY TAXES. Tenant agrees to pay all taxes
levied upon the personal property located within the Premises, including trade
fixtures and inventory.

(a) Tenant shall pay the cost of removal of any of
Tenant's refuse or rubbish.

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<PAGE> 5
(b) Tenant shall keep the Premises at a temperature
sufficiently high to prevent freezing of water in pipes and fixtures.

10. ENTRY BY LANDLORD. Tenant shall permit the Landlord, its
agent or attorney, to enter the Premises at all reasonable and proper times for
the purpose of inspection of the same, or for the performance of repairs
required by the terms of this Lease, upon reasonable prior notice to Tenant,
except in the event of an emergency.

12. TRADE AND OTHER FIXTURES; SIGNS.

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<PAGE> 6
or other fixtures are subject to a lien or title retention instrument, the
holder of such lien or title retention instrument shall have only the rights
and be able to enforce the same as stated herein. Under no circumstances and
in no event shall Landlord be responsible for loss or damage to trade items,
fixtures or other personal property belonging to the Tenant due to fire or
other casualty, theft, or the like, except in the event of Landlord's gross
negligence or willful misconduct. This provision shall not obligate Landlord
to provide any special electrical service or plumbing fixtures or fittings to
accommodate Tenant's use on the Premises.

(b) No sign, advertisement or notice shall be affixed or
displayed on the outside of the Premises without the Landlord's written
permission, which shall not be unreasonably withheld. If such consent is
granted, Tenant must first obtain any and all permits required by any law,
ordinance or regulation of the District of Columbia. If any unauthorized sign,
advertisement or notice is erected, Landlord shall have the right to remove the
same at the expense of Tenant.

13. CASUALTY DAMAGE. In the event the Premises is subject
to any mortgage or deed of trust, all proceeds of property insurance required
under this Lease shall be payable solely to the Landlord's first mortgagee
("First Mortgagee"), to be applied by the First Mortgagee in accordance with
the terms of this paragraph and said mortgage or deed of trust. Except as
hereafter provided, the proceeds of any loss payable under the casualty policy
described in this Lease, at the sole option of the First Mortgagee, shall be
applied, in whole or in part, either in satisfaction of the indebtedness owing
to such mortgagee, with the balance of the loss proceeds, if any, being paid to
the Landlord, or to the costs of repairing, restoring, renovating, or replacing
the Premises or the damage thereto. In the event the First Mortgagee makes the
proceeds of insurance available for repairing, restoring, renovating or
replacing the Premises, or the event there is no First Mortgagee at the time of
such casualty, then in the event of total damage or destruction to the Premises
due to fire or other casualty (total destruction hereby deemed to be damage
greater than fifty percent (50%) to the Premises), then the Landlord in its
sole discretion may opt to repair or replace the Premises by written notice
thereof to Tenant within thirty (30) days after the date of the damage, in
which event the rent shall fully abate for the repair or construction period.
In the event the Landlord chooses not to repair or replace the Premises, then
this Lease shall terminate and all parties shall be released from any further
liability hereunder. In the event of partial damage or destruction by fire or
other casualty (partial destruction hereby deemed to be damage to less than
fifty percent (50%) of the Premises as determined by Landlord), then the rent
shall be reduced proportionately for that period necessary to repair or replace
the damaged portion of the Premises. Notwithstanding anything to the contrary
contained in this Section 13, if Landlord so elects to restore the Premises to
the condition existing prior to the damage, such restoration shall be completed
with due diligence and, in all events, within twelve (12) months after the date
of the damage. If (a) Landlord does not elect to restore the Premises, or (b)
notwithstanding Landlord's election to restore the Premises, the restoration is
reasonably

6
<PAGE> 7
expected to require more than twelve (12) months to complete, or (c) Landlord's
restoration of the Premises is not completed within twelve (12) months of the
date of the damage, then, in any of such events, Tenant shall have the right to
terminate the Lease upon written notice thereof to Landlord within thirty (30)
days after the occurrence of the event described in clause (a), (b), or (c)
above, whichever is applicable, in which event the parties shall be released
from all liability accruing under the Lease from and after the date of such
termination. In the event such damage or destruction to the Premises was
caused by the act or omission of Tenant or its employees, agents, or invitees,
than Tenant shall not be entitled to any abatement in rent, and Tenant shall
pay Landlord's deductible and the amount by which such restoration expenses
exceed the insurance proceeds, if any, actually received by Landlord on account
of such damage or destruction. Notwithstanding anything herein to the
contrary, Landlord and Tenant each shall have the right to terminate this Lease
if (1) insurance proceeds are insufficient to pay the full cost of such repair
and restoration (2) the First Mortgagee fails or refuses to make such insurance
proceeds available for such repair and restoration, or (3) zoning or other
applicable governmental laws and regulations do not permit such repair and
restoration, upon written notice to the other party within thirty (30) days
after the determination that clause (1), (2) or (3) above is applicable.

14. INSURANCE.

(a) Tenant shall, at its sole expense, obtain and keep in
force throughout the term of this Lease, full replacement value fire and
extended coverage or "all-risk" coverage insurance naming Landlord and Tenant,
as their interests may appear, and such other parties as Landlord and Tenant
may designate as additional insureds, in the customary form utilized in the
District of Columbia for buildings and improvements of similar character, on
all improvements now or after this date located on the Premises.

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<PAGE> 8
and any mortgagee as to form and amount; (ii) expressly provide that such
policies shall not be canceled or altered without thirty (30) days' prior
written notice to Landlord and any Mortgagee; (iii) provide that no act or
omission of Tenant that would otherwise result in forfeiture or reduction of
the insurance shall affect or limit the obligation of the insurance company to
pay the amount of any loss sustained; and (iv) to the extent obtainable,
contain a waiver by the insurer of its rights of subrogation against Landlord
and Tenant. Upon issuance, each such insurance policy or a certified copy of
such policy shall be delivered to the Landlord and any lender whom Landlord
designates. Tenant may satisfy its obligation under this paragraph by
appropriate endorsements of its blanket insurance policies.

16. RIGHT TO ASSIGN OR SUBLET. The Tenant will not sublet the
Premises or any part thereof or transfer possession or occupancy thereof to any
person, firm or corporation or transfer or assign this Lease without the prior
written consent of the Landlord, nor shall any subletting or assignment hereof
be effected by operation of law or otherwise than by the prior written consent
of the Landlord, which consent Landlord shall not unreasonably withhold,
condition or delay.

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<PAGE> 9
shall each choose one arbitrator and the two arbitrators so chosen shall choose
a third arbitrator. The decision of any two of the arbitrators as to the
rental reduction, if any, shall be binding on Tenant and Landlord and any
expense or fees involved shall be divided equally between Tenant and Landlord.

19. DEFAULT.

(a) Each of the following occurrences or acts shall
constitute an event of default ("Event of Default") under this Lease entitling
Landlord to exercise the remedies contained in this Section 19; (i) if Tenant
shall fail to pay any monthly rent, additional rent or other sums under this
Lease on the date when due; provided, however, that no Event of Default shall
be deemed to have occurred unless such failure continues for a period of ten
(10) days after Landlord delivers written notice thereof to Tenant, except with
respect to the failure to pay Base Rent when due, in which event such written
notice shall be provided only with respect to the first such failure in any
twelve (12) month period, or (ii) if Tenant shall fail to observe or perform
any other covenant, condition or agreement of this Lease; provided, however,
that no Event of Default shall be deemed to have occurred unless such failure
continues for a period of ten (10) days after Landlord delivers written notice
thereof to Tenant; and provided further, if such failure is not reasonably
capable of being cured within such ten (10)-day period, then the period in
which Tenant may cure such failure shall be extended for such period of time as
is reasonably necessary for such cure, provided Tenant promptly commences and
diligently pursues the cure of such failure to completion. Upon the occurrence
of an Event of Default, Landlord may enforce performance in any manner provided
by law, including, without limitation, resumption of possession of the Premises
by Landlord and reletting the same for the remainder of the Term at the best
rental Landlord can obtain for the account of Tenant, who shall pay any
deficiency. In such event, Landlord shall pursue reletting of the Premises
with commercially reasonable diligence. If an Event of Default shall be
continuing with regard to the performance of any covenant, condition or
agreement in this Lease, Landlord shall have the right, but not the obligation,
to perform any act of Tenant required under such covenant, condition or
agreement.

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<PAGE> 10
(c) No termination of this Lease nor repossession of the
Premises pursuant to this paragraph or otherwise, and no reletting of the
Premises or any part thereof, shall relieve Tenant of its liabilities and
obligations hereunder, all of which shall survive such termination,
repossession or reletting.

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<PAGE> 11
including reasonable attorney's fees, shall be paid to Landlord by Tenant and
shall be considered to be additional rent hereunder. Notwithstanding anything
to the contrary contained in this Lease, in the event suit shall be brought by
either party hereto against the other to enforce any of the provisions of this
Lease, the prevailing party in any such action shall be entitled to recover
from the other party all of its expenses incurred in connection with such
action, including reasonable attorneys' fees, disbursements and actual costs.

21. SUBORDINATION. Tenant hereby agrees that its leasehold
interest hereunder is subordinate to any mortgages or Deeds of Trust now on, or
hereafter to be placed on, the Premises leased hereunder. This subordination
agreement shall be self-operative and no further instrument or certificate of
subordination shall be required from Tenant, but if requested Tenant agrees to
execute any documents presented to evidence the subordination. In the event of
enforcement by any Trustee under any Deed of Trust encumbering the Premises of
the remedies provided for by law or by such Deed of Trust, Tenant will, upon
request of any person succeeding to the interest of Landlord as the result of
such enforcement, automatically become the lessee of such successor in
interest, without any change in the terms or other provisions of this Lease;
provided, however, that any such successor in interest shall not be bound by
any amendment or modification of this Lease made without the consent of the
Beneficiary under any such Deed of Trust or any such successor in interest, and
Tenant shall, upon request by such successor in interest, execute and deliver
an instrument or instruments confirming its attornment and acknowledgment of
such successor as Landlord hereunder. Notwithstanding anything to the contrary
contained herein, except as to any mortgages or Deeds of Trust encumbering the
Premises as of the date of this Lease, the terms of this Section 21 shall be
subject and conditioned upon receipt by Tenant of a subordination,
non-disturbance and attornment agreement from each lender holding a mortgage or
Deed of Trust encumbering the Premises, on commercially reasonable terms.

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<PAGE> 12
LANDLORD: Beacon Investments, Inc.
6801 Lois Drive
Springfield, VA 22150

TENANT: Strayer College, Inc.
1025 Fifteenth Street, N.W.
Washington, D.C. 20005

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<PAGE> 13
Premises without process or by any legal process in force in the jurisdiction
in which the Premises are located.

26. INDEMNIFICATION.

(b) Landlord shall reimburse Tenant for, and shall
indemnify, defend upon request and hold Tenant harmless from and against, all
costs, damages, claims, liabilities, expenses (including reasonable attorneys'
fees, disbursements and actual costs), losses and court costs suffered by or
claimed against Tenant, based on or arising out of the gross negligence or
willful misconduct of Landlord in discharging its obligations under this Lease.

28. RENEWAL OPTION.

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Extension Period, with subsequent escalations in monthly Base Rent thereafter
to be determined by market practice with respect to comparable space. Landlord
and Tenant shall negotiate in good faith to determine the amount of monthly
Base Rent for the applicable Extension Period within thirty (30) days of the
date of Landlord's receipt of Tenant's written notice of its election to
exercise the applicable extension option.

(d) Upon determination of the Current Market Rental Rate
with respect to the applicable Extension Period, Tenant and Landlord shall each
have the right to terminate Tenant's election to extend the Term of the Lease
upon written notice thereof to the other party within five (5) days after
receipt of the Current Market Rental Rate. If neither Tenant nor Landlord
elects to terminate such election in accordance with the foregoing, an addendum
amending this Lease to set forth the monthly Base Rent for the Premises during
the applicable Extension Period shall be executed by Landlord and Tenant within
ten (10) days of the parties' agreement, or, in the alternative, within fifteen
(15) days of the brokers' determination of the monthly Base Rent for the
applicable Extension Period. If either Tenant or Landlord terminates Tenant's
election to extend the Term in accordance with the foregoing, the Lease Term
shall expire on the date originally scheduled therefor, as if such extension
election had not taken place.

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<PAGE> 15
(a) The United States Department of Labor, Consumer Price
Index, all items, for all urban households for the Washington, D.C., area for
all urban consumers, "1982-84 equals 100" for the last month of the Lease Year
prior to the then-current Lease Year, hereinafter referred to as the "Base
Index", shall be determined.

Comparison Index x current year's = Base Rent for the
---------------- rent ensuing Lease Year
Base Index

(e) Notwithstanding anything to the contrary contained
herein, in no event shall the Base Rent payable with respect to any Lease Year
ever be less than the Base Rent paid in the immediately preceding Lease Year,
nor shall any such Base Rent be more than three and one-half percent (3.5%) in
excess of the Base Rent payable with respect to the immediately preceding Lease
Year.

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<PAGE> 16
of the Premises, the cost of such appraisal being shared equally by Landlord
and Tenant, and the third appraisal and the previous appraisal closest to the
third appraisal in value shall be averaged and such average value shall be the
purchase price of the Premises. However, if the third appraisal shall be the
arithmatic mean value between the previous two appraisals, then the value
stated in such third appraisal shall be the purchase price of the Premises.
Upon determination of the purchase price in accordance with the foregoing,
Landlord or Tenant shall have the right to terminate Tenant's election to
purchase the Premises for any reason whatsoever upon written notice thereof to
the other party within thirty (30) days after receipt of such determination.
If Tenant's election is not terminated in accordance with the foregoing, title
to the Premises shall be conveyed by special warranty deed, subject to all
matters of record; provided, however, that the Premises shall be conveyed free
and clear of all monetary liens and encumbrances. All costs and expenses
associated with the Premises which are typically prorated in the sale of
commercial real estate, including without limitation real estate taxes, shall
be apportioned as of the date of closing. Closing on the purchase of the
Premises by Tenant shall take place within ninety (90) days following the
determination of the purchase price in accordance with the foregoing. At
closing, Tenant shall pay the purchase price to Landlord in cash, unless other
terms and conditions for payment have been agreed to in writing by Tenant and
Landlord. Landlord shall pay the cost of preparation of the deed of conveyance
and the State grantor's tax, and all other costs of settlement shall be paid by
Tenant.

31. COUNTERPARTS. This Lease may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.

32. CAPTIONS. The captions in this Lease are inserted for
convenience of reference only and in no way define, describe or limit the scope
or intent of this Agreement or any of the provisions hereof.

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<PAGE> 17
35. APPLICABLE LAW. This Lease and all questions of construction
of the provisions hereof and of the rights and liabilities of the parties
hereunder shall be construed and determined in accordance with the applicable
laws of the Commonwealth of Virginia.

37. PARTIES. All references herein to parties may be in the
masculine gender, and are intended to include the feminine gender, the neutral
gender, and plurals, as the case may appear from context.

40. AUTHORITY. Each individual executing this Lease on behalf of
Landlord or Tenant hereby represents and warrants that he is duly authorized to
execute and deliver this Lease; that Landlord or Tenant, as applicable, is duly
organized, qualified to do business in the Commonwealth of Virginia, and has
the power and authority and has obtained all necessary consents to enter into
and perform its obligations under this Lease; and that all action required to
authorize Landlord or Tenant, as applicable, to enter into this Lease has been
duly taken.

41. EFFECTIVE DATE. This Lease shall be effective as of the date
of the closing of the initial public offering of common stock by Strayer
Education, Inc.

(SIGNATURES AND NOTARIAL ACKNOWLEDGMENTS CONTINUE ON
FOLLOWING PAGE)

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<PAGE> 18
EXECUTED BY LANDLORD THIS 1st DAY OF JUNE, 1996.

BEACON INVESTMENTS, INC.,
a Virginia Corporation

BY: /s/ RON K. BAILEY
---------------------------------
Ron K. Bailey, President

EXECUTED BY TENANT THIS 1st DAY OF JUNE, 1996.

STRAYER COLLEGE, INC.,
a Maryland Corporation

By: /s/ HARRY T. WILKINS
------------------------------------
Harry T. Wilkins
Chief Financial Officer

State of Virginia

County/City of Arlington, to-wit:

The foregoing Deed of Lease dated as of the 1st day of June, 1996
was acknowledged before me, the undersigned Notary Public in and for the
aforesaid jurisdiction, by Ron K. Bailey, as President of Beacon Investments,
Inc., a Virginia Corporation, this 1st day of June, 1996.

My commission expires: 9/30/99
------------------.

/s/ JANENE LYNETTE EIGHMEY-CABATIC
------------------------------------
Notary Public
State of Virginia

County/City of Arlington, to-wit:

The foregoing Deed of Lease dated as of the 1st day of June, 1996
was acknowledged before me, the undersigned Notary Public in and for the
aforesaid jurisdiction, by Harry T. Wilkins as Chief Financial Officer of
Strayer College, Inc., a Maryland Corporation, this 1st day of June,
1996.

My commission expires: 9/30/99
--------------------.

/s/ JANENE LYNETTE EIGHMEY-CABATIC
-------------------------------------
Notary Public

<PAGE> 1
EXHIBIT 10.03

DEED OF LEASE

1. PARTIES. This Deed of Lease ("Lease") dated as of the 1st day
of June, 1996, is between STRAYER COLLEGE, INC., a Maryland Corporation, as
TENANT; and BATTLEVIEW INVESTMENTS, INC., a Virginia Corporation, as LANDLORD.

2. PREMISES. Landlord hereby leases to Tenant, and Tenant hereby
leases from Landlord, for the term and upon the conditions hereinafter set
forth, the premises ("Premises"), located in the County of Prince William,
consisting of 6.15833 acres, and known as Lot 15, Battlefield Business Park,
Manassas, Virginia 22110, together with improvements thereon, consisting of
approximately 20,800 gross square feet of floor area (hereinafter referred to
collectively as the "Premises")

4. BASE RENT. Beginning on the Lease Commencement Date, Tenant
shall pay to Landlord a Base Rent at the rate of THREE HUNDRED FIFTY THREE
THOUSAND SIX HUNDRED FOUR AND NO/100 DOLLARS ($353,604.00), for each year of
the primary Term, subject to increase pursuant to Paragraph 29 below, all of
which said rent shall be payable in equal monthly installments of TWENTY NINE
THOUSAND FOUR HUNDRED SIXTY SEVEN AND NO/100 DOLLARS ($29,467.00), in advance
on the first day of each and every month during the primary Term, subject to
increase pursuant to Paragraph 29 below. Rent shall be paid without any
reduction or setoff whatsoever. Tenant shall pay an additional five percent
(5%) late charge for any rent installments not received by Landlord within
seven (7) days of the due date. If said late charge is not allowable by law,
Tenant shall pay the maximum late charge allowable by law. In addition, Tenant
shall pay as additional rent to Landlord a fee of $50.00 for any check given to
Landlord for any reason which is returned or dishonored.

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<PAGE> 2
proceeding affecting Landlord, or any assignee of Landlord, or (ii) any action
with respect hereto which may be taken by any trustee or receiver of Landlord,
or of any assignee of Landlord in any such proceeding, or by any court in any
such proceeding.

5. ADDITIONAL CHARGES.

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<PAGE> 3
of said real estate taxes. Tenant shall pay monthly one-twelfth (1/12) of the
estimated annual cost in addition to the monthly rent. Failure by Tenant to
pay said taxes on a monthly basis shall be a default hereunder. After the
first calendar year, the estimated taxes for the next succeeding year and for
each year thereafter shall be deemed to be the actual taxes for the preceding
year. On or before the forty-fifth (45th) day following each December 31st
during the Term, Landlord shall provide Tenant with a statement reflecting the
actual real estate taxes for the Premises for the preceding year or portion
thereof. If the actual tax due is less than the total amount of the estimated
tax paid in advance, Landlord shall credit such excess against the next due
payment of taxes; and if the actual tax due exceeds the advance estimated tax
paid over the year, Tenant shall pay Landlord for the difference within thirty
(30) days following receipt by Tenant of such statement. Advance estimated tax
shall be prorated for any partial calendar year. Failure by Landlord to
deliver to Tenant the statement of actual real estate taxes within the time
frame set forth above shall not relieve Tenant of the obligation to make
monthly estimated payments in accordance with the last estimate of real estate
taxes, nor shall it be deemed a waiver by Landlord of the right to collect the
difference between Tenant's estimated payments and the actual real estate taxes
for the preceding year; provided, however, that if Landlord fails to deliver to
Tenant such reconciliation within the 45-day period provided herein, any excess
payments made by Tenant shall be credited to Tenant along with a late charge in
the amount of five percent (5%) of the amount of the overpayment.

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<PAGE> 4
Lease, then the monthly Base Rent and additional rent payable under this Lease
shall be abated until the Premises may reasonably be used for the purposes
contemplated hereunder.

7. PERSONAL PROPERTY TAXES. Tenant agrees to pay all taxes
levied upon the personal property located within the Premises, including trade
fixtures and inventory.

(a) Tenant shall pay the cost of removal of any of
Tenant's refuse or rubbish.

(b) Tenant shall keep the Premises at a temperature
sufficiently high to prevent freezing of water in pipes and fixtures.

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<PAGE> 5
Tenant shall not be unreasonably withheld, conditioned or delayed. Any
alterations or additions authorized to be made by Tenant are to be done in a
good and workmanlike manner without cost to Landlord. In addition, Tenant
shall obtain all necessary permits to complete improvements to the Premises.
Any mechanics lien filed against the Premises resulting from work performed at
the direction of Tenant shall be an event of default hereunder, unless Tenant
shall bond off such mechanics lien(s) within five (5) days after receiving
written notice of the filing of such lien and hold Landlord harmless from any
loss, including attorneys fees incurred to defend against such lien(s).

12. TRADE AND OTHER FIXTURES; SIGNS.

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<PAGE> 6
mortgagee, with the balance of the loss proceeds, if any, being paid to the
Landlord, or to the costs of repairing, restoring, renovating, or replacing the
Premises or the damage thereto. In the event the First Mortgagee makes the
proceeds of insurance available for repairing, restoring, renovating or
replacing the Premises, or the event there is no First Mortgagee at the time of
such casualty, then in the event of total damage or destruction to the Premises
due to fire or other casualty (total destruction hereby deemed to be damage
greater than fifty percent (50%) to the Premises), then the Landlord in its
sole discretion may opt to repair or replace the Premises by written notice
thereof to Tenant within thirty (30) days after the date of the damage, in
which event the rent shall fully abate for the repair or construction period.
In the event the Landlord chooses not to repair or replace the Premises, then
this Lease shall terminate and all parties shall be released from any further
liability hereunder. In the event of partial damage or destruction by fire or
other casualty (partial destruction hereby deemed to be damage to less than
fifty percent (50%) of the Premises as determined by Landlord), then the rent
shall be reduced proportionately for that period necessary to repair or replace
the damaged portion of the Premises. Notwithstanding anything to the contrary
contained in this Section 13, if Landlord so elects to restore the Premises to
the condition existing prior to the damage, such restoration shall be completed
with due diligence and, in all events, within twelve (12) months after the date
of the damage. If (a) Landlord does not elect to restore the Premises, or (b)
notwithstanding Landlord's election to restore the Premises, the restoration is
reasonably expected to require more than twelve (12) months to complete, or (c)
Landlord's restoration of the Premises is not completed within twelve (12)
months of the date of the damage, then, in any of such events, Tenant shall
have the right to terminate the Lease upon written notice thereof to Landlord
within thirty (30) days after the occurrence of the event described in clause
(a), (b), or (c) above, whichever is applicable, in which event the parties
shall be released from all liability accruing under the Lease from and after
the date of such termination. In the event such damage or destruction to the
Premises was caused by the act or omission of Tenant or its employees, agents,
or invitees, than Tenant shall not be entitled to any abatement in rent, and
Tenant shall pay Landlord's deductible and the amount by which such restoration
expenses exceed the insurance proceeds, if any, actually received by Landlord
on account of such damage or destruction. Notwithstanding anything herein to
the contrary, Landlord and Tenant each shall have the right to terminate this
Lease if (1) insurance proceeds are insufficient to pay the full cost of such
repair and restoration (2) the First Mortgagee fails or refuses to make such
insurance proceeds available for such repair and restoration, or (3) zoning or
other applicable governmental laws and regulations do not permit such repair
and restoration, upon written notice to the other party within thirty (30) days
after the determination that clause (1), (2) or (3) above is applicable.

14. INSURANCE.

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<PAGE> 7
other parties as Landlord and Tenant may designate as additional insureds, in
the customary form utilized in the northern Virginia area for buildings and
improvements of similar character, on all improvements now or after this date
located on the Premises.

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<PAGE> 8
17. BANKRUPTCY. Should Tenant make an assignment for the benefit
of creditors or file for bankruptcy such action shall constitute a breach of
this Lease for which Landlord, at its option, may terminate all rights of
Tenant or its successors in interest under this Lease, and exercise all other
remedies for breach available to Landlord.

19. DEFAULT.

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<PAGE> 9
Term at the best rental Landlord can obtain for the account of Tenant, who
shall pay any deficiency. In such event, Landlord shall pursue reletting of
the Premises with commercially reasonable diligence. If an Event of Default
shall be continuing with regard to the performance of any covenant, condition
or agreement in this Lease, Landlord shall have the right, but not the
obligation, to perform any act of Tenant required under such covenant,
condition or agreement.

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<PAGE> 10
for Tenant's default, and in lieu of all current damages beyond the date of
such demand (it being agreed that it would be impracticable or extremely
difficult to fix the actual damages), the amount by which (A) the Base Rent,
additional rent and other sums which would be payable under this Lease from the
date of such demand, for what would be the then unexpired term of this Lease in
the absence of such termination or repossession, discounted at the rate of 8%
per annum, exceeds (B) the then fair net rental value of the Premises for the
same period, discounted at the rate of 8% per annum. If any statute or rule of
law limits the amount of such liquidated final damages to less than the amount
above agreed upon, Landlord shall be entitled to the maximum amount allowable
under such statute or rule of law.

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<PAGE> 11
successor in interest, execute and deliver an instrument or instruments
confirming its attornment and acknowledgment of such successor as Landlord
hereunder. Notwithstanding anything to the contrary contained herein, except as
to any mortgages or Deeds of Trust encumbering the Premises as of the date of
this Lease, the terms of this Section 21 shall be subject and conditioned upon
receipt by Tenant of a subordination, non-disturbance and attornment agreement
from each lender holding a mortgage or Deed of Trust encumbering the Premises,
on commercially reasonable terms.

LANDLORD: Battleview Investments, Inc.
6801 Lois Drive
Springfield, VA 22150

TENANT: Strayer College, Inc.
1025 Fifteenth Street, N.W.
Washington, D.C. 20005

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<PAGE> 12
24. HOLDOVER. If the Tenant shall occupy the Premises with the
consent of the Landlord after the expiration of this Lease, and rent is
accepted from said Tenant, such occupancy and payment shall be construed as an
extension of this Lease for the term of one (1) month only from the date of
such expiration, and occupation thereof shall operate to extend the term of
this Lease for but one (1) month at a time unless other terms of such extension
are endorsed hereon in writing and signed by the parties hereto. In such event
if either Landlord or Tenant desires to terminate said occupancy at the end of
any month after the termination of this Lease, the party so desiring to
terminate the same shall give the other party at least thirty (30) days written
notice to that effect. Failure on the part of the Tenant to give such notice
shall obligate it to pay rent for an additional calendar month.

26. INDEMNIFICATION.

27. USE OF PREMISES. The Premises shall be used by Tenant solely
as an educational institution, or for any other use permitted under applicable
law. No other uses

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<PAGE> 13
shall be permitted on the Premises without the prior written consent of
Landlord, which Landlord may grant or withhold at its sole discretion.

28. RENEWAL OPTION.

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<PAGE> 14
foregoing, an addendum amending this Lease to set forth the monthly Base Rent
for the Premises during the applicable Extension Period shall be executed by
Landlord and Tenant within ten (10) days of the parties' agreement, or, in the
alternative, within fifteen (15) days of the brokers' determination of the
monthly Base Rent for the applicable Extension Period. If either Tenant or
Landlord terminates Tenant's election to extend the Term in accordance with the
foregoing, the Lease Term shall expire on the date originally scheduled
therefor, as if such extension election had not taken place.

Comparison Index current year's Base Rent for the
---------------- x rent = ensuing Lease Year
Base Index

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<PAGE> 15
30. PURCHASE OPTION. For and in consideration of the sum of Ten
Dollars ($10.00) paid to Landlord by Tenant, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Landlord hereby grants Tenant the option to purchase the Premises from
Landlord, such option to be exercisable by Tenant at any time during the term
of this Lease, including any extensions of such Term as permitted by this
Lease. Tenant shall exercise such option by giving written notice to Landlord
of its intent to exercise the option. The purchase price for the Premises
shall be determined as follows: Landlord and Tenant shall each obtain, at
their own cost, an appraisal of the fair market value of the Premises (such
determination expressly agreed to be made without regard to the current use of
the Premises as an educational institution, and without regard to this Lease)
performed by an MAI appraiser. If the two appraisals are within 15% of each
other, the average of the two appraisals shall be the purchase price for the
Premises. If the appraisals are not within 15% of each other, the two
appraisers performing such appraisals shall select a third appraiser, who shall
prepare an appraisal of the Premises, the cost of such appraisal being shared
equally by Landlord and Tenant, and the third appraisal and the previous
appraisal closest to the third appraisal in value shall be averaged and such
average value shall be the purchase price of the Premises. However, if the
third appraisal shall be the arithmatic mean value between the previous two
appraisals, then the value stated in such third appraisal shall be the purchase
price of the Premises. Upon determination of the purchase price in accordance
with the foregoing, Landlord or Tenant shall have the right to terminate
Tenant's election to purchase the Premises for any reason whatsoever upon
written notice thereof to the other party within thirty (30) days after receipt
of such determination. If Tenant's election is not terminated in accordance
with the foregoing, title to the Premises shall be conveyed by special warranty
deed, subject to all matters of record; provided, however, that the Premises
shall be conveyed free and clear of all monetary liens and encumbrances. All
costs and expenses associated with the Premises which are typically prorated in
the sale of commercial real estate, including without limitation real estate
taxes, shall be apportioned as of the date of closing. Closing on the purchase
of the Premises by Tenant shall take place within ninety (90) days following
the determination of the purchase price in accordance with the foregoing. At
closing, Tenant shall pay the purchase price to Landlord in cash, unless other
terms and conditions for payment have been agreed to in writing by Tenant and
Landlord. Landlord shall pay the cost of preparation of the deed of conveyance
and the State grantor's tax, and all other costs of settlement shall be paid by
Tenant.

31. COUNTERPARTS. This Lease may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.

32. CAPTIONS. The captions in this Lease are inserted for
convenience of reference only and in no way define, describe or limit the scope
or intent of this Agreement or any of the provisions hereof.

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<PAGE> 16
33. COMPLETE AGREEMENT. This Lease contains a complete expression
of the agreement between the parties and there are no promises, representations
or inducements except as herein provided; and this Lease may be amended only in
writing. This Lease shall inure to the benefit of, and be binding upon, the
parties hereto and their respective heirs, legal representatives, successors
and assigns.

37. PARTIES. All references herein to parties may be in the
masculine gender, and are intended to include the feminine gender, the neutral
gender, and plurals, as the case may appear from context.

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<PAGE> 17
and that all action required to authorize Landlord or Tenant, as applicable, to
enter into this Lease has been duly taken.

41. EFFECTIVE DATE. This Lease shall be effective as of the date
of the closing of the initial public offering of common stock by Strayer
Education, Inc.

EXECUTED BY LANDLORD THIS 1st DAY OF JUNE, 1996.

BATTLEVIEW INVESTMENTS, INC.,
a Virginia Corporation

BY: /s/ RON K. BAILEY
--------------------------------
Ron K. Bailey, President

EXECUTED BY TENANT THIS 1st DAY OF JUNE, 1996.

STRAYER COLLEGE, INC.,
a Maryland Corporation

By: /s/ HARRY T. WILKINS
----------------------------------------
Harry T. Wilkins
Chief Financial Officer

(NOTARIAL ACKNOWLEDGMENTS ON FOLLOWING PAGE)

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<PAGE> 18

State of Virginia

County/City of Arlington, to-wit:

The foregoing Deed of Lease dated as of the 1st day of June, 1996
was acknowledged before me, the undersigned Notary Public in and for the
aforesaid jurisdiction, by Ron K. Bailey, as President of Battleview
Investments, Inc., a Virginia Corporation, this 1st day of June, 1996.

My commission expires: 9/30/99
------------------.

/s/ JANENE LYNETTE EIGHMEY-CABATIC
-------------------------------------
Notary Public

State of Virginia

County/City of Arlington, to-wit:

The foregoing Deed of Lease dated as of the 1st day of June, 1996
was acknowledged before me, the undersigned Notary Public in and for the
aforesaid jurisdiction, by Harry T. Wilkins as Chief Financial Officer of
Strayer College, Inc., a Maryland Corporation, this 1st day of June,
1996.

My commission expires: 9/30/99
--------------------.

/s/ JANENE LYNETTE EIGHMEY-CABATIC
-------------------------------------
Notary Public

<PAGE> 1
EXHIBIT 10.04

AGREEMENT OF LEASE

1. PARTIES. This Agreement of Lease ("Lease") dated as of the
1st day of June, 1996, is between STRAYER COLLEGE, INC., a Maryland
Corporation, as TENANT; and CENTRAL INVESTMENTS, INC., a Virginia Corporation,
as LANDLORD.

2. PREMISES. Landlord hereby leases to Tenant, and Tenant hereby
leases from Landlord, for the term and upon the conditions hereinafter set
forth, the Premises, located in Washington, D.C. and known as 1025 15th Street,
N.W., together with improvements thereon, consisting of approximately 30,000
gross square feet of floor area (hereinafter referred to collectively as the
"Premises")

4. BASE RENT.

(a) Beginning on the Lease Commencement Date, Tenant
shall pay to Landlord a Base Rent at the rate of SEVEN HUNDRED FIFTY THOUSAND
AND NO/100 DOLLARS ($750,000.00), for each year of the primary Term, subject to
increase pursuant to Paragraph 29 below, all of which said rent shall be
payable in equal monthly installments of SIXTY TWO THOUSAND FIVE HUNDRED AND
00/100 ($62,500.00), in advance on the first day of each and every month during
the primary Term, subject to increase pursuant to Paragraph 29 below. Rent
shall be paid without any reduction or setoff whatsoever. Tenant shall pay an
additional five percent (5%) late charge for any rent installments not received
by Landlord within seven (7) days of the due date. If said late charge is not
allowable by law, Tenant shall pay the maximum late charge allowable by law.
In addition, Tenant shall pay as additional rent to Landlord a fee of $50.00
for any check given to Landlord for any reason which is returned or dishonored.

5. ADDITIONAL CHARGES.

7. PERSONAL PROPERTY TAXES. Tenant agrees to pay all taxes
levied upon the personal property located within the Premises, including trade
fixtures and inventory.

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<PAGE> 4
9. RULES AND REGULATIONS. By the signature affixed hereto, Tenant
agrees that the following rules and regulations shall apply to the Premises,
subject to change in the sole discretion of Landlord, provided, however, that
(i) any changes to such rules and regulations shall be reasonable and shall not
diminish Tenant's benefits under this Lease nor modify the economic terms of
this Lease, (ii) Tenant shall be provided with at least ten (10) days prior
written notice of such changes, and (iii) Tenant shall be provided a reasonable
period of time to comply with any such changes:

(a) Tenant shall pay the cost of removal of any of
Tenant's refuse or rubbish.

(b) Tenant shall keep the Premises at a temperature
sufficiently high to prevent freezing of water in pipes and fixtures.

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<PAGE> 5
12. TRADE AND OTHER FIXTURES; SIGNS.

(b) No sign, advertisement or notice shall be affixed or
displayed on the outside of the Premises without the Landlord's written
permission, which shall not be unreasonably withheld. If such consent is
granted, Tenant must first obtain any and all permits required by any law,
ordinance or regulation of the District of Columbia. If any unauthorized sign,
advertisement or notice is erected, Landlord shall have the right to remove the
same at the expense of Tenant.

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<PAGE> 6
continuing at the time of the loss; (iii) no such event of default shall occur
during the course of such repair, restoration, renovation, or replacement; (iv)
the amount of the insurance proceeds and any separate funds to be contributed
by the Tenant or Landlord are sufficient to effect such repair, restoration,
renovation, or replacement in a satisfactory manner; (v) the Tenant submits
to the First Mortgagee an acceptable construction budget and construction
schedule for the repair, restoration, renovation, or replacement, as well as
plans and specifications indicating that such repair, restoration, renovation,
or replacement can be accomplished within the time and cost restrictions shown
on the construction budget and construction schedule; and (vi) the funds which
are used to effect such repair, restoration, renovation, or replacement
(whether in the form of insurance proceeds, undisbursed loan proceeds, or an
equity contribution by the Landlord or Tenant) are held and disbursed by the
First Mortgagee over the term of the construction schedule, upon the terms and
in accordance with the procedures satisfactory to the First Mortgagee. In the
event the Premises is not subject to any mortgage or deed of trust at the time
of the occurrence of such casualty, then the following shall apply:

In the event of total damage or destruction to the Premises
due to fire or other casualty (total destruction hereby deemed to be damage
greater than fifty percent (50%) to the Premises), then the Landlord in its
sole discretion may opt to repair or replace the Premises by written notice
thereof to Tenant within thirty (30) days after the date of the damage, in
which event the rent shall fully abate for the repair or construction period.
In the event the Landlord chooses not to repair or replace the Premises, then
this Lease shall terminate and all parties shall be released from any further
liability hereunder. In the event of partial damage or destruction by fire or
other casualty (partial destruction hereby deemed to be damage to less than
fifty percent (50%) of the Premises as determined by Landlord), then the rent
shall be reduced proportionately for that period necessary to repair or
replace the damaged portion of the Premises. Notwithstanding anything to the
contrary contained in this Section 13, if Landlord so elects to restore the
Premises to the condition existing prior to the damage, such restoration shall
be completed with due diligence and, in all events, within twelve (12) months
after the date of the damage. If (a) Landlord does not elect to restore the
Premises, or (b) notwithstanding Landlord's election to restore the Premises,
the restoration is reasonably expected to require more than twelve (12) months
to complete, or (c) Landlord's restoration of the Premises is not completed
within twelve (12) months of the date of the damage, then, in any of such
events, Tenant shall have the right to terminate the Lease upon written notice
thereof to Landlord within thirty (30) days after the occurrence of the event
described in clause (a), (b), or (c) above, whichever is applicable, in which
event the parties shall be released from all liability accruing under the
Lease from and after the date of such termination. In the event such damage
or destruction to the Premises was caused by the act or omission of Tenant or
its employees, agents, or invitees, than Tenant shall not be entitled to any
abatement in rent, and Tenant shall pay Landlord's deductible and the amount
by which such restoration expenses exceed the insurance proceeds, if any,
actually received by Landlord on account of such damage or destruction.
Notwithstanding anything herein to the contrary, Landlord and Tenant each
shall have the right to terminate this Lease if (1) insurance proceeds are

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<PAGE> 7

insufficient to pay the full cost of such repair and restoration or (2) zoning
or other applicable governmental laws and regulations do not permit such repair
and restoration, upon written notice to the other party within thirty (30) days
after the determination that clause (1) or (2) above is applicable.

14. INSURANCE.

(a) Tenant shall, at its sole expense, obtain and keep in
force throughout the term of this Lease, full replacement value fire and
extended coverage or "all-risk" coverage insurance naming Landlord and Tenant,
as their interests may appear, and such other parties as Landlord and Tenant
may designate as additional insureds, in the customary form utilized in the
District of Columbia for buildings and improvements of similar character, on
all improvements now or after this date located on the Premises.

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<PAGE> 8

the Premises. Tenant shall also comply with all rules and regulations adopted
from time to time by Landlord relating to the Premises.

19. DEFAULT.

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<PAGE> 9

if Tenant shall fail to observe or perform any other covenant, condition or
agreement of this Lease; provided, however, that no Event of Default shall be
deemed to have occurred unless such failure continues for a period of ten (10)
days after Landlord delivers written notice thereof to Tenant; and provided
further, if such failure is not reasonably capable of being cured within such
ten (10)-day period, then the period in which Tenant may cure such failure
shall be extended for such period of time as is reasonably necessary for such
cure, provided Tenant promptly commences and diligently pursues the cure of
such failure to completion. Upon the occurrence of an Event of Default,
Landlord may enforce performance in any manner provided by law, including,
without limitation, resumption of possession of the Premises by Landlord and
reletting the same for the remainder of the Term at the best rental Landlord
can obtain for the account of Tenant, who shall pay any deficiency. In such
event, Landlord shall pursue reletting of the Premises with commercially
reasonable diligence. If an Event of Default shall be continuing with regard
to the performance of any covenant, condition or agreement in this Lease,
Landlord shall have the right, but not the obligation, to perform any act of
Tenant required under such covenant, condition or agreement.

9
<PAGE> 10

in connection with such re-letting (including, without limitation, all
brokerage commission, attorneys' fees, and expenses of preparation for such
re-letting). Tenant shall pay such current damages on the days on which the
Base Rent would have been payable under this Lease in the absence of such
termination or repossession, and Landlord shall be entitled to recover the same
from Tenant on each such day.

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<PAGE> 11

self-operative and no further instrument or certificate of subordination shall
be required from Tenant, but if requested Tenant agrees to execute any
documents presented to evidence the subordination. In the event of enforcement
by any Trustee under any Deed of Trust encumbering the Premises of the remedies
provided for by law or by such Deed of Trust, Tenant will, upon request of any
person succeeding to the interest of Landlord as the result of such
enforcement, automatically become the lessee of such successor in interest,
without any change in the terms or other provisions of this Lease; provided,
however, that any such successor in interest shall not be bound by any
amendment or modification of this Lease made without the consent of the
Beneficiary under any such Deed of Trust or any such successor in interest, and
Tenant shall, upon request by such successor in interest, execute and deliver
an instrument or instruments confirming its attornment and acknowledgment of
such successor as Landlord hereunder. Notwithstanding anything to the contrary
contained herein, except as to any mortgages or Deeds of Trust encumbering the
Premises as of the date of this Lease, the terms of this Section 21 shall be
subject and conditioned upon receipt by Tenant of a subordination,
non-disturbance and attornment agreement from each lender holding a mortgage or
Deed of Trust encumbering the Premises, on commercially reasonable terms.

LANDLORD: Central Investments, Inc.
6801 Lois Drive
Springfield, VA 22150

TENANT: Strayer College, Inc.
1025 Fifteenth Street, N.W.
Washington, D.C. 20005

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<PAGE> 12

by Tenant, and which are designated in said notice, and repair any damage
occasioned by such removals. In default thereof, Landlord may effect said
removal and repairs at Tenant's expense. Any floor covering that is cemented
or otherwise adhesively affixed to the floor of the Premises shall not be
considered a trade fixture. All trade fixtures not removed by Tenant shall
become property of the Landlord. Notwithstanding anything to the contrary
contained herein, Tenant shall not be required to remove any alteration to the
Premises unless, at the time Tenant requests Landlord's approval of such
alteration, Landlord specifies in writing that such alteration must be removed
from the Premises at the expiration or termination of the Lease Term.

26. INDEMNIFICATION.

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<PAGE> 13

28. RENEWAL OPTION.

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<PAGE> 14

be the mean of the two closest rental rate determinations. Landlord and Tenant
shall each pay the fee of the broker selected by it, and they shall equally
share the payment of the fee of the third broker.

Comparison Index x current year's = Base Rent for the
---------------- rent ensuing Lease Year
Base Index

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<PAGE> 15

period of "1982-84 equals 100", so that any index used for the purpose of this
clause shall be converted to the "1982-84 equals 100" index.

15
<PAGE> 16

31. COUNTERPARTS. This Lease may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.

32. CAPTIONS. The captions in this Lease are inserted for
convenience of reference only and in no way define, describe or limit the scope
or intent of this Agreement or any of the provisions hereof.

37. PARTIES. All references herein to parties may be in the
masculine gender, and are intended to include the feminine gender, the neutral
gender, and plurals, as the case may appear from context.

16
<PAGE> 17

date hereof shall have no further force and effect and shall not be binding on
the parties thereto.

41. EFFECTIVE DATE. This Lease shall be effective as of the date
of the closing of the initial public offering of common stock by Strayer
Education, Inc.

EXECUTED BY LANDLORD THIS 1st DAY OF JUNE, 1996.

CENTRAL INVESTMENTS, INC.,
a Virginia Corporation

BY: /s/ RON K. BAILEY
--------------------------------
Ron K. Bailey, President

EXECUTED BY TENANT THIS 1st DAY OF JUNE, 1996.

STRAYER COLLEGE, INC.,
a Maryland Corporation

By: /s/ HARRY T. WILKINS
-----------------------------------
Harry T. Wilkins,
Chief Financial Officer

<PAGE> 1
EXHIBIT 10.05

DEED OF LEASE

1. PARTIES. This Deed of Lease ("Lease") dated as of the 1st day
of June, 1996, is between STRAYER COLLEGE, INC., a Maryland Corporation, as
TENANT; and POTOMAC INVESTMENTS, INC., a Virginia Corporation, as LANDLORD.

2. PREMISES. Landlord hereby leases to Tenant, and Tenant hereby
leases from Landlord, for the term and upon the conditions hereinafter set
forth, the premises ("Premises"), located in the County of Prince William,
consisting of 5.88779 acres, as the same appears more fully described in the
Deed of Consolidation and Easement recorded in Deed Book 2227, at page 825,
among the land records of Prince William County, together with improvements
thereon, consisting of approximately 20,800 gross square feet of floor area
(hereinafter referred to collectively as the "Premises")

4. BASE RENT.

(a) Beginning on the Lease Commencement Date, Tenant shall
pay to Landlord a Base Rent at the rate of THREE HUNDRED FIFTY THREE THOUSAND
SIX HUNDRED FOUR AND NO/100 DOLLARS ($353,604.00), for each year of the primary
Term, subject to increase pursuant to Paragraph 29 below, all of which said
rent shall be payable in equal monthly installments of TWENTY NINE THOUSAND
FOUR HUNDRED SIXTY SEVEN AND NO/100 DOLLARS ($29,467.00), in advance on the
first day of each and every month during the primary Term, subject to increase
pursuant to Paragraph 29 below. Rent shall be paid without any reduction or
setoff whatsoever. Tenant shall pay an additional five percent (5%) late
charge for any rent installments not received by Landlord within seven (7) days
of the due date. If said late charge is not allowable by law, Tenant shall pay
the maximum late charge allowable by law. In addition, Tenant shall pay as
additional rent to Landlord a fee of $50.00 for any check given to Landlord for
any reason which is returned or dishonored.

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<PAGE> 2
(c) Tenant agrees that it shall remain obligated
hereunder, and that it shall not take any action to terminate, rescind, or
avoid this Lease, notwithstanding (i) any bankruptcy, insolvency, liquidation,
reorganization, dissolution, winding-up or other such proceeding affecting
Landlord, or any assignee of Landlord, or (ii) any action with respect hereto
which may be taken by any trustee or receiver of Landlord, or of any assignee
of Landlord in any such proceeding, or by any court in any such proceeding.

5. ADDITIONAL CHARGES.

(a) Except as specifically set forth below with
respect only to Capital Repairs, Tenant shall be responsible for maintaining
and operating the Premises, including, but not limited to trash collection,
keeping parking areas and travel lanes clean and clear of snow and ice and in
maintaining the Premises including landscaping, repainting of signs, poles,
parking lot surface and other like items, cleaning all plate glass, water and
sewer charges, repair of all plumbing, electrical, and HVAC systems,
maintenance and repair of the roof of the Premises, and the cost of insuring
the Premises. Landlord shall have the right, but not the obligation, to perform
any such maintenance or repairs if Tenant fails to perform the same within ten
(10) business days after receipt of written notice from Landlord specifying the
nature of such required maintenance or repair (or, if such maintenance or
repair is not reasonably capable of being performed within such ten
(10)-business day period, if Tenant commences such maintenance or repair within
such ten (10)-business day period and diligently pursues such maintenance or
repair to completion), in which event Tenant shall reimburse Landlord for the
reasonable out-of-pocket costs incurred in connection therewith, within thirty
(30) days after receipt of an invoice substantiating such costs; provided,
however, that Landlord shall have no duty to give such notice prior to
performing any such maintenance or repairs of an emergency nature or which are
required to prevent imminent damage to the Premises. Notwithstanding anything
to the contrary contained in this Lease, Landlord shall repair and maintain in
good working order and condition only the structural components of the building
located on the Premises (the "Capital Repairs"), and Tenant shall have no
obligation with respect thereto. Tenant shall have the right, but not the
obligation, to perform any such Capital Repairs only if Landlord fails to
perform the same within ten (10) business days after receipt of written notice
from Tenant specifying the nature of such required Capital Repairs (or, if such
Capital Repairs are not reasonably capable of being performed within such ten
(10)-business day period, if Landlord commences such capital repairs within
such ten (10)-business day period and diligently pursues such Capital Repairs
to completion), in which event Landlord shall reimburse Tenant for the
reasonable out-of-pocket costs incurred in connection therewith, within thirty
(30) days after the receipt of an invoice substantiating such costs. Tenant
shall notify Landlord immediately upon Tenant's becoming aware of the need for
any Capital Repairs. Except with respect to the Capital Repairs, Tenant shall
be responsible for all costs of maintaining and operating the Premises
regardless of whether the actual work is performed by or at the direction of
the Tenant or Landlord.

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<PAGE> 3
(b) Tenant shall pay in advance the real estate taxes for
the Premises, in accordance with the following: At the commencement of the
Term of this Lease and at the beginning of each calendar year, Landlord will
deliver to Tenant a reasonable estimate of said real estate taxes. Tenant
shall pay monthly one-twelfth (1/12) of the estimated annual cost in addition
to the monthly rent. Failure by Tenant to pay said taxes on a monthly basis
shall be a default hereunder. After the first calendar year, the estimated
taxes for the next succeeding year and for each year thereafter shall be deemed
to be the actual taxes for the preceding year. On or before the forty-fifth
(45th) day following each December 31st during the Term, Landlord shall provide
Tenant with a statement reflecting the actual real estate taxes for the
Premises for the preceding year or portion thereof. If the actual tax due is
less than the total amount of the estimated tax paid in advance, Landlord shall
credit such excess against the next due payment of taxes; and if the actual tax
due exceeds the advance estimated tax paid over the year, Tenant shall pay
Landlord for the difference within thirty (30) days following receipt by Tenant
of such statement. Advance estimated tax shall be prorated for any partial
calendar year. Failure by Landlord to deliver to Tenant the statement of
actual real estate taxes within the time frame set forth above shall not
relieve Tenant of the obligation to make monthly estimated payments in
accordance with the last estimate of real estate taxes, nor shall it be deemed
a waiver by Landlord of the right to collect the difference between Tenant's
estimated payments and the actual real estate taxes for the preceding year;
provided, however, that if Landlord fails to deliver to Tenant such
reconciliation within the 45-day period provided herein, any excess payments
made by Tenant shall be credited to Tenant along with a late charge in the
amount of five percent (5%) of the amount of the overpayment.

6. UTILITIES. Tenant agrees to pay, before delinquency,
all charges for water, electricity, telephone and any other utilities used by
Tenant; provided that Tenant is able to contract directly with the provider of
such utilities. In the event any such providers refuse to allow Tenant to
contract directly for such utilities, and Landlord contracts directly with the
provider of any such utilities, Tenant shall pay all charges for such services
incurred with respect to the Premises within twenty (20) days after receipt of
an invoice substantiating such charges. Landlord shall not be under any
responsibility or liability in any way whatsoever for the quality, quantity,
impairment, interruption, stoppage or other interference with service involving
water, heat, air conditioning, electric current for light and power, telephone
or any other service; except to the extent the same results from Landlord's
failure to perform its obligations pursuant to Section 8 below, in which event,
if such interruption, stoppage or other impairment of utilities or services
renders the Premises reasonably unacceptable for the use of the Premises
contemplated by this Lease, then the monthly Base Rent and additional rent
payable under this Lease shall be abated until the Premises may reasonably be
used for the purposes contemplated hereunder.

7. PERSONAL PROPERTY TAXES. Tenant agrees to pay all taxes
levied upon the personal property located within the Premises, including trade
fixtures and inventory.

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<PAGE> 4
8. MAINTENANCE. Tenant shall be responsible for all maintenance,
repairs and replacement of the interior and exterior of the Premises, and pest
control, all at Tenant's expense, with the exception of all Capital Repairs.

(a) Tenant shall pay the cost of removal of any of
Tenant's refuse or rubbish.

(b) Tenant shall keep the Premises at a temperature
sufficiently high to prevent freezing of water in pipes and fixtures.

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<PAGE> 5
receiving written notice of the filing of such lien and hold Landlord harmless
from any loss, including attorneys fees incurred to defend against such
lien(s).

12. TRADE AND OTHER FIXTURES; SIGNS.

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<PAGE> 6
damage greater than fifty percent (50%) to the Premises), then the Landlord in
its sole discretion may opt to repair or replace the Premises by written notice
thereof to Tenant within thirty (30) days after the date of the damage, in
which event the rent shall fully abate for the repair or construction period.
In the event the Landlord chooses not to repair or replace the Premises, then
this Lease shall terminate and all parties shall be released from any further
liability hereunder. In the event of partial damage or destruction by fire or
other casualty (partial destruction hereby deemed to be damage to less than
fifty percent (50%) of the Premises as determined by Landlord), then the rent
shall be reduced proportionately for that period necessary to repair or replace
the damaged portion of the Premises. Notwithstanding anything to the contrary
contained in this Section 13, if Landlord so elects to restore the Premises to
the condition existing prior to the damage, such restoration shall be completed
with due diligence and, in all events, within twelve (12) months after the date
of the damage. If (a) Landlord does not elect to restore the Premises, or (b)
notwithstanding Landlord's election to restore the Premises, the restoration is
reasonably expected to require more than twelve (12) months to complete, or (c)
Landlord's restoration of the Premises is not completed within twelve (12)
months of the date of the damage, then, in any of such events, Tenant shall
have the right to terminate the Lease upon written notice thereof to Landlord
within thirty (30) days after the occurrence of the event described in clause
(a), (b), or (c) above, whichever is applicable, in which event the parties
shall be released from all liability accruing under the Lease from and after
the date of such termination. In the event such damage or destruction to the
Premises was caused by the act or omission of Tenant or its employees, agents,
or invitees, than Tenant shall not be entitled to any abatement in rent, and
Tenant shall pay Landlord's deductible and the amount by which such restoration
expenses exceed the insurance proceeds, if any, actually received by Landlord
on account of such damage or destruction. Notwithstanding anything herein to
the contrary, Landlord and Tenant each shall have the right to terminate this
Lease if (1) insurance proceeds are insufficient to pay the full cost of such
repair and restoration (2) the First Mortgagee fails or refuses to make such
insurance proceeds available for such repair and restoration, or (3) zoning or
other applicable governmental laws and regulations do not permit such repair
and restoration, upon written notice to the other party within thirty (30) days
after the determination that clause (1), (2) or (3) above is applicable.

14. INSURANCE.

(a) Tenant shall, at its sole expense, obtain and keep in
force throughout the term of this Lease, full replacement value fire and
extended coverage or "all-risk" coverage insurance naming Landlord and Tenant,
as their interests may appear, and such other parties as Landlord and Tenant
may designate as additional insureds, in the customary form utilized in the
northern Virginia area for buildings and improvements of similar character, on
all improvements now or after this date located on the Premises.

(b) Tenant shall, at its sole expense, obtain and keep in
force during the term of this Lease commercial general liability insurance with
limits of not less than One

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<PAGE> 7
Million Dollars ($1,000,000.00) per occurrence and Three Million Dollars
($3,000,000.00) in the aggregate as to liability for personal injury to or
death of any person, and for damage to property, insuring against any and all
liability of Landlord and Tenant, including, without limitation, coverage for
contractual liability and broad form property damage with respect to the
Premises, or arising out of the maintenance, use, or occupancy of the Premises.

(c) All insurance required in this Lease shall be issued
by companies rated at least A or A+ non-contingent rating by A.M. Best's
Insurance Reports. The fire and extended coverage or "all-risk" coverage
insurance shall be payable to Landlord, Tenant, and any Mortgagee as their
interests may appear. The "all-risk" coverage insurance and the general
liability insurance shall be carried in the joint names of Tenant, Landlord,
and such other parties having an interest in the premises as Landlord and
Tenant may designate. All insurance policies shall (i) be subject to approval
by Landlord and any mortgagee as to form and amount; (ii) expressly provide
that such policies shall not be canceled or altered without thirty (30) days'
prior written notice to Landlord and any Mortgagee; (iii) provide that no act
or omission of Tenant that would otherwise result in forfeiture or reduction of
the insurance shall affect or limit the obligation of the insurance company to
pay the amount of any loss sustained; and (iv) to the extent obtainable,
contain a waiver by the insurer of its rights of subrogation against Landlord
and Tenant. Upon issuance, each such insurance policy or a certified copy of
such policy shall be delivered to the Landlord and any lender whom Landlord
designates. Tenant may satisfy its obligation under this paragraph by
appropriate endorsements of its blanket insurance policies.

18. CONDEMNATION. Tenant agrees that if the said Premises or any
part thereof, shall be taken or condemned for public or quasi-public use or
purpose by any

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<PAGE> 8
competent authority, Tenant shall have no claim against the Landlord and shall
not have any claim or right to any portion of the amount that may be awarded as
damages or paid as a result of any such condemnation with reference to the land
and improvements thereof; and all rights of the Tenant to damages therefor, if
any, are hereby assigned by the Tenant to the Landlord. If such condemnation
or taking is of such a substantial nature as to prevent the Tenant from
carrying on its business, then the Lease shall cease and terminate from the
date of such governmental taking or condemnation, and the Tenant shall have no
claim against the Landlord for the value of any unexpired Term of this Lease.
If this Lease is not terminated as above provided as a result of a governmental
taking, Tenant and Landlord shall agree upon an equitable reduction of the
rental. If the parties fail to agree upon reduction within sixty (60) days
from the date of the final award or payment for the part of the Leased Premises
so taken or conveyed, Landlord and Tenant shall each choose one arbitrator and
the two arbitrators so chosen shall choose a third arbitrator. The decision of
any two of the arbitrators as to the rental reduction, if any, shall be binding
on Tenant and Landlord and any expense or fees involved shall be divided
equally between Tenant and Landlord.

19. DEFAULT.

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<PAGE> 9
(b) As security for the performance of Tenant's obligations
under this Lease, Tenant grants to Landlord a lien upon and a security interest
in Tenant's personal property located in the Premises. Landlord may exercise
all rights in connection with such lien and security interest, at any time or
from time to time, in accordance with all applicable laws, including without
limitation, the Uniform Commercial Code in effect in the Commonwealth of
Virginia. Landlord agrees to subordinate such lien and security interest to
any lien or security interest granted by Tenant in or to any of its personal
property as security for indebtedness secured for the purpose of
financing the purchase or leasing of any such personal property; provided,
however, the secured party agrees (i) to provide notice of any defaults under
such financing to Landlord, and (ii) to promptly repair any and all damage to
the Premises that occurs if the secured party removes its collateral.

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rule of law limits the amount of such liquidated final damages to less than the
amount above agreed upon, Landlord shall be entitled to the maximum amount
allowable under such statute or rule of law.

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<PAGE> 11

LANDLORD: Potomac Investments, Inc.
6801 Lois Drive
Springfield, VA 22150

TENANT: Strayer College, Inc.
1025 Fifteenth Street, N.W.
Washington, D.C. 20005

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<PAGE> 12

the other party at least thirty (30) days written notice to that effect.
Failure on the part of the Tenant to give such notice shall obligate it to pay
rent for an additional calendar month.

26. INDEMNIFICATION.

28. RENEWAL OPTION.

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<PAGE> 13

extension option no later than one hundred eighty (180) days prior to the
expiration of the last Lease Year of the term or the then-current Extension
Period, as applicable.

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<PAGE> 14

Comparison Index x current year's = Base Rent for the
---------------- rent ensuing Lease Year
Base Index

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<PAGE> 15

to be made without regard to the current use of the Premises as an educational
institution, and without regard to this Lease) performed by an MAI appraiser.
If the two appraisals are within 15% of each other, the average of the two
appraisals shall be the purchase price for the Premises. If the appraisals are
not within 15% of each other, the two appraisers performing such appraisals
shall select a third appraiser, who shall prepare an appraisal of the Premises,
the cost of such appraisal being shared equally by Landlord and Tenant, and the
third appraisal and the previous appraisal closest to the third appraisal in
value shall be averaged and such average value shall be the purchase price of
the Premises. However, if the third appraisal shall be the arithmatic mean
value between the previous two appraisals, then the value stated in such third
appraisal shall be the purchase price of the Premises. Upon determination of
the purchase price in accordance with the foregoing, Landlord or Tenant shall
have the right to terminate Tenant's election to purchase the Premises for any
reason whatsoever upon written notice thereof to the other party within thirty
(30) days after receipt of such determination. If Tenant's election is not
terminated in accordance with the foregoing, title to the Premises shall be
conveyed by special warranty deed, subject to all matters of record; provided,
however, that the Premises shall be conveyed free and clear of all monetary
liens and encumbrances. All costs and expenses associated with the Premises
which are typically prorated in the sale of commercial real estate, including
without limitation real estate taxes, shall be apportioned as of the date of
closing. Closing on the purchase of the Premises by Tenant shall take place
within ninety (90) days following the determination of the purchase price in
accordance with the foregoing. At closing, Tenant shall pay the purchase price
to Landlord in cash, unless other terms and conditions for payment have been
agreed to in writing by Tenant and Landlord. Landlord shall pay the cost of
preparation of the deed of conveyance and the State grantor's tax, and all
other costs of settlement shall be paid by Tenant.

31. COUNTERPARTS. This Lease may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.

32. CAPTIONS. The captions in this Lease are inserted for
convenience of reference only and in no way define, describe or limit the scope
or intent of this Agreement or any of the provisions hereof.

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<PAGE> 16

enforceable or valid, and any such holdings shall not invalidate or render
unenforceable any other provision hereof.

37. PARTIES. All references herein to parties may be in the
masculine gender, and are intended to include the feminine gender, the neutral
gender, and plurals, as the case may appear from context.

41. EFFECTIVE DATE. This Lease shall be effective as of the date
of the closing of the initial public offering of common stock by Strayer
Education, Inc.

(SIGNATURES AND NOTARIAL ACKNOWLEDGMENTS ON FOLLOWING PAGE)

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<PAGE> 17

EXECUTED BY LANDLORD THIS 1st DAY OF JUNE, 1996.

POTOMAC INVESTMENTS, INC.,
a Virginia Corporation

BY: /s/ RON K. BAILEY
--------------------------------
Ron K. Bailey, President

EXECUTED BY TENANT THIS 1ST DAY OF JUNE, 1996.

STRAYER COLLEGE, INC.,
a Maryland Corporation

By: /s/ HARRY T. WILKINS
------------------------------------
Harry T. Wilkins

Chief Financial Officer

State of Virginia

County/City of Arlington, to-wit:

The foregoing Deed of Lease dated as of the 1st day of June, 1996
was acknowledged before me, the undersigned Notary Public in and for the
aforesaid jurisdiction, by Ron K. Bailey, as President of Potomac Investments,
Inc., a Virginia Corporation, this 1st day of June, 1996.

My commission expires: 9/30/99
---------------.

/s/ JANENE LYNETTE EIGHMEY-CABATIC
-------------------------------------
Notary Public
State of Virginia

County/City of Arlington, to-wit:

The foregoing Deed of Lease dated as of the 1st day of June, 1996
was acknowledged before me, the undersigned Notary Public in and for the
aforesaid jurisdiction, by Harry T. Wilkins as Chief Financial Officer of
Strayer College, Inc., a Maryland Corporation, this 1st day of June,
1996.

My commission expires: 9/30/99
--------------------.

/s/ JANENE LYNETTE EIGHMEY-CABATIC
-------------------------------------
Notary Public

<PAGE> 1
EXHIBIT 10.9

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT ("Agreement") is entered into as of
this 1st day of June, 1996, by and between Strayer College, Inc., a Maryland
corporation (the "College"), and Ron K. Bailey (the "Executive").

WHEREAS, the College desires to employ the Executive, and the
Executive desires to be employed by the College, on the terms and conditions
set forth herein.

NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth herein and other good and valuable consideration, the
receipt and sufficiency of which hereby are acknowledged, the parties hereto
agree as follows:

1. Employment. On the terms and conditions set forth in
this Agreement, the College agrees to employ the Executive and the Executive
agrees to be employed by the College for the term set forth in Section 2 hereof
and in the position and with the duties set forth in Section 3 hereof.

2. Term. The employment of the Executive by the College
as provided in Section 1 hereof shall commence on the date of the first closing
of the initial public offering of common stock , par value $.01 per share, of
the College's parent corporation, Strayer Education, Inc., and end two (2)
years thereafter; provided, that the term of this Agreement shall be extended
automatically for additional one (1) year periods on the second anniversary
date of this Agreement and each subsequent anniversary date, unless and until
either party provides written notice to the other party in accordance with
Section 9 hereof not less than ninety (90) days prior to such anniversary date
that such party is terminating this Agreement, which termination shall be
effective as of the end of such initial term or extended term, as the case may
be (the "Expiration Date"), or until sooner terminated as hereinafter set
forth.

3. Position and Duties. The Executive shall serve as
President of the College, with such duties and responsibilities as the board of
trustees of the College (the "Board") may from time to time determine and
assign to the Executive. The Executive shall devote the Executive's reasonable
best efforts and substantially full business time to the performance of the
Executive's duties and the advancement of the business and affairs of the
College, provided, however, that the College acknowledges that the Executive
will also provide services to Education Loan Processing, Inc., which shall bear
full responsibility for Executive's compensation for such services.
<PAGE> 2

4. Compensation.

4(a). Base Salary. The College shall pay to the
Executive an annual base salary (the "Base Salary") at the rate of $150,000.00
per year. The Base Salary shall be reviewed no less frequently than annually
and may be increased at the discretion of the Board. If the Executive's Base
Salary is increased, the increased amount shall be the Base Salary for the
remainder of the employment term hereunder. The Base Salary shall be payable
biweekly or in such other installments as shall be consistent with the
College's payroll procedures.

4(b). Other Benefits. The Executive shall be
entitled to receive disability salary continuation and life insurance coverage
in accordance with policies in effect for senior executives of the College.
The Executive also shall be entitled to participate in such plans and to
receive such bonuses, incentive compensation and fringe benefits as may be
granted or established by the College from time to time. Nothing contained in
this Agreement shall prevent the College from changing carriers or from
affecting modifications in insurance coverage for the Executive.

4(c). Vacation; Holidays. The Executive shall be
entitled to all public holidays observed by the College and vacation days in
accordance with the applicable vacation policies for senior executives of the
College, which shall be taken at a reasonable time or times.

4(d). Withholding Taxes and Other Deductions. To
the extent required by law, the College shall withhold from any payments due
Executive under this Agreement any applicable federal, state or local taxes and
such other deductions as are prescribed by law or College policy.

5. Confidential Information.

5(a). The Executive covenants and agrees that the
Executive will not ever, without the prior written consent of the Board or a
person authorized by the Board, publish or disclose to any unaffiliated third
party or use for the Executive's personal benefit or advantage any confidential
information with respect to any of the College's services, faculty, students,
curriculum, marketing techniques, methods or future plans disclosed to the
Executive as a result of the Executive's employment with the College, to the
extent such information has heretofore remained confidential (except for
unauthorized disclosures) and except as otherwise ordered by a court of
competent jurisdiction.

5(b). The Executive acknowledges that the
restrictions contained in Section 5(a) hereof are reasonable and necessary, in
view of the nature of the College's business, in order to protect the
legitimate interests of the College,

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<PAGE> 3

and that any violation thereof would result in irreparable injury to the
College. Therefore, the Executive agrees that in the event of a breach or
threatened breach by the Executive of the provisions of Section 5(a) hereof,
the College shall be entitled to obtain from any court of competent
jurisdiction, preliminary or permanent injunctive relief restraining the
Executive from disclosing or using any such confidential information. Nothing
herein shall be construed as prohibiting the College from pursuing any other
remedies available to it for such breach or threatened breach, including,
without limitation, recovery of damages from the Executive.

5(c). The Executive shall deliver promptly to the
College on termination of employment, or at any other time the College may so
request, all confidential memoranda, notes, records, reports and other
documents (and all copies thereof) relating to the College's and its
affiliates' businesses which the Executive obtained while employed by, or
otherwise serving or acting on behalf of, the College or which the Executive
may then possess or have under his or her control.

6. Non-Competition.

6(a). Non-Competition. The Executive covenants and
agrees that the Executive will not, during the Executive's employment hereunder
and for a period of three (3) years thereafter (to the extent permitted by
law), at any time and in any state or other jurisdiction in which the College
is engaged or has reasonably firm plans to engage in business, (i) compete with
the College on behalf of the Executive or any third party; (ii) participate as
a director, agent, representative, stockholder or partner or have any direct or
indirect financial interest in any other college, university or other
post-secondary education institution; or (iii) participate as an employee or
officer in any enterprise in which the Executive's responsibility relates to
the administration of any other college, university or other post-secondary
education institution. The ownership by the Executive of less than five
percent (5%) of the outstanding stock of any corporation listed on a national
securities exchange engaged in post-secondary education shall not be deemed a
violation of this Section 6(a).

6(b). Injunctive Relief. In the event the
restrictions against engaging in a competitive activity contained in Section
6(a) hereof shall be determined by any court of competent jurisdiction to be
unenforceable by reason of their extending for too great a period of time or
over too great a geographical area or by reason of their being too extensive in
any other respect, Section 6(a) hereof shall be interpreted to extend only over
the maximum period of time for which it may be enforceable and over the maximum
geographical area as to which it may be enforceable and to the maximum extent
in all other respects as to which it may be enforceable, all as determined by
such court in such action.

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<PAGE> 4

6(c). Non-Solicitation. The Executive covenants and
agrees that the Executive will not, during the Executive's employment hereunder
and for a period of one (1) year thereafter induce or attempt to induce any
employee of the College or any the College's affiliates to render services for
any other person, firm, or corporation.

7. Termination of Employment.

7(a). Death. The Executive's employment hereunder
shall terminate upon the Executive's death.

7(b). By the College. The College may terminate the
Executive's employment hereunder under the following circumstances:

(i) If the Executive shall have been unable to
perform all of the Executive's duties hereunder by reason of illness, physical
or mental disability or other similar incapacity, which inability shall
continue for more than three (3) consecutive months, the College may terminate
the Executive's employment hereunder.

(ii) The College may terminate the Executive's
employment hereunder for "Cause." For purposes of this Agreement, "Cause"
shall mean (A) willful refusal by the Executive to follow a written order of
the Board of Trustees, (B) the Executive's willful engagement in conduct
materially injurious to the College, (C) dishonesty of a material nature that
relates to the performance of the Executive's duties under this Agreement, (D)
the Executive's conviction for any felony involving moral turpitude, and (E)
the Executive's continued failure to perform his duties under this Agreement
(except due to the Executive's incapacity as a result of physical or mental
illness) to the satisfaction of the Board of Trustees of the College for a
period of at least forty-five (45) consecutive days after written notice is
delivered to the Executive specifically identifying the manner in which the
Executive has failed to perform his or her duties. In addition, the College
may terminate the Executive's employment for "Cause" if the normal business
operations of the College are rendered commercially impractical as a
consequence of an act of God, accident, fire, labor controversy, riot or civil
commotion, act of public enemy, law, enactment, rule, order, or any act of
government or governmental instrumentality, failure of facilities, or other
cause of a similar or dissimilar nature that is not reasonably within the
control of the College or which the College could not, by reasonable
diligence, have avoided.

7(c). By the Executive. The Executive may terminate
the Executive's employment hereunder for "Good Reason." For purposes of this
Agreement, "Good Reason" shall mean (i) the College's failure to perform or
observe any of the material terms or provisions of this Agreement, and the
continued failure of the College to cure such default within thirty (30) days
after written demand for

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<PAGE> 5

performance has been given to the College by the Executive, which demand shall
describe specifically the nature of such alleged failure to perform or observe
such material terms or provisions; or (ii) a material reduction in the scope of
the Executive's responsibilities and duties.

7(d). Notice of Termination. Any termination of the
Executive's employment by the College or the Executive (other than pursuant to
Section 7(a) hereof) shall be communicated by written "Notice of Termination"
to the other party hereto in accordance with Section 9 hereof. For purposes of
this Agreement, a "Notice of Termination" shall mean a notice which shall
indicate the specific termination provision in this Agreement relied upon, if
any, and shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of the Executive's employment under
the provision so indicated.

7(e). Date of Termination. For purposes of this
Agreement, the "Date of Termination" shall mean (i) if the Executive's
employment is terminated by the Executive's death, the date of the Executive's
death; (ii) if the Executive's employment is terminated pursuant to Section
7(b)(i) hereof, thirty (30) days after Notice of Termination, provided that the
Executive shall not have returned to the performance of the Executive's duties
on a full-time basis during such 30-day period; (iii) if the Executive's
employment is terminated pursuant to Section 7(b)(ii) or 7(c) hereof, the date
specified in the Notice of Termination; and (iv) if the Executive's employment
is terminated for any other reason, the date on which Notice of Termination is
given.

8. Compensation Upon Termination.

8(a). If the Executive's employment is terminated by
the Executive's death, the College shall pay to the Executive's estate, or as
may be directed by the legal representatives of such estate, the Executive's
full Base Salary through the Date of Termination and all other unpaid amounts,
if any, to which the Executive is entitled as of the Date of Termination in
connection with any fringe benefits or under any incentive compensation plan or
program of the College pursuant to Section 4(b) hereof, at the time such
payments are due and the College shall have no further obligations to the
Executive under this Agreement.

8(b). During any period that the Executive fails to
perform the Executive's duties hereunder as a result of incapacity due to
physical or mental illness ("disability period"), the Executive shall continue
to receive (i) the Executive's full Base Salary through the Date of Termination
and all other unpaid amounts, if any, to which the Executive is entitled as of
the Date of Termination in connection with any fringe benefits or under any
incentive compensation plan or program of the College pursuant to Section 4(b)
hereof, at the time such payments are due; provided, that payments so made to
the Executive during the disability period shall be reduced by the sum of the
amounts, if any, payable to the Executive

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<PAGE> 6

at or prior to the time of any such payment under disability benefit plans of
the College and which amounts were not previously applied to reduce any such
payment and the College shall have no further obligations to the Executive
under this Agreement.

8(c). If the College terminates the Executive's
employment for Cause as provided in Section 7(b)(ii) hereof, the College shall
pay the Executive the Executive's full Base Salary through the Date of
Termination and all other unpaid amounts, if any, to which Executive is
entitled as of the Date of Termination in connection with any fringe benefits
or under any incentive compensation plan or program of the College pursuant to
Section 4(b) hereof, and the College shall have no further obligations to the
Executive under this Agreement.

8(d). If the Executive terminates the Executive's
employment other than for Good Reason, the College shall pay the Executive the
Executive's full Base Salary through the Date of Termination and all other
unpaid amounts, if any, to which Executive is entitled as of the Date of
Termination in connection with any fringe benefits or under any incentive
compensation plan or program of the College pursuant to Section 5(b) hereof,
and the College shall have no further obligations to the Executive under this
agreement.

8(e). If the College terminates the Executive's
employment other than for Cause, disability or death, or the Executive
terminates the Executive's employment for Good Reason as provided in Section
9(c) hereof, the College shall pay the Executive (i) the Executive's full Base
Salary through the Date of Termination and all other unpaid amounts, if any, to
which the Executive is entitled as of the Date of Termination in connection
with any fringe benefits or under any incentive compensation plan or program of
the College pursuant to Section 5(b) hereof, at the time such payments are due;
and (ii) subject to Section 10(g), the full Base Salary and any other amounts
that would have been payable to the Executive under Sections 5(a) and 5(b)
hereof from the Date of Termination through the Expiration Date, at the time
such payments would otherwise have been due in accordance with the College's
normal payroll practices, and the College shall have no further obligations to
the Executive under this Agreement.

8(f). Parachute Limitations. Notwithstanding any
other provision of this Agreement or of any other agreement, contract or
understanding heretofore or hereafter entered into by the Executive with the
College or any subsidiary or affiliate thereof, except an agreement, contract
or understanding hereafter entered into that expressly modifies or excludes
application of this Section 8(f) (the "Other Agreements"), and notwithstanding
any formal or informal plan or other arrangement heretofore or hereafter
adopted by the College (or any subsidiary or affiliate thereof) for the direct
or indirect compensation of the Executive (including groups or classes of
participants or beneficiaries of which the Executive is a member), whether or
not such compensation is deferred, is in cash, or

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<PAGE> 7

is in the form of a benefit to or for the Executive (a "Benefit Plan"), if the
Executive is a "disqualified individual" (as defined in Section 280G(c) of the
Internal Revenue Code of 1986, as amended (the "Code")), any right to receive
any payment or benefit under this Agreement shall not become exercisable (i) to
the extent that such right to payment or benefit, taking into account all other
rights, payments or benefits to or for the Executive under this Agreement, all
Other Agreements and all Benefit Plans, would cause any payment or benefit to
the Executive under this Agreement to be considered a "parachute payment"
within the meaning of Section 280G(b)(2) of the Code as then in effect (a
"Parachute Payment") and (ii) if, as a result of receiving a Parachute Payment,
the aggregate after-tax amount received by the Executive from the College under
this Agreement, all Other Agreements and all Benefit Plans would be less than
the maximum after-tax amount that could be received by the Executive without
causing any such payment or benefit to be considered a Parachute Payment. In
the event that the receipt of any such right to payment or benefit under this
Agreement, any Other Agreement or any Benefit Plan would cause the Executive to
be considered to have received a Parachute Payment under this Agreement that
would have the effect of decreasing the after-tax amount received by the
Executive as described in clause (ii) of the preceding sentence, then the
Executive shall have the right, in the Executive's sole discretion, to
designate those rights, payments or benefits under this Agreement, any Other
Agreements and any Benefit Plans that should be reduced or eliminated so as to
avoid having the payment or benefit to the Executive under this Agreement be
deemed to be a Parachute Payment.

8(g). Mitigation. The Executive shall not be
required to mitigate amounts payable pursuant to Section 8 hereof by seeking
other employment provided, however, that any sums earned by the Executive
pursuant to any subsequent employment shall be offset against any remaining
obligation the College may have to pay by virtue of termination under this
agreement and, further provided that, the College's obligation to continue to
provide the Executive with fringe benefits pursuant to Section 8(e), above,
shall cease if the Executive becomes eligible to participate in fringe benefits
substantially similar to those provided for in this Agreement as a result of
the Executive's employment during the period that the Executive is entitled to
such fringe benefits.

9. Notices. All notices, demands, requests or other
communications required or permitted to be given or made hereunder shall be in
writing and shall be delivered, telecopied or mailed by first class registered
or certified mail, postage prepaid, addressed as follows:

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<PAGE> 8

(a) If to the College:

Strayer College, Inc.
1025 15th Street, N.W.
Washington, D.C. 20005
Attention: Ron K. Bailey

(b) If to the Executive:

Strayer College, Inc.
1025 15th Street, N.W.
Washington, D.C. 20005
Attention: Ron K. Bailey

or to such other address as may be designated by either party in a notice to
the other. Each notice, demand, request or other communication that shall be
given or made in the manner described above shall be deemed sufficiently given
or made for all purposes three (3) days after it is deposited in the U.S. mail,
postage prepaid, or at such time as it is delivered to the addressee (with the
return receipt, the delivery receipt, the answer back or the affidavit of
messenger being deemed conclusive evidence of such delivery) or at such time as
delivery is refused by the addressee upon presentation.

10. Severability. The invalidity or unenforceability of
any one or more provisions of this Agreement shall not affect the validity or
enforceability of the other provisions of this Agreement, which shall remain in
full force and effect.

11. Survival. It is the express intention and agreement
of the parties hereto that the provisions of Sections 5 and 6 hereof shall
survive the termination of employment of the Executive. In addition, all
obligations of the College to make payments hereunder shall survive any
termination of this Agreement on the terms and conditions set forth herein.

12. Assignment. The rights and obligations of the
parties to this Agreement shall not be assignable, except that the rights and
obligations of the College hereunder shall be assignable in connection with any
subsequent merger, consolidation, sale of all substantially all of the assets
of the College or similar reorganization of a successor corporation.

13. Binding Effect. Subject to any provisions hereof
restricting assignment, this Agreement shall be binding upon the parties hereto
and shall inure to the benefit of the parties and their respective heirs,
devisees, executors, administrators, legal representatives, successors and
assigns.

-8-
<PAGE> 9

14. Amendment; Waiver. This Agreement shall not be
amended, altered or modified except by an instrument in writing duly executed
by the parties hereto. Neither the waiver by either of the parties hereto of a
breach of or a default under any of the provisions of this Agreement, nor the
failure of either of the parties, on one or more occasions, to enforce any of
the provisions of this Agreement or to exercise any right or privilege
hereunder, shall thereafter be construed as a waiver of any subsequent breach
or default of a similar nature, or as a waiver of any such provisions, rights
or privileges hereunder.

15. Headings. Section and subsection headings contained
in this Agreement are inserted for convenience of reference only, shall not be
deemed to be a part of this Agreement for any purpose, and shall not in any way
define or affect the meaning, construction or scope of any of the provisions
hereof.

16. Governing Law. This Agreement, the rights and
obligations of the parties hereto, and any claims or disputes relating thereto,
shall be governed by and construed in accordance with the laws of the State of
Virginia (but not including the choice of law rules thereof).

17. Entire Agreement. This Agreement constitutes the
entire agreement between the parties hereto with respect to the subject matter
hereof, and it supersedes all prior oral or written agreements, commitments or
understandings with respect to the matters provided for herein.

18. Counterparts. This Agreement may be executed in two
or more counterparts, each of which shall be an original and all of which shall
be deemed to constitute one and the same instrument.

-9-
<PAGE> 10

IN WITNESS WHEREOF, the undersigned have duly executed this
Agreement, or have caused this Agreement to be duly executed on their behalf,
as of the day and year first hereinabove written.

STRAYER COLLEGE, INC.

By: /s/ RON K. BAILEY
--------------------------------------
Name: Ron K. Bailey
Title: President

THE EXECUTIVE:

/s/ RON K. BAILEY
-----------------------------------------
Ron K. Bailey

-10-

<PAGE> 1

EXHIBIT 10.10

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT ("Agreement") is entered into as of
this 1st day of June, 1996, by and between Strayer College, Inc., a Maryland
corporation (the "College"), and Harry T. Wilkins (the "Executive").

WHEREAS, the College desires to employ the Executive, and the
Executive desires to be employed by the College, on the terms and conditions
set forth herein.

3. Position and Duties. The Executive shall serve as
Chief Financial Officer of the College, with such duties and responsibilities
as the board of trustees of the College (the "Board") may from time to time
determine and assign to the Executive. The Executive shall devote the
Executive's reasonable best efforts and substantially full business time to the
performance of the Executive's duties and the advancement of the business and
affairs of the College, provided, however, that the College acknowledges that
the Executive will also provide services to Education Loan Processing, Inc.,
which shall bear full responsibility for Executive's compensation for such
services.

<PAGE> 2

4. Compensation.

4(a). Base Salary. The College shall pay to the
Executive an annual base salary (the "Base Salary") at the rate of $90,750.00
per year. The Base Salary shall be reviewed no less frequently than annually
and may be increased at the discretion of the Board. If the Executive's Base
Salary is increased, the increased amount shall be the Base Salary for the
remainder of the employment term hereunder. The Base Salary shall be payable
biweekly or in such other installments as shall be consistent with the
College's payroll procedures.

5. Confidential Information.

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<PAGE> 3

6. Non-Competition.

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<PAGE> 4

7. Termination of Employment.

7(a). Death. The Executive's employment hereunder
shall terminate upon the Executive's death.

7(b). By the College. The College may terminate the
Executive's employment hereunder under the following circumstances:

(ii) The College may terminate the Executive's
employment hereunder for "Cause." For purposes of this Agreement, "Cause"
shall mean (A) willful refusal by the Executive to follow a written order of
the President or the Board of Trustees, (B) the Executive's willful engagement
in conduct materially injurious to the College, (C) dishonesty of a material
nature that relates to the performance of the Executive's duties under this
Agreement, (D) the Executive's conviction for any felony involving moral
turpitude, and (E) the Executive's continued failure to perform his duties
under this Agreement (except due to the Executive's incapacity as a result of
physical or mental illness) to the satisfaction of the Board of Trustees of the
College for a period of at least forty-five (45) consecutive days after written
notice is delivered to the Executive specifically identifying the manner in
which the Executive has failed to perform his or her duties. In addition, the
College may terminate the Executive's employment for "Cause" if the normal
business operations of the College are rendered commercially impractical as a
consequence of an act of God, accident, fire, labor controversy, riot or civil
commotion, act of public enemy, law, enactment, rule, order, or any act of
government or governmental instrumentality, failure of facilities, or other
cause of a similar or dissimilar nature that is not reasonably within the
control of the College or which the College could not, by reasonable
diligence, have avoided.

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<PAGE> 5

8. Compensation Upon Termination.

-5-
<PAGE> 6

-6-
<PAGE> 7

-7-
<PAGE> 8

(a) If to the College:

Strayer College, Inc.
1025 15th Street, N.W.
Washington, D.C. 20005
Attention: Ron K. Bailey

(b) If to the Executive:

Strayer College, Inc.
1025 15th Street, N.W.
Washington, D.C. 20005
Attention: Harry T. Wilkins

-8-
<PAGE> 9

18. Counterparts. This Agreement may be executed in two
or more counterparts, each of which shall be an original and all of which shall
be deemed to constitute one and the same instrument.

-9-
<PAGE> 10

IN WITNESS WHEREOF, the undersigned have duly executed this
Agreement, or have caused this Agreement to be duly executed on their behalf,
as of the day and year first hereinabove written.

STRAYER COLLEGE, INC.

By: /s/ RON K. BAILEY
--------------------------------------
Name: Ron K. Bailey
Title: President

THE EXECUTIVE:

/s/ HARRY T. WILKINS
-----------------------------------------
Harry T. Wilkins

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<PAGE> 1
Exhibit 10.11

STRAYER EDUCATION, INC.

1996 STOCK OPTION PLAN
<PAGE> 2
TABLE OF CONTENTS
PAGE
----
1. PURPOSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

2. ADMINISTRATION . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.1. Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.2. Committee . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.3. No Liability . . . . . . . . . . . . . . . . . . . . . . . . 2
2.4. Action by the Board . . . . . . . . . . . . . . . . . . . . . 2

3. STOCK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

4. ELIGIBILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
4.1. Employees . . . . . . . . . . . . . . . . . . . . . . . . . . 2
4.2. Eligible Directors . . . . . . . . . . . . . . . . . . . . . 2

5. EFFECTIVE DATE AND TERM . . . . . . . . . . . . . . . . . . . . . . 3
5.1. Effective Date . . . . . . . . . . . . . . . . . . . . . . . 3
5.2. Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

6. GRANT OF OPTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . 3

7. LIMITATION ON INCENTIVE STOCK OPTIONS . . . . . . . . . . . . . . . 3

8. OPTION AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . 4

9. OPTION PRICE . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

10. TERM AND EXERCISE OF OPTIONS . . . . . . . . . . . . . . . . . . . 4
10.1. Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
10.2. Exercise by Optionee . . . . . . . . . . . . . . . . . . . . 5
10.3. Option Period and Limitations on Exercise . . . . . . . . . 5
10.4. Method of Exercise . . . . . . . . . . . . . . . . . . . . . 5
10.5. Eligible Directors . . . . . . . . . . . . . . . . . . . . . 6

11. TRANSFERABILITY OF OPTIONS . . . . . . . . . . . . . . . . . . . . 6

12. TRANSFERABILITY OF STOCK . . . . . . . . . . . . . . . . . . . . . 6

13. TERMINATION OF EMPLOYMENT . . . . . . . . . . . . . . . . . . . . . 6

14. RIGHTS IN THE EVENT OF DEATH OR DISABILITY . . . . . . . . . . . . 7
14.1. Death . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
14.2. Disability . . . . . . . . . . . . . . . . . . . . . . . . . 7

15. USE OF PROCEEDS . . . . . . . . . . . . . . . . . . . . . . . . . . 8
<PAGE> 3
TABLE OF CONTENTS (CONT'D)
PAGE
----
16. SECURITIES LAWS . . . . . . . . . . . . . . . . . . . . . . . . . . 8

17. EXCHANGE ACT: RULE 16b-3 . . . . . . . . . . . . . . . . . . . . . 8
17.1. General . . . . . . . . . . . . . . . . . . . . . . . . . . 8
17.2. Stock Option and Compensation Committee . . . . . . . . . . 9
17.3. Additional Restriction on Transfer of Stock . . . . . . . . 9
17.4. Additional Requirement of Stockholders' Approval . . . . . . 9

18. AMENDMENT AND TERMINATION . . . . . . . . . . . . . . . . . . . . . 9

19. EFFECT OF CHANGES IN CAPITALIZATION . . . . . . . . . . . . . . . . 10
19.1 Changes in Stock . . . . . . . . . . . . . . . . . . . . . . 10
19.2. Reorganization With Corporation Surviving . . . . . . . . . 10
19.3. Other Reorganizations; Sale of Assets or Stock . . . . . . . 10
19.4. Adjustments . . . . . . . . . . . . . . . . . . . . . . . . 11
19.5. No Limitations on Corporation . . . . . . . . . . . . . . . 11

20. WITHHOLDING . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

21. DISCLAIMER OF RIGHTS . . . . . . . . . . . . . . . . . . . . . . . 11

22. NONEXCLUSIVITY . . . . . . . . . . . . . . . . . . . . . . . . . . 12
<PAGE> 4
STRAYER EDUCATION, INC.
1996 STOCK OPTION PLAN

STRAYER EDUCATION, INC., a Maryland corporation (the "Corporation"),
sets forth herein the terms of the 1996 Stock Option Plan (the "Plan") as
follows:

1. PURPOSE

The Plan is intended to advance the interests of the Corporation by
providing eligible individuals (as designated pursuant to Section 4 hereof) an
opportunity to acquire or increase a proprietary interest in the Corporation,
which thereby will create a stronger incentive to expend maximum effort for the
growth and success of the Corporation and its subsidiaries and will encourage
such eligible individuals to remain in the employ of the Corporation or that of
one or more of its subsidiaries. Each stock option granted under the Plan (an
"Option") is intended to be an "incentive stock option" ("Incentive Stock
Option") within the meaning of Section 422 of the Internal Revenue Code of
1986, or the corresponding provision of any subsequently enacted tax statute,
as amended from time to time (the "Code"), except (a) to the extent that any
such Option would exceed the limitations set forth in Section 7 hereof, (b) for
Options specifically designated at the time of grant as not being "incentive
stock options" and (c) for Options granted to directors who are not officers or
other employees of the Corporation or any subsidiary.

2. ADMINISTRATION

2.1. BOARD

The Plan shall be administered by the board of directors of the
Corporation (the "Board"), which shall have the full power and authority to
take all actions and to make all determinations required or provided for under
the Plan or any Option granted or Option Agreement (as defined in Section 8
hereof) entered into hereunder and all such other actions and determinations
not inconsistent with the specific terms and provisions of the Plan deemed by
the Board to be necessary or appropriate to the administration of the Plan or
any Option granted or Option Agreement entered into hereunder. The
interpretation and construction by the Board of any provision of the Plan or of
any Option granted or Option Agreement entered into hereunder shall be final
and conclusive.

2.2. COMMITTEE

The Board may from time to time appoint a Stock Option Committee (the
"Committee") which may, in the discretion of the Board, be the Compensation
Committee of the Board. The Board, in its sole discretion, may provide that
the role of the Committee shall be limited to making recommendations to the
Board concerning any determinations to be made and actions to be taken by the
Board pursuant to or with respect to the Plan, or the Board may delegate to the
Committee such powers and authorities related to the administration of the
Plan, as set forth in Section 2.1 hereof, as the Board shall determine,
consistent with the Certificate of
<PAGE> 5
Incorporation and Bylaws of the Corporation and applicable law. In the event
that the Plan or any Option granted or Option Agreement entered into hereunder
provides for any action to be taken by or determination to be made by the
Board, such action may be taken by or such determination may be made by the
Committee if the power and authority to do so has been delegated to the
Committee by the Board as provided for in this Section 2.2. Unless otherwise
expressly determined by the Board, any such action or determination by the
Committee shall be final and conclusive.

2.3. NO LIABILITY

No member of the Board or of the Committee shall be liable for any
action or determination made, or any failure to take or make an action or
determination, in good faith with respect to the Plan or any Option granted or
Option Agreement entered into hereunder.

2.4. ACTION BY THE BOARD

The Board may act under the Plan with respect to any Option granted
to or Option Agreement entered into with an officer or stockholder of the
Corporation who is subject to Section 16 of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), other than by, or in accordance with the
recommendations of, the Committee, constituted as set forth in Section 2.2
hereof, only if all of the members of the Board are "disinterested persons" as
defined in Rule 16b-3 of the Exchange Act.

3. STOCK

The stock that may be issued pursuant to Options granted under the
Plan shall be shares of Common Stock of the Corporation (the "Stock"), which
shares may be treasury shares or authorized but unissued shares. The number of
shares of Stock that may be issued pursuant to Options granted under the Plan
shall not exceed in the aggregate 1,000,000 shares of Stock, which number of
shares is subject to adjustment as provided in Section 19 hereof. If any
Option expires, terminates or is terminated for any reason prior to exercise in
full, the shares of Stock that were subject to the unexercised portion of such
Option shall be available for future Options granted under the Plan.

4. ELIGIBILITY

4.1. EMPLOYEES

Options may be granted under the Plan to any officer or key employee
of the Corporation or any "subsidiary corporation" thereof within the meaning
of Section 424(f) of the Code (a "Subsidiary") (including any such officer or
key employee who is also a director of the Corporation or any Subsidiary) as
the Board shall determine and designate from time to time prior to expiration
or termination of the Plan. An individual may hold more than one Option,
subject to such restrictions as are provided herein.

4.2. ELIGIBLE DIRECTORS

As of the date the Stock is priced in connection with the
commencement of the initial public offering of Stock, each member then serving
on the Board of Directors of the Corporation who is not an officer or other
salaried employee of the Corporation or any Subsidiary (an "Eligible Director")
shall be granted an Option to purchase that number of shares of Stock equal to
1,000 times the number of years that the Eligible Director has served as a
director of the Corporation at the price and upon the other terms and
conditions specified in the Plan. Thereafter, subject to the availibility of
shares, each Eligible Director shall be granted an additional option to
purchase 1,000 shares of Stock immediately after each of the subsequent annual
meetings of the Corporation's stockholders if the Eligible Director continues
to be an Eligible Director, at the price and upon the other terms and
conditions specified in the Plan. Except as provided in this Section 4.2, no
Eligible Director shall be eligible to be granted Options under this Plan. The
foregoing numbers of shares shall be subject to adjustment pursuant to Section
19 below.

- 2 -
<PAGE> 6
5. EFFECTIVE DATE AND TERM

5.1. EFFECTIVE DATE

The Plan shall become effective as of the date of adoption by the
Board, subject to stockholders' approval of the Plan within one year of such
effective date by a majority of the votes cast at a duly held meeting of the
stockholders of the Corporation at which a quorum representing a majority of
all outstanding stock is present, either in person or by proxy, and voting on
the matter, or by written consent in accordance with applicable state law and
the Certificate of Incorporation and Bylaws of the Corporation and in a manner
that satisfies the requirements of Rule 16b-3(b) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"); provided, however, that upon approval
of the Plan by the stockholders of the Corporation, all Options granted under
the Plan on or after the effective date shall be fully effective as if the
stockholders of the Corporation had approved the Plan on the effective date.
If the stockholders fail to approve the Plan within one year of such effective
date, any Options granted hereunder shall be null, void and of no effect.

5.2. TERM

The Plan shall terminate on the date 10 years after the effective
date.

6. GRANT OF OPTIONS

Subject to the terms and conditions of the Plan, the Board may, at
any time and from time to time prior to the date of termination of the Plan,
grant to such eligible individuals as the Board may determine ("Optionees")
Options to purchase such number of shares of the Stock on such terms and
conditions as the Board may determine, including any terms or conditions which
may be necessary to qualify such Options as "incentive stock options" under
Section 422 of the Code. Without limiting the foregoing, the Board may at any
time, with the consent of the Optionee, amend the terms of outstanding Options
or issue new Options in exchange for the surrender and cancellation of
outstanding Options. The date on which the Board approves the grant of an
Option (or such later date as is specified by the Board) shall be considered
the date on which such Option is granted. The maximum number of shares of
Stock subject to Options that can be awarded under the Plan to any person is
500,000 Shares.

7. LIMITATION ON INCENTIVE STOCK OPTIONS

An Option (other than an Option described in Section 1(b) hereof)
shall constitute an Incentive Stock Option only to the extent that the
aggregate fair market value (determined at the time the Option is granted) of
the Stock with respect to which Incentive Stock Options are exercisable for the
first time by any Optionee during any calendar year (under the Plan and all
other plans of the Optionee's employer corporation and its parent and
subsidiary corporations within the meaning of Section 422(d) of the Code) does
not exceed $100,000. This limitation shall be applied by taking Options into
account in the order in which such Options were granted.

- 3 -
<PAGE> 7
8. OPTION AGREEMENTS

All Options granted pursuant to the Plan shall be evidenced by
written agreements ("Option Agreements") to be executed by the Corporation and
the Optionee, in such form or forms as the Board shall from time to time
determine. Option Agreements covering Options granted from time to time or at
the same time need not contain similar provisions; provided, however, that all
such Option Agreements shall comply with all terms of the Plan.

9. OPTION PRICE

The purchase price of each share of the Stock subject to an Option
(the "Option Price") shall be fixed by the Board and stated in each Option
Agreement. In the case of an Option that is intended to constitute an
Incentive Stock Option, the Option Price shall be not less than the of par
value of a share of the Stock covered by the Option; provided, however, that in
the event the Optionee would otherwise be ineligible to receive an Incentive
Stock Option by reason of the provisions of Sections 422(b)(6) and 424(d) of
the Code (relating to stock ownership of more than 10 percent), the Option
Price of an Option which is intended to be an Incentive Stock Option shall be
not less than the greater of par value or 110 percent of the fair market value
of a share of the Stock covered by the Option at the time such Option is
granted.

In the event that the Stock is listed on an established national or
regional stock exchange, is admitted to quotation on the National Association
of Securities Dealers Automated Quotation System, or is publicly traded in an
established securities market, in determining the fair market value of the
Stock, the Board shall use the closing price of the Stock on such exchange or
system or in such market (the highest such closing price if there is more than
one such exchange or market) on the date the Option is granted (or, if there is
no such closing price, then the Board shall use the mean between the highest
bid and lowest asked prices or between the high and low prices on such date),
or, if no sale of the Stock has been made on such day, on the next preceding
day on which any such sale shall have been made.

10. TERM AND EXERCISE OF OPTIONS

10.1. TERM

Each Option granted under the Plan shall terminate and all rights to
purchase shares thereunder shall cease upon the expiration of 10 years from the
date such Option is granted, or on such date prior thereto as may be fixed by
the Board and stated in the Option Agreement relating to such Option; provided,
however, that in the event the Optionee would otherwise be ineligible to
receive an Incentive Stock Option by reason of the provisions of Sections
422(b)(6) and 424(d) of the Code (relating to stock ownership of more than 10
percent), an Option granted to such Optionee which is intended to be an
Incentive Stock Option shall in no event be exercisable after the expiration of
five years from the date it is granted; and provided further that an Option
granted to an Eligible Director shall in no event be exercisable after the
expiration of five years from the date it is granted.

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<PAGE> 8
10.2. EXERCISE BY OPTIONEE

Only the Optionee receiving an Option (or, in the event of the
Optionee's legal incapacity or incompetency, the Optionee's guardian or legal
representative, and in the case of the Optionee's death, the Optionee's estate)
may exercise the Option.

10.3. OPTION PERIOD AND LIMITATIONS ON EXERCISE

Each Option granted under the Plan shall be exercisable in whole or
in part at any time and from time to time over a period commencing on or after
the date of grant of the Option and ending upon the expiration or termination
of the Option, as the Board shall determine and set forth in the Option
Agreement relating to such Option. Without limitation of the foregoing, the
Board, subject to the terms and conditions of the Plan, may in its sole
discretion provide that an Option may not be exercised in whole or in part for
any period or periods of time during which such Option is outstanding as the
Board shall determine and set forth in the Option Agreement relating to such
Option. Any such limitation on the exercise of an Option contained in any
Option Agreement may be rescinded, modified or waived by the Board, in its sole
discretion, at any time and from time to time after the date of grant of such
Option, so as to accelerate the time at which the Option may be exercised.
Notwithstanding any other provisions of the Plan, no Option shall be
exercisable in whole or in part prior to the date the Plan is approved by the
stockholders of the Corporation as provided in Section 5.1 hereof. Each Option
grant to an Eligible Director shall be exercisable as to 33 1/3% of the shares
of Stock purchasable pursuant to the Option on the first anniversary of the
date of grant if the Eligible Director has been providing services to the
Corporation continuously from the date of grant to the anniversary date.
Thereafter, so long as continuous service has not been interrupted, the Option
becomes vested as to an additional 33 1/3% of the shares of Stock subject to
the Option after each of the next two anniversaries of the date of grant.

10.4. METHOD OF EXERCISE

An Option that is exercisable hereunder may be exercised by delivery
to the Corporation on any business day, at its principal office addressed to
the attention of the Board, of written notice of exercise, which notice shall
specify the number of shares for which the Option is being exercised, and shall
be accompanied by payment in full of the Option Price of the shares for which
the Option is being exercised. Payment of the Option Price for the shares of
Stock purchased pursuant to the exercise of an Option shall be made, as
determined by the President and set forth in the Option Agreement pertaining to
an Option, (a) in cash or by certified check payable to the order of the
Corporation; (b) through the tender to the Corporation of shares of Stock,
which shares shall be valued, for purposes of determining the extent to which
the Option Price has been paid thereby, at their fair market value (determined
in the manner described in Section 9 hereof ) ("Fair Market Value") on the date
of exercise; (c) by authorizing the Company to withhold whole Shares then
issuable upon exercise of the Option (with any such Shares valued at their Fair
Market Value) or (d) by a combination of the methods described in Sections
10.4(a), 10.4(b) and 10.4(c) hereof; provided, however, that the Board may in
its discretion impose and set forth in the Option Agreement pertaining to an
Option such limitations or prohibitions on the use of shares of Stock to
exercise Options as it deems appropriate. Payment in full of the Option Price
need not accompany the written notice of exercise provided the notice directs
that the Stock certificate or certificates for the shares for which the Option
is exercised be delivered to a licensed broker acceptable to the Corporation as
the agent for the individual exercising the Option and, at the time such Stock
certificate or certificates are delivered, the broker tenders to the
Corporation cash (or cash equivalents acceptable to the Corporation) equal to
the Option

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<PAGE> 9
Price. An attempt to exercise any Option granted hereunder other than as set
forth above shall be invalid and of no force and effect. Promptly after the
exercise of an Option and the payment in full of the Option Price of the shares
of Stock covered thereby, the individual exercising the Option shall be
entitled to the issuance of a Stock certificate or certificates evidencing such
individual's ownership of such shares. A separate Stock certificate or
certificates shall be issued for any shares purchased pursuant to the exercise
of an Option which is an Incentive Stock Option, which certificate or
certificates shall not include any shares which were purchased pursuant to the
exercise of an Option which is not an Incentive Stock Option. An individual
holding or exercising an Option shall have none of the rights of a stockholder
until the shares of Stock covered thereby are fully paid and issued to such
individual and, except as provided in Section 19 hereof, no adjustment shall be
made for dividends or other rights for which the record date is prior to the
date of such issuance.

10.5. ELIGIBLE DIRECTORS

Any Option granted to an Eligible Director that has become
exercisable shall not terminate until the expiration of the Option under
Section 10.1 above. On termination of service as a Director, any Option
granted to an Eligible Director will terminate to the extent it is not
exercisable at the time of such termination.

11. TRANSFERABILITY OF OPTIONS

No Option shall be assignable or transferable by the Optionee to whom
it is granted, other than by will or the laws of descent and distribution.

12. TRANSFERABILITY OF STOCK

Without the written consent of the Corporation, no Stock acquired
pursuant to an Incentive Stock Option may be sold, pledged, assigned,
transferred or otherwise disposed of by the Optionee within two years from the
date of grant of such Incentive Stock Option nor within one year after the
transfer of such Stock to the Optionee; provided, however that a transfer to a
trustee, receiver, or other fiduciary in any insolvency proceeding, as
described in Section 422(c)(3) of the Code shall not be deemed to be such a
disposition.

13. TERMINATION OF EMPLOYMENT

The Board may provide, by inclusion of appropriate language in any
Option Agreement, that an Optionee may (subject to the general limitations on
exercise set forth in Section 10.3 hereof), in the event of termination of
employment of the Optionee with the Corporation or a Subsidiary, exercise an
Option, in whole or in part, at any time subsequent to such termination of
employment and prior to termination of the Option pursuant to Section 10.2
hereof, either subject to or without regard to any installment limitation on
exercise imposed pursuant to Section 10.3 hereof, as the Board, in its sole and
absolute discretion, shall determine and set forth in the Option Agreement.
Whether a leave of absence or leave on military or government service shall
constitute a termination of employment for purposes of the Plan shall be
determined by the Board, which determination shall be final and conclusive.
For purposes of the Plan, a termination of employment with the Corporation or a
Subsidiary shall not be deemed to occur if the Optionee is immediately
thereafter employed with the Corporation or any other Subsidiary.

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<PAGE> 10
14. RIGHTS IN THE EVENT OF DEATH OR DISABILITY

14.1. DEATH

If an Optionee dies while employed by the Corporation or a Subsidiary
or within the period following the termination of employment during which the
Option is exercisable under Section 13 or 14.2 hereof, the executors,
administrators, legatees or distributees of such Optionee's estate shall have
the right (subject to the general limitations on exercise set forth in Section
10.3 hereof), at any time within one year after the date of such Optionee's
death and prior to termination of the Option pursuant to Section 10.1 hereof,
to exercise any Option held by such Optionee at the date of such Optionee's
death, to the extent such Option was exercisable immediately prior to such
Optionee's death; provided, however, that the Board may provide by inclusion of
appropriate language in any Option Agreement that, in the event of the death of
an Optionee, the executors, administrators, legatees or distributees of such
Optionee's estate may exercise an Option (subject to the general limitations on
exercise set forth in Section 10.3 hereof), in whole or in part, at any time
subsequent to such Optionee's death and prior to termination of the Option
pursuant to Section 10.1 hereof, either subject to or without regard to any
installment limitation on exercise imposed pursuant to Section 10.3 hereof, as
the Board, in its sole and absolute discretion, shall determine and set forth
in the Option Agreement.

14.2. DISABILITY

If an Optionee terminates employment with the Corporation or a
Subsidiary by reason of the "permanent and total disability" (within the
meaning of Section 22(e) (3) of the Code) of such Optionee, then such Optionee
shall have the right (subject to the general limitations on exercise set forth
in Section 10.3 hereof), at any time within one year after such termination of
employment and prior to termination of the Option pursuant to Section 10.1
hereof, to exercise, in whole or in part, any Option held by such Optionee at
the date of such termination of employment, to the extent such Option was
exercisable immediately prior to such termination of employment; provided,
however, that the Board may provide, by inclusion of appropriate language in
any Option Agreement, that an Optionee may (subject to the general limitations
on exercise set forth in Section 10.3 hereof), in the event of the termination
of employment of the Optionee with the Corporation or a Subsidiary by reason of
the "permanent and total disability" (within the meaning of Section 22(e)(3) of
the Code) of such Optionee, exercise an Option, in whole or in part, at any
time subsequent to such termination of employment and prior to termination of
the Option pursuant to Section 10.1 hereof, either subject to or without regard
to any installment limitation on exercise imposed pursuant to Section 10.3
hereof, as the Board, in its sole and absolute discretion, shall determine and
set forth in the Option Agreement. Whether a termination of employment is to
be considered by reason of "permanent and total disability" for purposes of the
Plan shall be determined by the Board, which determination shall be final and
conclusive.

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<PAGE> 11
15. USE OF PROCEEDS

The proceeds received by the Corporation from the sale of Stock
pursuant to Options granted under the Plan shall constitute general funds of
the Corporation.

16. SECURITIES LAWS

The Corporation shall not be required to sell or issue any shares of
Stock under any Option if the sale or issuance of such shares would constitute
a violation by the individual exercising the Option or by the Corporation of
any provisions of any law or regulation of any governmental authority,
including, without limitation, any federal or state securities laws or
regulations. If at any time the Corporation shall determine, in its
discretion, that the listing, registration or qualification of any shares
subject to the Option upon any securities exchange or under any state or
federal law, or the consent of any government regulatory body, is necessary or
desirable as a condition of, or in connection with, the issuance or purchase of
shares, the Option may not be exercised in whole or in part unless such
listing, registration, qualification, consent or approval shall have been
effected or obtained free of any conditions not acceptable to the Corporation,
and any delay caused thereby shall in no way affect the date of termination of
the Option. Specifically in connection with the Securities Act of 1933, as
amended (the "Securities Act"), upon exercise of any Option, unless a
registration statement under the Securities Act is in effect with respect to
the shares of Stock covered by such Option, the Corporation shall not be
required to sell or issue such shares unless the Corporation has received
evidence satisfactory to the Corporation that the Optionee may acquire such
shares pursuant to an exemption from registration under the Securities Act.
Any determination in this connection by the Corporation shall be final and
conclusive. The Corporation may, but shall in no event be obligated to,
register any securities covered hereby pursuant to the Securities Act. The
Corporation shall not be obligated to take any affirmative action in order to
cause the exercise of an Option or the issuance of shares pursuant thereto to
comply with any law or regulation of any governmental authority. As to any
jurisdiction that expressly imposes the requirement that an Option shall not be
exercisable unless and until the shares of Stock covered by such Option are
registered or are subject to an available exemption from registration, the
exercise of such Option (under circumstances in which the laws of such
jurisdiction apply) shall be deemed conditioned upon the effectiveness of such
registration or the availability of such an exemption.

17. EXCHANGE ACT: RULE 16b-3

17.1. GENERAL

The Plan is intended to comply with Rule 16b-3 ("Rule 16b-3") under
the Exchange Act from and after the date on which the Corporation first
registers a class of equity securities under Section 12 of the Exchange Act
(the "Registration Date"). From and after the Registration Date, any provision
inconsistent with Rule 16b-3 (as in effect on the Registration Date) shall, to
the extent permitted by law and determined to be advisable by the Board

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<PAGE> 12
(constituted in accordance with Section 17.2 hereof), be inoperative and void.
In addition, from and after the Registration Date, the provisions set forth in
Sections 17.2 through 17.4 shall apply.

17.2. STOCK OPTION AND COMPENSATION COMMITTEE

From and after the Registration Date, the Committee appointed in
accordance with Section 2.2 hereof shall consist of not fewer than two members
of the Board each of whom shall qualify (at the time of appointment to the
Committee and during all periods of service on the Committee) in all respects
as a "disinterested person" as defined in Rule 16b-3.

17.3. ADDITIONAL RESTRICTION ON TRANSFER OF STOCK

From and after the Registration Date, no director, officer or other
"insider" of the Corporation subject to Section 16 of the Exchange Act shall be
permitted to sell Stock (which such "insider" had received upon exercise of an
Option) during the six months immediately following the grant of such Option.

17.4. ADDITIONAL REQUIREMENT OF STOCKHOLDERS' APPROVAL

From and after the Registration Date, no amendment by the Board
shall, without approval by a majority of the votes cast at a duly held meeting
of the stockholders of the Corporation at which a quorum representing a
majority of all outstanding stock is present, either in person or by proxy, and
voting on the amendment, or by written consent in accordance with applicable
state law and the Certificate of Incorporation and Bylaws of the Corporation,
materially increase the benefits accruing to Section 16 "insiders" under the
Plan or take any other action that would require the approval of such
stockholders pursuant to Rule 16b-3.

18. AMENDMENT AND TERMINATION

The Board may, at any time and from time to time, amend, suspend or
terminate the Plan as to any shares of Stock as to which Options have not been
granted; provided, however, that no amendment by the Board shall, without
approval by a majority of the votes cast at a duly held meeting of the
stockholders of the Corporation at which a quorum representing a majority of
all outstanding stock is present, either in person or by proxy, and voting on
the amendment, or by written consent in accordance with applicable state law
and the Certificate of Incorporation and Bylaws of the Corporation, materially
change the requirements as to eligibility to receive Options or increase the
maximum number of shares of Stock in the aggregate that may be sold pursuant to
Options granted under the Plan (except as permitted under Section 19 hereof).
The Corporation also may retain the right in an Option Agreement to cause a
forfeiture of the shares or gain realized by an Optionee on account of the
Optionee taking actions in "competition with the Corporation," as defined in
the applicable Option Agreement. Furthermore, the Corporation may, in the
Option Agreement, retain the right to annul the grant of an Option if the
holder of such grant was an employee of the Corporation or a Subsidiary and is
terminated "for cause," as defined in the applicable Option Agreement. Except
as permitted under Section 19 hereof, no

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<PAGE> 13
amendment, suspension or termination of the Plan shall, without the consent of
the Optionee, alter or impair rights or obligations under any Option
theretofore granted under the Plan.

19. EFFECT OF CHANGES IN CAPITALIZATION

19.1 CHANGES IN STOCK

If the number of outstanding shares of Stock is increased or
decreased or changed into or exchanged for a different number or kind of shares
or other securities of the Corporation by reason of any recapitalization,
reclassification, stock split-up, combination of shares, exchange of shares,
stock dividend or other distribution payable in capital stock, or other
increase or decrease in such shares effected without receipt of consideration
by the Corporation, occurring after the effective date of the Plan, a
proportionate and appropriate adjustment shall be made by the Corporation in
the number and kind of shares for which Options are outstanding, so that the
proportionate interest of the Optionee immediately following such event shall,
to the extent practicable, be the same as immediately prior to such event. Any
such adjustment in outstanding Options shall not change the aggregate Option
Price payable with respect to shares subject to the unexercised portion of the
Option outstanding but shall include a corresponding proportionate adjustment
in the Option Price per share.

19.2. REORGANIZATION WITH CORPORATION SURVIVING

Subject to Section 19.3 hereof, if the Corporation shall be the
surviving corporation in any reorganization, merger or consolidation of the
Corporation with one or more other corporations, any Option theretofore granted
pursuant to the Plan shall pertain to and apply to the securities to which a
holder of the number of shares of Stock subject to such Option would have been
entitled immediately following such reorganization, merger or consolidation,
with a corresponding proportionate adjustment of the Option Price per share so
that the aggregate Option Price thereafter shall be the same as the aggregate
Option Price of the shares remaining subject to the Option immediately prior to
such reorganization, merger or consolidation.

19.3. OTHER REORGANIZATIONS; SALE OF ASSETS OR STOCK

Upon the dissolution or liquidation of the Corporation, or upon a
merger, consolidation or reorganization of the Corporation with one or more
other corporations in which the Corporation is not the surviving corporation,
or upon a sale of substantially all of the assets of the Corporation to another
corporation, or upon any transaction (including, without limitation, a merger
or reorganization in which the Corporation is the surviving corporation)
approved by the Board that results in any person or entity (other than persons
who are holders of stock of the Corporation at the time the Plan is approved by
the Stockholders and other than an Affiliate) owning 80 percent or more of the
combined voting power of all classes of stock of the Corporation, the Plan and
all Options outstanding hereunder shall terminate, except to the extent
provision is made in connection with such transaction for the continuation of
the Plan and/or the assumption of the Options theretofore granted, or for the
substitution for such Options of new

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<PAGE> 14
options covering the stock of a successor corporation, or a parent or
subsidiary thereof, with appropriate adjustments as to the number and kinds of
shares and exercise prices, in which event the Plan and Options theretofore
granted shall continue in the manner and under the terms so provided. In the
event of any such termination of the Plan, each Optionee shall have the right
(subject to the general limitations on exercise set forth in Section 10.3
hereof and except as otherwise specifically provided in the Option Agreement
relating to such Option), immediately prior to the occurrence of such
termination and during such period occurring prior to such termination as the
Board in its sole discretion shall designate, to exercise such Option in whole
or in part, whether or not such Option was otherwise exercisable at the time
such termination occurs, but subject to any additional limitations that the
Board may, in its sole discretion, include in any Option Agreement. The Board
shall send written notice of an event that will result in such a termination to
all Optionees not later than the time at which the Corporation gives notice
thereof to its stockholders.

19.4. ADJUSTMENTS

Adjustments under this Section 19 relating to stock or securities of
the Corporation shall be made by the Board, whose determination in that respect
shall be final and conclusive. No fractional shares of Stock or units of other
securities shall be issued pursuant to any such adjustment, and any fractions
resulting from any such adjustment shall be eliminated in each case by rounding
downward to the nearest whole share or unit.

19.5. NO LIMITATIONS ON CORPORATION

The grant of an Option pursuant to the Plan shall not affect or limit
in any way the right or power of the Corporation to make adjustments,
reclassifications, reorganizations or changes of its capital or business
structure or to merge, consolidate, dissolve or liquidate, or to sell or
transfer all or any part of its business or assets.

20. WITHHOLDING

The Corporation shall have the right to withhold, or require an Optionee
to remit to the Corporation, an amount sufficient to satisfy any applicable
federal, state or local withholding tax requirements imposed with respect to
exercise of Options. To the extent permissible under applicable tax,
securities and other laws, the Optionee may satisfy a tax withholding
requirement by directing the Corporation to apply shares of Stock to which the
Optionee is entitled as a result of the exercise of an Option to satisfy
withholding requirements under this Section 14.

21. DISCLAIMER OF RIGHTS

No provision in the Plan or in any Option granted or Option Agreement
entered into pursuant to the Plan shall be construed to confer upon any
individual the right to remain in the employ of the Corporation or any
Subsidiary, or to interfere in any way with the right and

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<PAGE> 15
authority of the Corporation or any Subsidiary either to increase or decrease
the compensation of any individual at any time, or to terminate any employment
or other relationship between any individual and the Corporation or any
Subsidiary. The obligation of the Corporation to pay any benefits pursuant to
the Plan shall be interpreted as a contractual obligation to pay only those
amounts described herein, in the manner and under the conditions prescribed
herein. The Plan shall in no way be interpreted to require the Corporation to
transfer any amounts to a third party trustee or otherwise hold any amounts in
trust or escrow for payment to any participant or beneficiary under the terms
of the Plan.

22. NONEXCLUSIVITY

Neither the adoption of the Plan nor the submission of the Plan to
the stockholders of the Corporation for approval shall be construed as creating
any limitations upon the right and authority of the Board to adopt such other
incentive compensation arrangements (which arrangements may be applicable
either generally to a class or classes of individuals or specifically to a
particular individual or individuals) as the Board in its discretion determines
desirable, including, without limitation, the granting of stock options
otherwise than under the Plan.

The Plan was duly adopted and approved by the Board on _______ __,
1996 and was duly approved by the stockholders of the Corporation on _______
__, 1996.

-------------------------------
Glenda S. Hardison
Secretary

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<PAGE> 1

EXHIBIT 10.12

TAX INDEMNIFICATION AGREEMENT

THIS AGREEMENT is made as of this ___ day of July, 1996, by
and among STRAYER EDUCATION, INC., a Delaware corporation (the "Parent") which
will own 100% of the outstanding capital stock of STRAYER COLLEGE, INC., a
Maryland corporation (the "Company"), and each of the Company's stockholders
named on the signature pages hereof.

W I T N E S S E T H:

WHEREAS, in connection with the initial public offering
("Public Offering") of the Parent's common stock, $.01 par value per share
("Common Stock"), there will be a reorganization pursuant to which Strayer
Education, Inc. will become the parent corporation of the Company;

WHEREAS, the Company filed an election with the Internal
Revenue Service to be taxed as an "S" corporation under Subchapter S of the
Internal Revenue Code of 1986, as amended (the "Code"), and under similar
provisions of state and local tax laws;

WHEREAS, for the period commencing as of January 1, 1996 until
the close of business on the Termination Date (as hereinafter defined), the
Company will have been taxed as an "S" corporation under Subchapter S of the
Code and under similar provisions of applicable state and local tax laws;

WHEREAS, for Federal and certain state and local income tax
purposes, the Company's items of income, loss and deductions have been and will
have been passed through to and reported on the individual tax returns of its
stockholders;

WHEREAS, as a result of the reorganization, the Company will
no longer be eligible to be taxed as an S corporation for Federal and certain
state and local income tax purposes;

WHEREAS, the parties to this Agreement recognize that the
election of the Company to be taxed under Subchapter S of the Code will be
terminated on a

<PAGE> 2

date (the "Termination Date") immediately prior to the closing ("Closing") of
the Public Offering, and the Company and its stockholders will make an election
to compute the taxable income of the Company with respect to the portion of the
Company's 1996 taxable year prior to the Termination Date pursuant to Section
1362(e)(3) of the Code (the "1996 S Period Taxable Income");

WHEREAS, the Company has distributed to its stockholders of
record as of April __, 1996 (the "Stockholders), the amount of $2.1 million,
which represents the Stockholders' estimated tax liability for the Company's
1996 S Period Taxable Income expected to be earned during the five-month period
ended May 31, 1996, and in connection therewith has declared a dividend payable
to the Stockholders equal to $2.1 million;

WHEREAS, the Company agreed to distribute to the Stockholders,
pro rata in proportion to their respective stock ownership as of the
Termination Date, an additional amount which represents the Stockholders'
estimated tax liability for the Company's 1996 S Period Taxable Income expected
to be earned during the period ending on the Termination Date, to the extent
not previously paid (the "Estimated 1996 S Period Taxable Income"), and in
connection therewith has declared a dividend payable to the Stockholders equal
to $__ million; and

WHEREAS, the parties to this Agreement desire to set forth
their agreement with respect to their respective obligations in the event the
actual 1996 S Period Taxable Income differs from the Estimated 1996 S Period
Taxable Income.

NOW THEREFORE, in consideration of the foregoing and of the
mutual promises, covenants and conditions hereinafter contained, the parties
hereto, intending to be legally bound hereby, agree as follows:

1. 1996 S PERIOD DISTRIBUTION

(a) In the event that the amount of the Company's
actual 1996 S Period Taxable Income as shown on its Federal income tax return
for such period exceeds the amount of the Company's Estimated 1996 S Period
Taxable Income, not later than five (5) days prior to the filing of such
Federal income tax return the Company shall pay to the Stockholders, on a pro
rata basis in accordance with the percentage of the outstanding shares of
Common Stock owned by each Stockholder on the Termination Date, an amount equal
to [forty-three] percent

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<PAGE> 3

[(43.00%)] of such excess amount, plus interest at the rate of Eight Percent
(8%) per annum on the amount of such payment from the Termination Date until
the date of such payment.

(b) In the event that the amount of the Company's
Estimated 1996 S Period Taxable Income exceeds the amount of the Company's
actual 1996 S Period Taxable Income as shown on its Federal income tax return
for such period, each Stockholder agrees to pay to the Company, within ten (10)
days after written notice from the Company, such Stockholder's pro rata share
(as set forth in the Company's written notice, which shall be based on the
percentage of the outstanding shares of Common Stock owned by such Stockholder
on the Termination Date) of an amount equal to [forty-three] percent [(43.00%)]
of such excess amount, plus interest at the rate of Eight Percent (8%) per
annum on the amount of such payment from the Termination Date until the date
specified for such payment.

(c) Each Stockholder agrees to prepare his income
tax returns with respect to the calendar year in which the Termination Date
occurs consistent with the manner in which each item of income, loss, deduction
and credit of the Company is reported by the Company to such Stockholder. Each
Stockholder further agrees that the Company's obligation to make payments under
Section 1(a) shall be the Company's sole and exclusive obligation with respect
to the Stockholder's tax liabilities.

2. ELECTION FOR S TERMINATION YEAR

The Company shall elect and the Stockholders shall
consent, pursuant to Section 1362(e)(3) of the Code, to allocate tax items to
the Company's short taxable year ending on the Termination Date and its short
taxable year beginning after the Termination Date pursuant to normal tax
accounting rules (the "closing of the books method") rather than by the pro
rata allocation method set forth in Section 1362(e)(2) of the Code.

3. APPOINTMENT OF TAX MATTERS PERSON

The Company and the Stockholders agree that, pursuant to
Section 6244 of the Code, a person appointed by the Company shall serve as "tax
matters person" for the Company for the S Corporation Period. The cost of
contesting any

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<PAGE> 4

challenge to a tax return of the Company by the Internal Revenue Service, or a
state or local administrative agency, in any forum, judicial or administrative,
shall be borne by the Company.

4. SURVIVAL OF AGREEMENTS

The covenants and agreements of the parties set forth in this
Agreement shall survive indefinitely.

5. NOTICES

All notices, requests, demands and the other communications
which are required or which may be given under this Agreement shall be in
writing addressed, if to the Company, to its President at the Company's
principal office and if to a Stockholder, at the last address of such
Stockholder shown on the records of the Company.

6. ENTIRE AGREEMENT

This Agreement constitutes the entire agreement between the
parties hereto with respect to the subject matter hereof and supersedes all
prior agreements and understandings, oral and written, between the parties
hereto with respect to the subject matter hereof.

7. SUCCESSORS AND ASSIGNS

This Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective successors and assigns.

8. AMENDMENT AND WAIVER

No provisions of this Agreement may be amended, waived or
otherwise modified without the prior written consent of each of the parties
hereto.

9. EXECUTION IN COUNTERPARTS

This Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original as against any party whose
signature appears thereon, and all of which shall together constitute one and
the same instrument. This Agreement shall become binding when one or more
counterparts

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<PAGE> 5

hereof, individually or taken together, shall bear the signatures of all of the
parties reflected hereon as the signatories.

10. EFFECTIVE DATE

This Agreement shall be effective upon the Termination Date.

11. GOVERNING LAW

This Agreement shall be governed by, and construed in
accordance with, the internal laws of [Maryland], without reference to the
principles of conflicts of law.

IN WITNESS WHEREOF, this Agreement has been duly executed as
of the day and year first above written.

STRAYER EDUCATION, INC.,

By:
---------------------------------
Ron K. Bailey
President

STRAYER COLLEGE, INC.

By:
---------------------------------
Ron K. Bailey
President

THE STOCKHOLDERS:

---------------------------------------
Ron K. Bailey

---------------------------------------
Beverly W. Bailey

-5-

<PAGE> 1
EXHIBIT 23.02

[COOPERS & LYBRAND LETTERHEAD]

CONSENT OF INDEPENDENT ACCOUNTANTS

We consent to the inclusion in this Registration Statement on Amendment No. 2
to Form S-1 (No. 333-3967) of our report dated May 15, 1996, on our audit of
the balance sheet of Strayer Education, Inc. as of May 15, 1996, and our report
dated May 14, 1996, on our audits of the balance sheets of Strayer College,
Inc. as of December 31, 1995 and 1994, and the related statements of income,
stockholders' equity and cash flows for each of the three years in the period
ended December 31, 1995. We also consent to the reference to our firm under
the caption "Experts".

Coopers & Lybrand L.L.P.

Washington D.C.
July 3, 1996