Certain of the statements included in this "Management's Discussion and Analysis of Financial Condition and Results of Operations" as well as elsewhere in this report on Form 10-Q are forward-looking statements made pursuant to the Private Securities Litigation Reform Act of 1995 ("Reform Act"). Such statements may be identified by the use of words such as "expect," "estimate," "assume," "believe," "anticipate," "will," "forecast," "plan," "project," or similar words. These statements are based on the Company's current expectations and are subject to a number of assumptions, risks and uncertainties. In accordance with the safe harbor provisions of the Reform Act, the Company has identified important factors that could cause the actual results to differ materially from those expressed in or implied by such statements. The assumptions, uncertainties and risks include the pace of growth of student enrollment, our continued compliance with Title IV of the Higher Education Act, and the regulations thereunder, as well as regional accreditation standards and state regulatory requirements, rulemaking by the Department of Education and increased focus by the U. S. Congress on for-profit education institutions, competitive factors, risks associated with the opening of new campuses, risks associated with the offering of new educational programs and adapting to other changes, risks relating to the timing of regulatory approvals, our ability to continue to implement our growth strategy, risks associated with the ability of our students to finance their education in a timely manner, and general economic and market conditions. Further information about these and other relevant risks and uncertainties may be found in the Company's annual report on Form 10-K and its other filings with the Securities and Exchange Commission. The Company undertakes no obligation to update or revise forward looking statements, except as may be required by law.

Additional Information

We maintain a website at http://www.strayereducation.com. The information on our website is not incorporated by reference in this Quarterly Report on Form 10-Q and our web address is included as an inactive textual reference only. We make available, free of charge through our website, our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC.

Results of Operations

In the first quarter of 2012, we generated $149.5 million in revenue, a 13% decrease compared to the same period in 2011, primarily as a result of a decline in average enrollment of 12%. Income from operations was $40.9 million for the first quarter of 2012, a decrease of 31% compared to the same period in 2011. Net income was $24.0 million, a decrease of 33% compared to the same period in 2011. Diluted earnings per share was $2.09 in the first quarter of 2012 compared to $2.80 in the same period in 2011, a decrease of 25%.

Key enrollment trends by quarter were as follows:

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Although we do not know for sure why our enrollment trends over the last eighteen months and that of the proprietary higher education sector generally have been negative, we believe that sustained levels of high unemployment and the resulting lower confidence in job prospects are contributing factors. The 19% decline in our new students in 2011 will have an adverse impact on 2012 enrollment since there will be fewer students from 2011 continuing their education in 2012.

We cannot predict future enrollments or whether new student enrollment will decline further, stabilize or increase in response to the economy or other factors. We

can describe what we think our business model may look like financially under different enrollment scenarios. We implemented a 3% tuition increase in 2012 and announced our plan to open eight new campuses in 2012 subject to regulatory approval. Based on this investment plan, assuming we continue to increase our expenditures on faculty, marketing and admissions advisory services as we open new campuses and assuming 11,700,000 diluted weighted average shares outstanding and an effective tax rate of 39.5%, the Company expects its business model may perform as follows.

Assumed new student enrollment (vs. 2011)        -10%                  0%                   10%
Total student enrollment (vs. 2011)                      -9 %                 -6 %                 -3 %
Revenue (millions)                          $           570      $           590      $           610
Operating income margin                           21% to 22 %          23% to 24 %          25% to 26 %
Diluted earnings per share                  $ 6.00 to $6.20      $ 6.90 to $7.10      $ 7.80 to $8.00

Three Months Ended March 31, 2012 Compared to Three Months Ended March 31, 2011

Enrollment. Enrollment at Strayer University for the 2012 winter term, which began January 2, 2012 and ended March 19, 2012, decreased 12% to 50,432 students compared to 57,608 students for the same term in 2011. Across the Strayer University campus and online system, new student enrollments decreased approximately 8% and continuing student enrollments decreased approximately 13%. Global online enrollments decreased 17%, while students taking 100% of their classes online (including campus based students) decreased 9%.

Revenues. Revenues decreased 13% to $149.5 million in the first quarter of 2012 from $172.0 million in the first quarter of 2011, principally due to a 12% decrease in enrollment.

Instruction and educational support expenses. Instruction and educational support expenses decreased slightly by $1.2 million, or 2%, to $73.8 million in the first quarter of 2012 from $75.0 million in the first quarter of 2011. This decrease was principally due to lower faculty compensation costs associated with lower enrollment during the first quarter of 2012, despite the increase in the number of campuses. Instruction and educational support expenses as a percentage of revenues increased to 49.3% in the first quarter of 2012 from 43.6% in the first quarter of 2011, largely due to faculty and facility costs decreasing at a significantly lower rate than tuition revenue.

Marketing expenses. Marketing expenses decreased slightly by $0.5 million, or 4%, to $15.5 million in the first quarter of 2012 from $16.0 million in the first quarter of 2011. Marketing expenses as a percentage of revenues increased to 10.3% in the first quarter of 2012 from 9.3% in the first quarter of 2011.

Admissions advisory expenses. Admissions advisory expenses decreased slightly by $0.4 million, or 6% to $6.8 million in the first quarter of 2012 from $7.2 million in the first quarter of 2011. This decrease was principally due to reduced admissions material costs associated with lower student enrollment in the first quarter of 2012. Admissions advisory expenses as a percentage of revenues increased to 4.5% in the first quarter of 2012 from 4.2% in the first quarter of 2011.

General and administration expenses. General and administration expenses decreased $1.9 million, or 13%, to $12.6 million in the first quarter of 2012 from $14.5 million in the first quarter of 2011. The decrease is primarily due to lower other administrative expenses (e.g., professional services, relocation cost, etc.) incurred in the first quarter of 2012 compared to the same period in 2011. General and administration expenses as a percentage of revenues increased slightly to 8.5% in the first quarter of 2012 from 8.4% in the first quarter of 2011.

Income from operations. Income from operations decreased $18.3 million, or 31%, to $40.9 million in the first quarter of 2012 from $59.2 million in the first quarter of 2011, due to the aforementioned factors.

Investment income. Investment income decreased from $0.1 million to approximately $1,000 in the first quarter of 2012. The decrease was principally due to lower investment yields on existing cash balances.

Interest expense. Interest expense increased $1.0 million to $1.2 million in the first quarter of 2012 compared to $0.2 million in the first quarter of 2011 due to an increase in average borrowings from a term loan and revolving credit facility.

Provision for income taxes. Income tax expense decreased $7.7 million, or 33%, to $15.7 million in the first quarter of 2012 from $23.4 million in the first quarter of 2011, primarily due to the decrease in income before taxes attributable to the factors discussed above. Our effective tax rate was 39.5% for each of the first quarters of 2011 and 2012.

Net income. Net income decreased $11.8 million, or 33%, to $24.0 million in the first quarter of 2012 from $35.8 million in the first quarter of 2011, because of the factors discussed above.

Liquidity and Capital Resources

At March 31, 2012, we had cash and cash equivalents of $52.7 million compared to $57.1 million at December 31, 2011, and $71.1 million at March 31, 2011. At March 31, 2012, most of our excess cash was invested in bank overnight deposits and money market funds.

On April 4, 2011, we entered into an amended and restated revolving credit and term loan agreement. This credit facility, which is secured by our assets, provides for a $100 million revolving credit facility and $100 million term loan facility with a maturity date of March 31, 2014. At March 31, 2012, we had $92.5 million outstanding under the term loan facility and no outstanding balance under the revolving credit facility. In April 2012, we borrowed $13.0 million under the revolving credit facility, which was subsequently repaid.

For the three months ended March 31, 2012, we generated $36.5 million net cash from operating activities compared to $67.2 million for the same period in 2011. Capital expenditures were $4.1 million for the quarter ended March 31, 2012 compared to $11.4 million for the same period in 2011. During the quarter ended March 31, 2012, we paid a regular, quarterly common stock dividend of $11.9 million ($1.00 per share). The Company had $80.0 million of share repurchase authorization remaining at March 31, 2012. No shares were repurchased in the first quarter 2012.

In the first quarter of 2012, bad debt expense as a percentage of revenues was 3.8% compared to 3.5% for the same period in 2011. Days sales outstanding was 14 days at the end of the first quarter of 2012, compared to 13 days at the end of the first quarter of 2011.

We believe that existing cash and cash equivalents, cash generated from operating activities, and if necessary, cash borrowed under the revolving credit facility, will be sufficient to meet our requirements for at least the next 12 months.

The table below sets forth our contractual commitments, including our revolving credit facility, as of March 31, 2012. Although they have historically been paid, dividends are not a contractual commitment and, therefore, have been excluded from this table.

                                            Payments due by period (in thousands)
                                           Within 1                                     After 5
                               Total         Year        2-3 Years       4-5 Years       Years
 Operating leases            $ 241,762     $  37,569     $   74,438     $    60,555     $ 69,200
 Revolving credit facility          -             -              -               -            -
 Term loan                      92,500        30,000         62,500              -            -


 Total                       $ 334,262     $  67,569     $  136,938     $    60,555     $ 69,200

New Campuses

The Company plans to open four new campuses for the 2012 summer term subject to regulatory approval. Two of the new campuses are located in Minneapolis, Minnesota, a new market for Strayer University. The other two new campuses are planned to open in Chicago, Illinois and will represent the University's third and fourth campuses in that market. Including these four new campuses, the Company plans to open a total of eight new campuses in 2012, subject to regulatory approval.