1261654--11/26/2008--UNIVERSAL_TECHNICAL_INSTITUTE

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{system, service, information}

{acquisition, growth, future}

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A substantial decrease in student financing options, or a significant increase in financing costs for our students, could have a material adverse affect on our student population and consequently, on our results of operations, cash flows and financial condition. Congress may change the law or reduce funding for Title IV Programs which could reduce our student population, net revenues and/or profit margin. A high percentage of the Title IV student loans our students receive were made by one lender and guaranteed by one guaranty agency which exposes us to financial and regulatory risk. If our schools do not maintain their state authorizations, they may not operate or participate in Title IV Programs. If our schools do not maintain their accreditation, they may not participate in Title IV Programs. Our schools may lose eligibility to participate in Title IV Programs if the percentage of their revenue derived from those programs is too high which could reduce our student population. Our schools may lose eligibility to participate in Title IV Programs if their student loan default rates are too high, which could reduce our student population. If we or our schools do not meet the financial responsibility standards prescribed by ED, we may be required to post letters of credit or our eligibility to participate in Title IV Programs could be terminated or limited which could reduce our student population or impact our cash flow. We are subject to sanctions if we fail to correctly calculate and timely return Title IV Program funds for students who withdraw before completing their educational programs. We are subject to sanctions if we pay impermissible commissions, bonuses or other incentive payments to persons involved in certain recruiting, admissions or financial aid activities. Government and regulatory agencies and third parties may conduct compliance reviews, bring claims or initiate litigation against us. Our business and stock price could be adversely affected as a result of regulatory investigations of, or actions commenced against, other companies in our industry. Budget constraints in some states may affect our ability to obtain necessary authorizations or approvals from those states to conduct or change our operations. Budget constraints in states that provide state financial aid to our students could reduce the amount of such financial aid that is available to our students which could reduce our student population. If regulators do not approve our acquisition of a school that participates in Title IV Program funding, the acquired school would not be permitted to participate in Title IV Programs, which could impair our ability to operate the acquired school as planned or to realize the anticipated benefits from the acquisition of that school. If regulators do not approve or delay their approval of transactions involving a change of control of our company or any of our schools, our ability to participate in Title IV Programs may be impaired. Risks Related to Our Business If we fail to effectively fill our existing capacity, we may incur higher than anticipated costs and expenses which likely will result in a deterioration of our profitability and operating margins. We have established a proprietary loan program that could have a material adverse effect on our results of operations. We rely on two third parties to originate, process and service loans under our proprietary loan program. If these companies fail or discontinue providing such services, our business could be harmed. An increase in interest rates and a tightening of credit markets could adversely affect our ability to attract and retain students. Increasing fuel prices and living expenses could continue to affect our ability to attract and retain students. Failure on our part to maintain and expand existing industry relationships and develop new industry relationships with our industry customers could impair our ability to attract and retain students. Competition could decrease our market share and create tuition pricing concerns. Our success depends in part on our ability to update and expand the content of existing programs and develop new programs in a cost-effective manner and on a timely basis. Our business may be adversely affected by a general economic slowdown or recession in the U.S. or abroad. Our cash and cash equivalents are sensitive to interest rate changes and a significant decrease in interest rates could adversely impact the performance of our investment. We rely heavily on the reliability, security and performance of an internally developed student management and reporting system, and any difficulties in maintaining this system may result in service interruptions, decreased customer service, or increased expenditures. We may not be able to retain our key personnel or hire and retain the personnel we need to sustain and grow our business. If we are unable to hire, retain and continue to develop and train our education representatives, the effectiveness of our student recruiting efforts would be adversely affected. Our financial performance depends in part on our ability to continue to develop awareness and acceptance of our programs among high school graduates and adults seeking advanced training. Seasonal and other fluctuations in our results of operations could adversely affect the trading price of our common stock. If we fail to maintain effective internal controls over financial reporting, we may not be able to accurately report our financial results or prevent fraud. As a result, current and potential stockholders could lose confidence in our financial reporting which would harm our business and the trading price of our stock. Failure on our part to effectively identify, establish and operate additional schools or campuses could reduce our ability to implement our growth strategy. We may be unable to successfully complete or integrate future acquisitions. We have recorded a significant amount of goodwill, which may become impaired and subject to a write-down

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1261654--11/26/2008--UNIVERSAL_TECHNICAL_INSTITUTE_INC