1261654--12/1/2010--UNIVERSAL_TECHNICAL_INSTITUTE

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Congress may change the law or reduce funding for Title IV Programs which could reduce our student population, revenues and/or profit margin. The U.S. Congress has recently commenced an examination of the for-profit education sector that could result in legislation or further ED rulemaking restricting Title IV Program participation by proprietary schools in a manner that materially and adversely affects our business. Pending rulemaking by ED may result in regulatory changes that could materially and adversely affect our business Our business could be harmed if we experience a disruption in our ability to process student loans because of the phase-out of Federal Family Education Loan Program loans and the corresponding transition to direct student loans under the Federal Direct Loan Program. An increase in the regulatory burden on the providers of private loans to our students could increase the cost of borrowing for our students, which could reduce our student population and have a material impact on our business, financial condition and results of operations. Limited opportunities for private alternative student loans for our students could increase the need for institutional funding, which could have a material impact on our business, financial condition and results of operations. 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. Failure to demonstrate administrative capability to ED may result in the loss of eligibility to participate in Title IV Programs. 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 and negatively affect our 90/10 Rule calculation. If regulators do not approve our acquisition of a school that participates in Title IV Program funding or the opening of an additional location, the acquired school and/or the additional location would not be permitted to participate in Title IV Programs, which could impair our ability to operate the acquired school and/or the additional location as planned or to realize the anticipated benefits from the acquisition of that school and/or opening of the additional location. 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 experience a deterioration of our profitability and operating margins. Our proprietary loan program could have a negative effect on our results of operations. We rely on 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 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 recession in the U.S. or abroad. 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 control 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--12/1/2010--UNIVERSAL_TECHNICAL_INSTITUTE_INC