14.	COMMITMENTS AND CONTINGENCIES

Lease Commitments-The Company leases office premises, educational facilities and various equipment for varying periods through the year 2032 at basic annual rentals (excluding taxes, insurance, and other expenses under certain leases) as follows:

Year Ending December 31,	Finance Obligation			Operating Leases		Capital Leases
2012	$	1,463		$	23,248	$	2,609
2013		1,463			22,085		2,505
2014		1,463			20,916		2,494
2015		1,463			19,240		2,494
2016		1,465			16,000		2,556
Thereafter		-			63,851		42,493
		7,317			165,340		55,151
Less amount representing interest		(7,317	)		-		(28,315	)
	$	-		$	165,340	$	26,836

On December 28, 2001, the Company completed a sale and a leaseback of four owned facilities to a third party for net proceeds of approximately $8.8 million. The initial term of the lease is 15 years with two ten-year extensions. The lease is an operating lease that starts at $1.2 million in the first year and increases annually by the consumer price index. The lease includes an option near the end of the initial lease term to purchase the facilities at fair value, as defined. This transaction is being accounted for as a lease obligation. The net proceeds received have been reflected in the consolidated balance sheet as a finance obligation. The lease payments are included as a component of interest expense.

Rent expense, included in operating expenses in the accompanying consolidated financial statements for the three years ended December 31, 2011 is $24.7 million, $24.7 million, and $23.1 million, respectively. Interest expense related to the financing obligation in the accompanying financial statements for the years ended December 31, 2011, 2010 and 2009 is $1.5 million, $1.4 million and $1.4 million, respectively.

Capital Expenditures-The Company has entered into commitments to expand or renovate campuses. These commitments are in the range of $1.0 to $3.0 million in the aggregate and are due within the next 12 months.

Litigation and Regulatory Matters- In the ordinary conduct of business, the Company is subject to periodic lawsuits, investigations and claims, including, but not limited to, claims involving students or graduates and routine employment matters. Although the Company cannot predict with certainty the ultimate resolution of lawsuits, investigations and claims asserted against it, the Company does not believe that any currently pending legal proceeding to which it is a party will have a material adverse effect on our business, financial condition, results of operations or cash flows.

The Company and several executive officers were named as defendants in two purported securities class action lawsuits. The complaints, which were both filed in the U.S. District Court for the District of New Jersey, alleged that the Company and the other defendants made false and misleading statements and failed to disclose material adverse facts about the Company's business and prospects in violation of federal securities laws. The plaintiff sought damages for the purported class. The complaints were filed on August 13, 2010 and September 19, 2010, and were respectively captioned, Donald J. and Mary S. Moreaux v. Lincoln Educational Services Corp., et al., and Robert Lyathaud v. Lincoln Educational Services Corp., et al. On November 24, 2010, the Court consolidated the two actions under the caption In re Lincoln Educational Services Corp. Securities Litigation and appointed a lead plaintiff. A consolidated amended complaint was filed on February 14, 2011. On April 15, 2011, defendants filed a motion to dismiss all of the claims asserted therein. On September 6, 2011, the Court entered an order granting defendants' motion to dismiss the consolidated amended complaint with prejudice. Plaintiffs did not appeal.

Certain of the Company's executive officers and directors were also named as defendants in three purported shareholder derivative lawsuits. The first action, which was filed on December 21, 2010 in the U.S. District Court for the District of New Jersey, was captioned Mike Schweertmann v. David F. Carney, et al. The second, which was filed on February 14, 2011 in the Superior Court of New Jersey, Essex County, Chancery Division, was captioned Gregory and Karen Lehner v. Shaun E. McAlmont, et al. The third action, which was filed on March 11, 2011 in the U.S. District Court for the District of New Jersey, was captioned Steven C. Lloyd and Paul Stone v. David F. Carney, et al. All three complaints alleged that defendants breached their fiduciary duties by allowing the Company to engage in certain allegedly improper practices and misrepresenting the Company's financial condition. On October 18, 2011, the parties to the Schweertmann action filed with the Court a stipulation of voluntary dismissal of the action without prejudice, which the Court ordered on October 24, 2011. On October 21, 2011, plaintiffs in the Lloyd action filed a notice of voluntary dismissal of the action without prejudice, which the Court ordered on October 26, 2011. On November 30, 2011, the parties to the Lehner action filed a stipulation of voluntary dismissal of the action without prejudice, which the Court ordered on December 2, 2011.

On May 18, 2011, the Company received a subpoena duces tecum from the Attorney General of the State of New York relating to their investigation of whether the Company and certain of its academic institutions have complied with certain New York state consumer protection, securities and finance laws. Pursuant to the subpoena duces tecum, the Attorney General has requested from the Company and certain of its academic institutions documents and detailed information for the time period May 17, 2005 to the present.

Student Loans-At December 31, 2011, the Company had outstanding net loan commitments to its students to assist them in financing their education of approximately $20.2 million.

Vendor Relationship- On September 15, 2011, the Company entered into an agreement with Snap-on Industrial (“Snap-on”) which expires on December 31, 2012. The Company has agreed to grant Snap-on exclusive rights to certain automotive campuses to display advertising and supply certain tools with the exception of one pre-existing vendor contract. The Company earns credits that are redeemable for certain tools and equipment based on the sales to students and to the Company. Snap-on receivable for credits not redeemed for year ended December 31, 2011 was $0.5 million related to this contract. This contract replaces the contract from April 1, 2006 which expired and will carryforward any unredeemed receivables and liabilities.

On April 1, 2006, the Company entered into an agreement with Snap-on Industrial (“Snap-on”) which expired on March 31, 2011. The Company had agreed to grant Snap-on exclusive rights to our certain automotive campuses to display advertising and to train our students with the exception of one pre-existing vendor contract. The Company earned credits that are redeemable for tools and equipment based on the number of automotive graduated quarterly. In addition, credits are earned on our purchases as well as purchases made by students enrolled in our automotive programs. Snap-on receivable for credits not redeemed for the years ended December 31, 2011 and 2010 was $0.4 million and $0.7 million, respectively.

On October 1, 2005, the Company entered into an agreement with Snap-on exclusively for our Queens, NY campus opened March 27, 2006 which expired on November 30, 2011. We had agreed to grant Snap-on exclusive rights to in school advertising and supplying all student training tools and equipment, as well as our automotive equipment purchases. In exchange, Snap-on agreed to advance tools and equipment needed to build out the school, not to exceed $1.0 million at list price. The equipment advance was offset by credits earned through purchases by the Queens campus and their students. Snap-on liability resulting from advanced equipment received in excess of credits earned for the years ended December 31, 2011 and 2010, was $0.2 million and $0.3 million, respectively.

As part of the acquisition of BAR in January 2009, the Company assumed an agreement with Snap-on exclusively for our East Windsor, Connecticut campus which expired on December 31, 2011. We had agreed to grant Snap-on exclusive rights to promote and sell to East Windsor students' equipment offered by Snap-on. In exchange, Snap-on agreed to initially advance tools and equipment up to $0.5 million of the equipment to East Windsor as agreed upon by the parties. Snap-on could have at its discretion advance additional amounts for equipment according to the agreement Snap-on liability resulting from advanced equipment received in excess of credits earned for years ended December 31, 2011 and 2010 was $0.1 million and $0.2 million, respectively.

Executive Employment Agreements-The Company entered into employment contracts with key executives that provide for continued salary payments if the executives are terminated for reasons other than cause, as defined in the agreements. The future employment contract commitments for such employees were approximately $8.9 million at December 31, 2011.

Change in Control Agreements-In the event of a change of control several key executives will receive continued salary payments based on their employment agreements.

Surety Bonds-Each of the Company's campuses must be authorized by the applicable state education agency in which the campus is located to operate and to grant degrees, diplomas or certificates to its students. The campuses are subject to extensive, ongoing regulation by each of these states. In addition, our campuses are required to be authorized by the applicable state education agencies of certain other states in which our campuses recruit students. The Company is required to post surety bonds on behalf of our campuses and education representatives with multiple states to maintain authorization to conduct our business. At December 31, 2011, the Company has posted surety bonds in the total amount of approximately $15.1 million.