
<PAGE>
 
                                                                    EXHIBIT 10.1


                         CAREER EDUCATION CORPORATION
                            1995 STOCK OPTION PLAN



     1.   PURPOSE.  The purpose of this Stock Option Plan (the "Plan") is to
enable Career Education Corporation (the "Company") to attract and retain people
of initiative and ability as employees, advisors and directors. The Plan is also
intended to provide additional incentives to employees, advisors and directors
to maximize the Company's share price. Reference hereinafter to "employee" shall
also include advisors and non-employee members of the Company's Board of
Directors. Reference to "employment" shall also include tenure under a
consulting agreement or as a member of the Company's Board of Directors.

     2.   SHARES SUBJECT TO THE PLAN.  Subject to adjustment as provided below
and in Paragraph 7, the shares to be offered under the Plan shall consist of
Class E Non-Voting Common Stock of the Company ("Shares").  The total number of
Shares that may be issued under the Plan shall not exceed twelve-thousand two-
hundred fifteen (12,215) Shares.  If an option right granted under the Plan
expires, terminates or is canceled, the unissued Shares subject to such option
shall again be available under the Plan.

     3.   EFFECTIVE DATE AND DURATION OF PLAN.

          (a) Effective Date.  The Plan shall become effective on August 1, 1995
     (the "Effective Date").  However, no option granted under the Plan shall
     become exercisable until after the Plan is approved by the affirmative vote
     of the holders of a majority of the Common Stock of the Company represented
     at a shareholders' meeting at which a quorum is present.  Any awards under
     the Plan prior to such approval shall be conditioned on and subject to such
     approval.  Subject to this limitation, options may be granted under the
     Plan at any time after the Effective Date and before termination of the
     Plan.

          (b) Duration.  The Board of Directors may at any time suspend or
     terminate the Plan.  Unless previously terminated by the Board, this Plan
     shall terminate on July 31, 2005.  The rights and obligations under any
     option granted while the Plan is in effect shall not be altered or impaired
     by suspension or termination of the Plan, except by the consent of the
     person to whom the option was granted.

     4.   ADMINISTRATION.  The Plan shall be administered by a committee
appointed by the Board of directors of the Company consisting of not less than
two directors (the "Committee").  The Committee shall determine and designate
from time to time the employees to whom awards shall be made, the amount of the
awards, and the other terms and conditions of the awards, except that only the
Board of Directors may amend or terminate the Plan as provided in Paragraphs 3
and 10.  Subject to the provisions of the Plan, the Committee may from time to
time adopt and amend rules and regulations relating to administration of the
Plan, advance the lapse of any waiting period, accelerate any exercise date,
waive or modify any restriction
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applicable to Shares (except those restrictions imposed by law) and make all
other determinations in the judgment of the Committee necessary or desirable for
the administration of the Plan.  The interpretation and construction of the
provisions of the Plan and related agreements by the Committee shall be final
and conclusive.  The Committee may correct any defect or supply any omission or
reconcile any inconsistency in the Plan or in any related agreement in the
manner and to the extent it shall deem expedient to carry the Plan into effect,
and it shall be the sole and final judge of such expediency.

     5.   ELIGIBILITY.  Any awards may be made to employees, including advisors
and non-employee directors of the Company.  Advisors shall be eligible for an
award only if they have rendered services to the Company, other than those in
connection with the sale of securities in a capital-raising transaction.  The
Committee shall specify the action taken with respect to each employee to whom
an award is made under the Plan.  At the discretion of the Committee, an
employee may be given an election to surrender an award in exchange for the
grant of a new award.

     6.   OPTION GRANT.

          (a)  Grant.  The Committee has the authority and discretion to grant
     options under the Plan.  With respect to each option grant, the Committee
     shall determine the number of Shares subject to the option, the option
     price, the period of the option, and the time or times at which the option
     may be exercised.  In addition, the Committee may provide for any other
     restrictions or provisions in the option agreement which it deems
     appropriate.  Options shall be either Incentive Stock Options or
     Nonstatutory Stock Options.  Incentive Stock Options shall meet all of the
     requirements of this Paragraph 6.  Nonstatutory Options shall meet the
     requirements of Subparagraphs (c) through (g).

          (b)  Incentive Stock Option. Incentive Stock Options ("ISOs") shall be
     subject to the following terms and conditions (for the purposes of this
     Paragraph 6(b), references to "employee" shall not include advisors or non-
     employee directors of the Company; only common law employees may receive
     ISOs):

               (i)    ISOs may be granted under the Plan to an employee
          possessing more than 10% directly or by attribution, of the total
          combined voting power of all classes of stock of the Company only if
          the option price is at least 110% of the fair market value of the
          Shares subject to the option on the date it is granted, as described
          in 6(b)(iii), and the option by its terms is not exercisable after the
          expiration of five years from the date it is granted.

               (ii)   Subject to Paragraphs 6(b)(i) and 6(c), ISOs granted under
          the Plan shall continue in effect for the period fixed by the
          Committee, except that no ISO shall be exercisable after the
          expiration of ten years from the date it is granted.

               (iii)  The option price per share shall be determined by the
          Committee at the time of grant.  Subject to Paragraph 6(b)(i), the
          exercise price shall not be less than 100% of the fair market value of
          the Shares covered by the ISO at the date 

                                      -2-
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          the option is granted. The fair market value shall be deemed to be the
          closing of the Shares of the Company as reported on the date preceding
          the date the option is granted, or if there has been no sale on that
          date, on the last preceding date on which a sale occurred, or as
          reasonably determined by the Committee.

               (iv)   No ISO shall be granted on or after the tenth anniversary
          of the Effective Date of the Plan.

          (c)  Exercise of Options.  Except as provided in Paragraph 6(f), no
     option granted under the Plan may be exercised unless, at the time of such
     exercise, the optionee is employed by the Company or is rendering services
     to the Company and shall have been so employed or retained continuously
     since the date such option was granted.  Absence on leave or on account of
     illness or disability under rules established by the Committee shall not,
     however, be deemed an interruption of employment for this purpose.  Except
     as provided in Paragraphs 6(f), 7 and 8, options granted under the Plan may
     be exercised from time to time over the period stated in each option in
     such amounts and at such times as shall be prescribed by the Committee,
     provided that options shall not be exercised for factional shares.  Unless
     otherwise determined by the Committee, if the optionee does not exercise an
     option in any one year with respect to the full number of Shares to which
     the optionee is entitled in that year, the optionee's rights shall be
     cumulative and the optionee may purchase those Shares in any subsequent
     year during the term of the option.

          (d)  Nontransferability.  Each stock option granted under the Plan by
     its terms shall be nonassignable and nontransferable by the optionee,
     either voluntarily or by operation of law, except by will or by the laws of
     descent and distribution of the state or country of the optionee's domicile
     at the time of death, and each option by its terms shall be exercisable
     during the optionee's lifetime only by the optionee.

          (e)  Vesting.  Options granted under the Plan shall vest according to
     such schedule as the Committee may prescribe at the time of grant, which
     may include full and immediate vesting.  Reference to "option" in this Plan
     means all vested and non-vested options.

          (f)  Termination of Employment or Death.

               With respect to ISOs:

               (i)    If the employment of an option holder is terminated, any
          then outstanding and exercisable stock option held by such person
          shall remain exercisable, in accordance with the provision of the
          stock option agreement, by such employee until the expiration date of
          such stock option or within three months after the date of termination
          of employment, whichever is the shorter period.

               (ii)   Notwithstanding the provisions of (f)(i), if the
          employee's 

                                      -3-
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          employment is terminated because of a disability described in Section
          422(c)(6) of the Internal Revenue Code ("Disability"), any then
          outstanding and exercisable stock option held by such employee shall
          remain exercisable, in accordance with the stock option agreement, by
          such employee until the expiration of such option agreement or within
          one year after the date of termination of employment whichever is the
          shorter period.

               (iii)  Notwithstanding the provisions of (f)(i), if the employee
          dies, any then outstanding and exercisable stock option held by such
          employee on the date of death shall be exercisable, in accordance with
          the provisions of the stock option agreement, by the duly appointed
          representative of the employee's estate at any time prior to the
          expiration of such option agreement or within one year after the date
          of death, whichever is the shorter period.

               If a termination under (f)(ii) or (iii) occurs, any unvested
          portion of the option held by the employee shall become vested,
          provided that the aggregate value of Shares with respect to which any
          ISO first becomes exercisable in the calendar year of the termination
          of employment does not exceed $100,000.  If the value of Shares that
          become fully vested in a calendar year under an ISO exceed $100,000,
          such excess shall be treated as stock subject to a Nonstatutory Stock
          Option.  For purposes of the $100,000 limitation, the fair market
          value of the Shares on the date the ISO was granted shall be used in
          determining the value of the Shares.

               With respect to Nonstatutory Options:

               The Committee may specify in the option agreement what
          restrictions will apply in the event of termination of employment.

               For all options issued hereunder, to the extent that the option
          of any deceased optionee or any optionee whose employment terminates
          is not exercised within the applicable period, all further rights to
          purchase Shares to such option shall cease and terminate.

          (g)  Purchase of Shares.  Unless the Committee determines otherwise,
     Shares may be acquired pursuant to an option granted under the Plan only
     upon receipt by the Company of notice in writing from the optionee of the
     optionee's intention to exercise, specifying the number of Shares as to
     which the optionee desires to exercise the option and the date on which the
     optionee desires to complete the transaction, and if required in order to
     comply with the Securities Act of 1933, as amended, containing a
     representation that it is the optionee's present intention to acquire the
     Shares for investment and not with a view toward distribution.  Unless the
     Committee determines otherwise, on or before the date specified for
     completion of the purchase of Shares pursuant to an option, the optionee
     must have paid the Company the full purchase price of such shares in cash.
     No Shares shall be issued until full payment therefor has been made.  If
     the Company is required to withhold on account of any present or future tax
     imposed as a result of an 

                                      -4-
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     exercise, the Company shall so notify the optionee and the optionee shall
     be required to pay all such withholding in cash as a condition to the
     receipt of shares.

     7.   CHANGES IN CAPITAL STRUCTURE.  If the outstanding shares of Common
Stock of the Company are hereafter increased or decreased or changed into or
exchanged for a different number or kind of shares or other securities of the
Company or of another corporation by reason of any reorganization, merger,
consolidation, plan of exchange, recapitalization, reclassification, stock
split-up, combination of shares or dividend payable in shares, appropriate
adjustment shall be made by the Committee in the number and kind of shares
available for awards under the Plan, provided that this Paragraph 7 shall not
apply with respect to transactions referred to in Paragraph 8. In addition, the
Committee shall make appropriate adjustment in the number and kind of shares as
to which outstanding options, or portions thereof then unexercised, shall be
exercisable, to the end that the optionee's proportionate interest is maintained
as before the occurrence of such event.  The Committee may also require that any
securities issued in respect of or exchange for Shares issued hereunder that are
subject to restrictions be subject to similar restrictions.  Notwithstanding the
foregoing, the Committee shall have no obligation to effect any adjustment that
would or might result in the issuance of fractional shares, and any fractional
shares from any adjustment may be disregarded or provided for in any manner
determined by the Committee.  Any such adjustments made by the Committee shall
be conclusive.

     8.   CHANGE OF CONTROL.  Notwithstanding any other provisions of the Plan,
a change of control ("Change of Control") shall occur at any time when the
Stockholders of the Company approve one of the following ("Approved
Transactions"):

               (i)  Any consolidation, merger, plan of exchange, or on involving
          the Company ("Merger") in which the Company is not the continuing or
          surviving corporation or pursuant to which the majority of the Common
          Stock of the Company would be converted into cash, securities or other
          property, other than (A) a Merger involving the Company in which the
          holders of the Common Stock of the Company immediately prior to the
          Merger have the same proportionate ownership of common stock of the
          surviving corporation after the Merger, (B) any transaction in
          connection with an initial public offering; (C) any private placement
          where a substantial block of stock is sold to one or more new
          investors; or (D) the conversion of shares from one class of stock to
          another or the exercise of any warrant; or

               (ii) Any sale, lease, exchange, or other transfer (in one
          transaction or a series of related transactions) of all or
          substantially all of the assets of the Company or the adoption of any
          plan or proposal for the liquidation or dissolution of the Company.

          In addition, a Change of Control shall occur in the event a "person"
     (within the meaning of Section 13(d) of the Securities Exchange Act of
     1934, as amended) after the Effective Date first becomes the beneficial
     owner (as defined in Rule 13d-3 under the Exchange Act), directly or
     indirectly, in one or more transactions, of shares of common stock of the
     Company representing 50% or more of the total number of votes that may be

                                      -5-
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     cast by all stockholders of the Company voting as a single class, without
     the approval or consent of the Board of Directors, other than (A) any
     transaction in connection with an initial public offering; (B) any private
     placement where a substantial block of stock is sold to one or more new
     investors; or (C) the conversion of shares from one class of stock to
     another or the exercise of any warrant.

     9.   CORPORATE MERGERS, ACQUISITIONS, ETC.  The Committee may also grant
options under the Plan having terms, conditions and provisions that vary from
those specified in this Plan, provided that any such awards are granted in
substitution for, or in connection with the assumption of, existing options,
issued by another corporation and assumed or otherwise agreed to be provided for
by the Company pursuant to or by reason of a transaction involving a corporate
merger, consolidation, plan of exchange, acquisition of property or stock,
separation, reorganization, or liquidation to which the Company is a party.

     10.  AMENDMENT OF PLAN.  The Board of Directors may at any time, and from
time to time, modify or amend the Plan in such respects as it shall deem
advisable because of changes in the law while the Plan is in effect or for any
other reason.  Except as provided in Paragraphs 6(f), 7 and 8, however, no
change in an award already granted shall be made without the written consent of
the holder of such award.

     11.  APPROVALS.  The obligations of the Company under the Plan are subject
to the approval of state and federal authorities or agencies with jurisdiction
in the matter.  The Company will use its best efforts to take steps required by
applicable state or federal law or regulations, including rules and regulations
of the Securities and Exchange Commission and any stock exchange or trading
system on which this Company's shares may then be listed or admitted for
trading, in connection with grants under the Plan.  The foregoing
notwithstanding, the Company shall not be obligated to issue or deliver Common
Stock under the Plan if such issuance or delivery would violate applicable state
or federal securities law.

     12.  EMPLOYMENT RIGHTS.  Nothing in the Plan or any award pursuant to the
Plan shall confer upon any option holder any right to be continued in the
employment of the Company or shall interfere in any way with the right of the
Company to terminate such employee's employment at any time, for any reason,
with or without cause, or to increase or decrease such employee's compensation
or benefits.

     13.  RIGHTS AS A SHAREHOLDER.  The recipient of any award under the Plan
shall have no rights as a shareholder with respect to any Shares until the date
of issue to the recipient of a stock certificate for such shares.  Except as
otherwise expressly provided in the Plan, no adjustment shall be made for
dividends or other rights for which the record date is prior to the date such
stock certificate is issued.

     14.  GOVERNING LAW.  All questions arising with respect to the provisions
of the Plan shall be determined by application of the laws of the State of
Illinois, except to the extent that Illinois laws are preempted by any federal
statute, regulation, judgment or court order, including but not limited to, the
Internal Revenue Code.

                                      -6-
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     15.  HEADINGS.  The titles of Paragraphs are included for convenience only,
and are not to be considered in the construction of the provisions thereof.

     IN WITNESS WHEREOF, this Plan is executed this 23rd day of August, 1995, to
be effective as of the Effective Date.

                                    CAREER EDUCATION CORPORATION, a Delaware
                                    Corporation


                                    By:  /s/ John M. Larson
                                       --------------------------------
                                         Its:  President
                                             --------------------------

                                      -7-
<PAGE>
 
                              AMENDMENT No. 1 TO
                              -------------------
                         CAREER EDUCATION CORPORATION
                         ----------------------------
                            1995 STOCK OPTION PLAN
                            ----------------------


     THIS AMENDMENT NO. 1 relates to that certain Career Education Corporation
1995 Stock Option Plan executed as of August 23, 1995 (the "Plan") and is
effective as of February 27, 1997.

     WHEREAS, pursuant to the Plan, Career Education Corporation (the "Company")
authorized the issuance under the Plan of up to 12,215 shares of Class E Non-
Voting Common Stock of the Company (the "Shares");

     WHEREAS, the Company now wishes to increase the number of Shares authorized
for issuance under the Plan and such increase was approved by the Company's
directors by Unanimous Written Consent dated as of February 28, 1997.

     NOW, THEREFORE, pursuant to Section 10 of the Plan, the Company's Board of
Directors hereby amend the Plan as follows:

     1.   Section 2 of the Plan is amended and restated in its entirety, and
shall be replaced with the following provision:

          2.   Shares Subject to the Plan. Subject to adjustment as provided
     below and in Paragraph 7, he shares to be offered under the Plan shall
     consist of Class E Non-Voting Common Stock of the Company ("Shares"). The
     total number of Shares that may be issued under the Plan shall not exceed
     thirteen-thousand-two-hundred-fifteen (13,215) Shares. If an option right
     granted under the Plan expires, terminates or is canceled, the unissued
     Shares subject to such option shall again be available under the Plan.

     2.   Except as specifically amended herein, the terms and conditions of the
Plan shall remain in full force and effect.

     3.   This Amendment shall be effective as of February 27, 1997.

     IN WITNESS WHEREOF, the Company's Board of Directors has executed this
Amendment as of December 31, 1997.

<PAGE>
 
                                    CAREER EDUCATION CORPORATION


                                     /s/ WILLIAM A. KLETTKE
                                    -------------------------------
                                    WILLIAM A. KLETTKE
                                    Senior Vice President,
                                    Chief Financial Officer 
                                    and Treasurer

                                       2
<PAGE>
 
                              AMENDMENT No. 2 TO
                              -------------------
                          CAREER EDUCATION CORPORATION
                          ----------------------------
                             1995 STOCK OPTION PLAN
                             ----------------------


     THIS AMENDMENT NO. 2 relates to that certain Career Education Corporation
1995 Stock Option Plan executed as of August 23, 1995 (the "Plan") and is
effective as of May 30, 1997.

     WHEREAS, pursuant to the Plan, Career Education Corporation (the "Company")
originally authorized the issuance under the Plan of up to 12,215 shares of
Class E Non-Voting Common Stock of the Company and authorized the issuance of an
additional 1,000 shares of Class E Non-Voting Common Stock as of February 27,
1997 (the "Shares");

     WHEREAS, the Company now wishes to increase the number of Shares authorized
for issuance under the Plan and such increase was approved by the Company's
directors by Unanimous Written Consent dated as of May 30, 1997.

     NOW, THEREFORE, pursuant to Section 10 of the Plan, the Company's Board of
Directors hereby amend the Plan as follows:

     1.  Section 2 of the Plan is amended and restated in its entirety, and
shall be replaced with the following provision:

          2.  Shares Subject to the Plan.  Subject to adjustment as provided
     below and in Paragraph 7, the shares to be offered under the Plan shall
     consist of Class E Non-Voting Common Stock of the Company ("Shares").  The
     total number of Shares that may be issued under the Plan shall not exceed
     seventeen-thousand-one-hundred-thirty-five (17,135) Shares.  If an option
     right granted under the Plan expires, terminates or is canceled, the
     unissued Shares subject to such option shall again be available under the
     Plan.

     2.   Except as specifically amended herein, the terms and conditions of the
Plan shall remain in full force and effect.

     3.   This Amendment shall be effective as of May 30, 1997.

<PAGE>
 
     IN WITNESS WHEREOF, the Company has executed this Amendment as of December
31, 1997.


                                    CAREER EDUCATION CORPORATION


                                    /s/ WILLIAM A. KLETTKE
                                    -------------------------------
                                        William A. Klettke
                                        Senior Vice President,
                                        Chief Financial Officer
                                        and Treasurer


                                       2
