
<PAGE>
 
                                                                    EXHIBIT 10.8

                     AMENDED AND RESTATED OPTION AGREEMENT

          THIS AMENDED AND RESTATED OPTION AGREEMENT (this "AGREEMENT"), dated
as of July 31, 1995, is between Career Education Corporation, a Delaware
corporation ("CEC"), and John M. Larson ("LARSON").


                                   RECITALS

          A.   Larson and CEC are parties to that certain Larson Option
Agreement, dated as of January 31, 1994 (the "ORIGINAL AGREEMENT") pursuant to
which Larson was granted options to purchase certain shares of CEC's common
stock, $.01 par value based upon the returns achieved by Heller Equity Capital
Corporation ("HECC"), on its behalf and as successor to Heller Financial, Inc.

          B.   In connection with the extension of Larson's Employment
Agreement, Larson and CEC have decided to restructure a portion of Larson's
rights to receive the options, as reflected in this Agreement and the
Supplemental Option Agreement of even date herewith between Larson and CEC.

                                  AGREEMENTS

          In consideration of the recitals and the mutual covenants herein
contained and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto agree as follows:


                                   ARTICLE I

                                  DEFINITIONS
                                  -----------

          1.1  In addition to the terms defined elsewhere in this Agreement,
as used in this Agreement:

          (a)  "Adjusted Shares" means the number of shares of CEC
     Common (assuming full exercise of all Option Shares) at the time
     of the exercise of the Option, exclusive of (i) any shares of CEC
     Common issued or issuable pursuant to the Supplemental Option or
     the Dowdell Option; (ii) any shares of CEC Common issued to the
     management of CEC pursuant to any stock option plans duly adopted
     by the Board of Directors from time to time; and (iii) any shares
     of CEC Common sold at a price equal to the market value of such
     shares (as reasonably determined by the Board of Directors of
     CEC) to any Person who is not affiliated with any of the 
<PAGE>
 
     Existing Stockholders. For purposes hereof, if CEC issues any
     Option Securities or CEC Common in connection with the issuance
     of any shares of preferred stock of CEC (or any other capital
     stock with a preference as to dividends or liquidation), such
     Option Securities and any CEC Common issuable upon the exercise,
     exchange or conversion thereof shall be deemed to have been
     issued at market value (regardless of the stated exercise,
     exchange or purchase price of such CEC Common) if the Board of
     Directors reasonably determines that the total price paid for all
     such equity securities (including the Option Securities,
     preferred stock and CEC Common) equals the market value of the
     portion of total capitalization represented by all such equity
     securities. It is hereby acknowledged that all CEC Common
     issuable in connection with the Warrant (along with any Penalty
     Warrants issued from time to time) issued to Electra Investment
     Trust PLC and Electra Associates, Inc. (collectively, "ELECTRA")
     or their respective successors or assigns pursuant to the
     Securities Purchase Agreement of even date herewith among CEC and
     Electra constitute shares of CEC Common issued at market value
     for purposes of this Agreement.

          (b)  "Cash Equivalent" means (a) marketable direct
     obligations issued or unconditionally guarantied by the United
     States Government or issued by any agency thereof and backed by
     the full faith and credit of the United States, in each case
     maturing within ninety (90) days from the date of acquisition
     thereof; (b) commercial paper maturing no more than ninety (90)
     days from the date issued and, at the time of acquisition, having
     a rating of at least A-1 from Standard & Poor's Corporation or at
     least P-1 from Moody's Investors Service, Inc.; and (c)
     certificates of deposit or bankers' acceptances maturing within
     ninety (90) days from the date of issuance thereof issued by, or
     overnight reverse repur chase agreements from, any commercial
     bank organized under the laws of the United States or any state
     thereof or the District of Columbia having combined capital and
     surplus of not less than $500,000,000 and not subject to setoff
     rights in favor of such bank.

          (c)  "Cause" has the meaning set forth in the Larson
     Employment Agreement.

          (d)  "CEC Common" means the common stock of CEC, $.01 par
     value, regardless of class, and any securities (including,
     without limitation, options and warrants) which are exercisable
     or exchangeable for or convertible into CEC Common (an "OPTION
     SECURITY"); provided, that for purposes of calculating the Option
<PAGE>
 
     Amount hereunder, the CEC Common issuable upon exercise, exchange
     or conversion of any Option Security shall, upon its issuance, be
     deemed to have been sold to the holder of the Option Security as
     of the date of the issuance of the Option Security for an amount
     equal to the exercise, exchange or conversion price provided in
     such Option Security plus the consideration received by CEC upon
     the issuance of the Option Security (as reasonably determined by
     the Board of Directors of CEC in connection with the issuance of
     such Option Securities).

          (e)  "Commission" means the Securities and Exchange
     Commission.

          (f)  "Dilution Factor" means a fraction, the numerator of
     which is the number of shares of CEC Common outstanding at the
     time of such determination plus the then exercisable portion of
                                ----
     the Option Amount pursuant to the Option and the Dowdell Option,
     and the denominator of which is the number of shares of CEC
     Common outstanding at the time of such determination.

          (g)  "Dowdell Option" means the option granted to Dowdell
     pursuant to the Amended and Restated Dowdell Option Agreement, of
     even date herewith, between CEC and Dowdell.

          (h)  "Earn-Up Target" means, at the time of determination,
     an amount of cash or cash equivalents that HECC and its
     affiliates would have to receive in connection with the sale,
     transfer, redemption, repayment, or other disposition of all or
     part of the Heller Investment (net of related transaction
     expenses including fees and expenses of counsel) or any cash
     dividend or interest declared and paid thereon in order for HECC
     and their respective affiliates (including, without limitation,
     all consulting, non-competition, advisory or similar fees
     received by HECC and its affiliates) to (i) earn, in the
     aggregate with respect to the Heller Investment, an IRR of at
     least the amount specified with respect to such Earn-Up Target
     and (ii) receive aggregate cash or cash equivalent consideration
     of at least twice the total amount of Heller Investment. All Earn-
     Up Targets shall be calculated on a pro forma basis assuming that
     all shares of CEC Common subject to the Supplemental Option and
     all shares of CEC Common subject to the Supplemental Option and
     all shares of CEC Common subject to the Option and the Dowdell
     Option that would become exercisable upon achievement of such
     Earn-Up Target have been exercised and such shares were issued
     and outstanding prior to

                                      -3-
<PAGE>
 
     the transaction or payment with respect to which achievement of
     the Earn-Up Target is being calculated. The Earn-Up Targets shall
     be based on the achievement of the IRR identified below:

                   Earn-Up Target             IRR
                   --------------             ---
                                                
               Initial Earn-Up Target         25%
               Second Earn-Up Target          30%
               Third Earn-Up Target           35%
               Fourth Earn-Up Target          40%
               Final Earn-Up Target           45%

          (i)  "Exercise Percentage" means the percentage of the
     Option Amount with respect to which the Option is exercisable
     based upon the achievement of the Earn-Up Targets as determined
     in accordance with the following:

                                        Percentage
                                     of Option Amount
                  Earn-Up Target     then Exercisable
                  --------------     ----------------
 
               Initial Earn-Up Target       28.6%
               Second Earn-Up Target        42.9%
               Third Earn-Up Target         57.1%
               Fourth Earn-Up Target        78.6%
               Final Earn-Up Target          100%

          (j)  "Exercise Price" means $.10 per share (adjusted
     proportionately in the event the CEC Common is combined into a
     lesser number or divided into a greater number but in no event
     less than the par value of such CEC Common).

          (k)  "Existing Stockholders" means Larson, Dowdell and HECC
     and each of their respective successors and permitted assigns.

          (l)  "Good Reason" has the meaning set forth in the Larson
     Employment Agreement.

          (m)  "Heller Investment" means any and all equity and debt
     investments in CEC or its subsidiaries made by HECC or any of its
     affiliates on or prior the exercise of an Option.

          (n)  "IRR" means the annual rate of interest that causes (i)
     the net present value as of January 31, 1994 of all cash or cash
     equivalent payments received by HECC and its affiliates on or
     prior to the date of any calculation hereof with respect to the
     Heller Investment (whether such payments are received from CEC

                                      -4-
<PAGE>
 
     or any third party, and whether such payments are received as
     principal, interest, dividends, sale proceeds, upon redemption of
     any portion of the Heller Investment, upon liquidation of CEC or
     otherwise including, without limitation, all consulting, non-
     competition, advisory or similar fees received by HECC and its
     affiliates), to equal (ii) the sum of (A) $3,000,000 plus (B) the
                                                          ----
     net present value (calculated using an interest rate equal to the
     IRR) as of January 31, 1994 of each additional cash payment made,
     directly or indirectly, subsequent to January 31, 1994 by HECC or
     its affiliates to CEC or to others to acquire additional debt or
     equity securities of CEC as part of the Heller Investment. The
     IRR shall be calculated on a pre-tax basis.

          (o)  "Larson Employment Agreement" means the Employment and
     Non-Competition Agreement, dated as of January 31, 1994, between
     Larson and CEC, as amended as of July 31, 1994.

          (p)  "Non-Earn-Up Sale" means the consummation of the sale,
     transfer or other disposition by HECC and its affiliates of all
     or the last portion of the Heller Investment in one or more arm's-
     length transactions to independent third parties resulting in the
     receipt by HECC and its affiliates of cash in an amount which
     when aggregated with all prior cash dispositions by HECC or its
     affiliates of the Heller Investment, all cash dividends and
     interest declared and paid in respect thereof and all consulting,
     non-competition, advisory or similar fees received by HECC and
     its affiliates is less than the Initial Earn-Up Target.

          (q)  "Option" has the meaning set forth in Section 2.1 hereof.
                                                     -----------        

          (r)  "Option Amount" means the number of shares of CEC
     Common equal to 7.0% of the Adjusted Shares as reduced by the
     number of shares of CEC Common previously issued pursuant to the
     Option.

          (s)  "Option Termination Date" means the earliest of (i)
     January 31, 2004, (ii) the date of the closing of a Non-Earn-Up
     Sale, (iii) the date Larson ceases to be employed by CEC
     resulting from Larson's voluntary decision to terminate his
     employment (other than for Good Reason) or a termination of
     Larson's employment with CEC for Cause, (iv) the date of any
     material violation by Larson of any provision of Section 5 of the
                                                      ---------
     Larson Employment Agreement following the termination of his
     employment with CEC and (v) twenty-

                                      -5-
<PAGE>
 
     four (24) months after the date Larson and his Permitted
     Transferees cease to be stockholders of CEC.

          (t)  "Permitted Transferee" has the meaning set forth in
     Section 2.6 of the Stockholders' Agreement.
     -----------

          (u)  "Person" means a natural person, a partnership, a
     corporation, an association, a joint stock company, a trust, an
     estate, a joint venture, an unincorporated organization or other
     entity or a governmental entity or any department, agency or
     political subdivision thereof.

          (v)  "Securities Act" means the Securities Act of 1933, as
     amended.

          (v)  "Supplemental Option" means the option granted to
     Larson pursuant to the Supplemental Option Agreement of even date
     herewith between CEC and Larson.

          (w)  "Vested Percentage" means the percentage identified
     below as determined by the number of years from January 31, 1994
     that Larson is a director of CEC or is employed as an executive
     officer of CEC (pursuant to the Larson Employment Agreement or
     otherwise), plus any additional period during which Larson
     continues to receive his Base Salary pursuant to Section 5.1 of
     the Larson Employment Agreement, as determined below:

          Years of Employment                      Vested Percentage
          -------------------                      -----------------

          After January 31, 1995                        25%
          After January 31, 1996                        50%
          After January 31, 1997                        75%
          After January 31, 1998                       100%

     Notwithstanding the foregoing, if Larson ceases to be an executive officer
     of CEC as the direct result of (i) the consummation of a transaction
     described in Section 2.4(c) of the Stockholders' Agreement prior to the
                  --------------                                            
     fourth anniversary hereof or (ii) any person other than Dowdell, Larson or
     Heller acquiring a majority of the CEC Common and exercising the power to
     elect a majority of CEC's Board of Directors, the Vested Percentage shall
     be 100%.

                                      -6-
<PAGE>
 
                                  ARTICLE II

                             THE OPTION PROVISIONS
                             ---------------------

          2.1  Grant of the Option.  Subject to the terms and conditions set
               -------------------                                          
forth herein, CEC hereby grants to Larson an option (the "OPTION") to purchase
CEC Common from CEC at a price, per share, equal to the Exercise Price.  The
Option shall be exercisable with respect to the Option Amount applicable to the
achievement of the corresponding Earn-Up Target.

          2.2  Procedures for Exercise.  Subject to the Option becoming
               -----------------------                                 
exercisable pursuant to Section 2.3 of this Agreement, Larson or a Permitted
                        -----------                                         
Transferee may exercise the Exercise Percentage of the Option Amount (in whole
or in part) at any time thereafter and prior to the Option Termination Date by
delivering written notice to CEC setting forth the portion of the Option (not to
exceed the Exercise Percentage of the Option Amount) to be exercised, together
with cash (or a bank check payable to the order of CEC or its designee) in an
amount equal to the aggregate Exercise Price for the shares of CEC Common with
respect to which Larson or a Permitted Transferee is exercising such Option. The
shares subject to the Option shall be shares of such class or classes of the CEC
Common as CEC shall determine. As promptly as practicable after receiving such
written notice and payment, CEC shall deliver to Larson or a Permitted
Transferee, as the case may be, certificates for the shares of CEC Common with
respect to which Larson or a Permitted Transferee has exercised the Option. For
all purposes, Larson or a Permitted Transferee, as the case may be, will be
deemed to have exercised the Option and to have purchased and become the holder
of the applicable CEC Common as of the date CEC receives written notice and
payment from Larson or a Permitted Transferee, as the case may be, as provided
in this Section 2.2.
        ----------- 

          2.3  Conditions to Exercise of the Options.  The Option shall only
               -------------------------------------                        
become exercisable as follows:

          (a)   The Option will become exercisable with respect to the
     Exercise Percentage of the Option Amount on or after the first
     date on which HECC and/or its affiliates receive an amount of
     cash or cash equivalents necessary to achieve the Earn-Up Target
     applicable to such Exercise Percentage.

          (b)   At the time of the exercise of the Option, Larson
     shall be entitled to exercise the Option with respect to a number
     of shares of CEC Common equal to the Exercise Percentage of the
     Option Amount applicable to the achievement of such Earn-Up
     Target, less the number of shares of CEC Common previously
             ----
     purchased 

                                      -7-
<PAGE>
 
     pursuant to the Option.

          (c)   If at the time of the exercise of the Option, Larson
     is not employed as an executive officer of CEC, Larson shall only
     be entitled to exercise the Option with respect to the Vested
     Percentage of the Exercise Percentage of the CEC Common,
     determined as of the date Larson ceased to be so employed,
     otherwise subject to the Option in accordance herewith.

          2.4  Payments in Lieu of Exercise of Option.  If at the time the
               --------------------------------------                     
Option or any portion thereof is exercised neither Larson nor his Permitted
Transferees are stockholders of CEC, CEC shall have the right, but not the
obligation, to pay Larson or his Permitted Transferees the cash or cash
equivalent consideration attributable to the CEC Common that Larson would have
otherwise been entitled to purchase pursuant to Section 2.3 above. To the extent
                                                -----------
that Larson or his Permitted Transferees are to receive cash or cash equivalent
consideration pursuant to this Section 2.4 in lieu of the issuance of shares of
                               -----------
CEC Common, CEC shall transfer to Larson an aggregate amount of cash or cash
equivalent consideration equal to the value of the CEC Common that Larson would
have been entitled to purchase pursuant to such exercised Options. The per share
value of the CEC Common referred to in the preceding sentence shall be equal (a)
to (i) the sum of the cash or cash equivalent consideration received by HECC and
its affiliates in any transaction or redemption resulting in the achievement of
an Earn-Up Target attributable to the CEC Common sold by such parties, divided
by (ii) the aggregate number of shares of CEC Common to be sold by such parties
or redeemed by CEC in such transaction multiplied by the Dilution Factor; or (b)
if no shares of CEC Common were sold or redeemed in connection with the
achievement of such Earn-Up Target, the Fair Market Value of such shares, as
determined in accordance with the Stockholders' Agreement.

          2.5  Notice of Internal Rate of Return.  After each sale, transfer,
               ---------------------------------
redemption or other disposition of any portion of the Heller Investment, the
receipt of any cash dividend or interest thereon or the payment of any
consulting, non-competition, advisory or similar fees received by HECC and its
affiliates, the Compensation Committee of the Board of Directors of CEC (with
the assistance of HECC) will, if requested by Larson in writing, deliver within
seven (7) days of Larson's request written notice to Larson of the IRR after
giving effect to such transaction in order to determine whether an Earn-Up
Target has been met. If one or more Earn-Up Targets have been achieved, such
notice shall also contain a calculation of the Exercise Percentage of the Option
Amount and the number of shares of CEC Common which Larson is then entitled to
purchase upon exercise of the Option.

          2.6  Termination of the Options.  Notwithstanding 
               --------------------------    

                                      -8-
<PAGE>
 
anything else to the contrary in this Agreement, the Options will expire and
terminate immediately upon the Option Termination Date and thereafter will be
void and of no force and effect.

          2.7  Non-Transferable.  Larson or any Permitted Trans feree will not
               ----------------                                               
transfer, sell, convey, exchange or otherwise dispose of (herein referred to as
"DISPOSITION" or "TO DISPOSE OF") the Options and the rights and privileges of
Larson or such Permitted Transferee under this Agreement, except (i) in the
event of Larson's death or incompetency, to a Permitted Transferee who consents
in writing to be bound by the terms of this Agreement to the same extent as
Larson or (ii) by exercise pursuant to the terms of this Agreement.

          2.8  No Rights as a Stockholder.  The Options do not confer upon
               --------------------------                                 
Larson or a Permitted Transferee any right to vote or consent or to receive
notice as a stockholder of CEC that do not otherwise exist in respect of any
matters whatsoever, or any other rights or liabilities as a stockholder, prior
to the exercise of the Options as hereinbefore provided.

                                  ARTICLE III

                                 MISCELLANEOUS
                                 -------------

          3.1 Notices.  All notices, demands or other communications to be
              -------                                                      
given or delivered under or by reason of the provisions of this Agreement shall
be in writing and shall be deemed to have been given when delivered personally
to the recipient, sent to the recipient by reputable express courier service
(charges prepaid), sent by facsimile or mailed to the recipient by certified or
registered mail, return receipt requested and postage prepaid. Such notices,
demands and other communications shall be sent to the Company and to Larson at
the addresses indicated below:

          If to CEC:

                Career Education Corporation
                2300 N. Barrington Road, Suite 400
                Hoffman Estates, Illinois 60195
                Attention:  President
                Facsimile:  (708) 884-9423

          With copies to:

                Heller Equity Capital Corporation
                500 West Monroe Street
                Chicago, Illinois  60661
                Attention:  Todd H. Steele
                Facsimile:  (312) 441-7378

                                      -9-
<PAGE>
 
                Heller International Corporation
                500 West Monroe Street
                Chicago, Illinois  60661
                Attention:  Charles P. Brissman, Esq.
                Facsimile:  (312) 441-7208

          and

                Goldberg, Kohn, Bell, Black,
                Rosenbloom & Moritz, Ltd.
                55 East Monroe Street
                Suite 3700
                Chicago, Illinois  60603
                Attention:  Robert M. Heinrich, Esq.
                Facsimile:  (312) 332-2196

          If to Larson:

                John M. Larson
                36 Lakeside Drive
                South Barrington, Illinois 60010

          With copies to:

                Quinn, Kully & Morrow
                520 South Grand Avenue
                Los Angeles, California  90071
                Attention:  Russel Kully, Esq.
                Facsimile:  (213) 622-3799

or to such other address or to the attention of such other person as the
recipient party has specified by prior written notice to the sending party.

          3.2 Entire Agreement.  Except as otherwise expressly set forth
              ----------------                                          
herein, this Agreement and the other agreements executed in connection here
embody the complete agreement and understanding among the parties and supersede
and preempt any prior understandings, agreements or representations by or
among the parties, written or oral, which may have related to the subject matter
hereof in any way, including, without limitation, the Original Agreement.

          3.3 Successors and Assigns.  All covenants and agree ments contained
              ----------------------                                          
in this Agreement by or on behalf of either party hereto shall bind and inure to
the benefit of the other party hereto and their heirs, legal representatives,
successors and assigns whether so expressed or not.

          3.4 Governing Law.  This Agreement shall be construed and enforced
              -------------      
in accordance with, and all questions concerning the construction, validity,
interpretation and performance of this 

                                      -10-
<PAGE>
 
Agreement shall be governed by the laws of the State of Illinois without giving
effect to the provisions thereof regarding conflict of laws.

          3.5 Consent to Jurisdiction and Service of Process. EACH PARTY 
              ----------------------------------------------   
HERETO HEREBY CONSENTS TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED
WITHIN THE COUNTY OF COOK, STATE OF ILLINOIS AND IRREVOCABLY AGREES THAT SUBJECT
TO CEC'S ELECTION, ALL ACTIONS OR PROCEEDINGS ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE OTHER RELATED DOCUMENTS SHALL BE LITIGATED IN SUCH COURTS. EACH
PARTY HERETO ACCEPTS FOR ITSELF AND HIMSELF, GENERALLY AND UNCONDITIONALLY, THE
NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF
FORUM NON CONVENIENS, AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT
RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT. LARSON DESIGNATES AND
APPOINTS CT CORPORATION SYSTEM AND SUCH OTHER PERSONS AS MAY HEREINAFTER BE
SELECTED BY CEC WHO IRREVOCABLY AGREE IN WRITING TO SO SERVE AS AGENT TO RECEIVE
ON SUCH PARTY'S BEHALF SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDINGS IN ANY
SUCH COURT, SUCH SERVICE BEING HEREBY ACKNOWLEDGED BY EACH PARTY TO BE EFFECTIVE
AND BINDING SERVICE IN EVERY RESPECT. A COPY OF ANY SUCH PROCESS SO SERVED SHALL
BE MAILED BY REGISTERED MAIL TO EACH PARTY AS PROVIDED HEREIN, EXCEPT THAT
UNLESS OTHERWISE PROVIDED BY APPLICABLE LAW, ANY FAILURE TO MAIL SUCH COPY SHALL
NOT AFFECT THE VALIDITY OF SERVICE OF PROCESS. IF ANY AGENT APPOINTED BY A PARTY
REFUSES TO ACCEPT SERVICE, SUCH PARTY HEREBY AGREES THAT SERVICE UPON IT BY MAIL
SHALL CONSTITUTE SUFFICIENT NOTICE. NOTHING HEREIN SHALL AFFECT THE RIGHT TO
SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT OF
CEC TO BRING PROCEEDINGS AGAINST LARSON IN ANY OTHER COURT HAVING JURISDICTION
OVER LARSON.

          3.6 Waiver of Jury Trial.  EACH PARTY HERETO HEREBY WAIVES ITS
              --------------------                                      
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS AGREEMENT OR ANY DEALINGS BETWEEN THEM RELATING TO THE
SUBJECT MATTER OF THIS TRANSACTION AND THE RELATIONSHIP THAT IS BEING
ESTABLISHED.  EACH PARTY HERETO ALSO WAIVES ANY BOND OR SURETY OR SECURITY UPON
SUCH BOND WHICH MIGHT, BUT FOR THIS WAIVER, BE REQUIRED OF THE OTHER PARTY.  THE
SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES
THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS
AGREEMENT, INCLUDING WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS, BREACH OF
DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS.  EACH PARTY HERETO
ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS
RELATIONSHIP, THAT EACH HAS ALREADY RELIED ON THE WAIVER IN ENTERING INTO THIS
AGREEMENT AND THAT EACH WILL CONTINUE TO RELY ON THE WAIVER IN THEIR RELATED
FUTURE DEALINGS.  EACH PARTY HERETO FURTHER WARRANTS AND REPRESENTS THAT EACH
HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT EACH KNOWINGLY AND
VOLUNTARILY WAIVES ITS OR HIS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH
LEGAL COUNSEL.  THIS WAIVER IS 

                                      -11-
<PAGE>
 
IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING,
AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS
OR MODIFICATIONS TO THIS AGREEMENT OR TO ANY OTHER DOCUMENTS OR AGREEMENTS
RELATING TO THE TRANSACTIONS CONTEMPLATED HEREBY. IN THE EVENT OF LITIGATION,
THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

          3.7 Descriptive Headings; Interpretation.  The descriptive headings
              ------------------------------------                            
of this Agreement are inserted for convenience only and do not constitute a part
of this Agreement.

          3.8 Counterparts.  This Agreement may be executed simultaneously in
              ------------                                                   
two or more counterparts, any one of which need not contain the signatures of
more than one party, but all such counterparts taken together shall constitute
one and the same Agreement.

          3.9 Amendments and Waivers.  No modification, amendment or waiver of
              ----------------------                                          
any provisions of this Agreement shall be effective unless approved in writing
by each of the parties hereto.  The failure of any party at any time to enforce
any of the provisions of this Agreement shall in no way be construed as a waiver
of such provisions and will not affect the right of such party to enforce each
and every provision hereof in accordance with its terms.

          3.10  Severability.  Whenever possible, each provision of this
                ------------                                            
Agreement will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision will be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of this Agreement.

          3.11  Larson's Investment Representations.  Larson hereby represents
                -----------------------------------                           
on the date hereof, and any person that acquires all or any portion of the
Options in accordance with the provisions of this Agreement represents with
respect to such person as of the date of such acquisition, that such person is
acquiring the Options for such person's own account with the present intention
of holding the Options and any shares of common stock of CEC acquired pursuant
to the Options for purposes of investment, and that such person has no intention
of selling either the Options or any shares of common stock of CEC acquired
pursuant to the Options in a public distribution in violation of the federal
securities laws or any applicable state securities laws.  Larson hereby
represents on the date hereof, and any person that acquires all or any portion
of the Options in accordance with the provisions of this Agreement represents
with respect to such person as of the date of exercise, that such person (a) has
such knowledge and experience in financial and business matters that 

                                      -12-
<PAGE>
 
such person is capable of evaluating the merits and risks of such person's
investment in the Options and any shares of common stock of CEC acquired
pursuant to the Options; (b) is able to bear the complete loss of his investment
in the Options and any shares of common stock of CEC acquired pursuant to the
Options; (c) has had the opportunity to ask questions of, and receive answers
from, CEC concerning the terms and conditions of the Options and the common
stock of CEC and to obtain additional information about CEC; (d) is an
"accredited investor" within the meaning of Rule 501 of Regulation D promulgated
by the Commission under the Securities Act; and (e) understands that no
assurances can be given that CEC's business plan, as currently proposed or
subsequently modified, will be effectuated and that none of HECC, HFI or their
respective affiliates has any commitment or obligation to provide additional
equity or debt financing, or other financial accommodations, to CEC or its
subsidiaries to effectuate such business plan or otherwise.

          IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.

                                     CAREER EDUCATION CORPORATION


                                     By  /s/ John M. Larson
                                         ---------------------------
                                            

                                     Its  President
                                         ---------------------------

                                     JOHN M. LARSON


                                         /s/ John M. Larson
                                         ---------------------------

                                      -13-
<PAGE>
 
                                  AMENDMENT TO
                     AMENDED AND RESTATED OPTION AGREEMENT

     THIS AMENDMENT (the "Amendment"), dated as of October 20, 1997, is made by
and between Career Education Corporation, a Delaware corporation ("CEC"), and
John M. Larson ("Larson") and amends that certain Amended and Restated Option
Agreement (the "Option Agreement") dated as of July 31, 1995, between CEC and
Larson.

     WHEREAS, pursuant to the Option Agreement, CEC granted Larson an option
(the "Option") to purchase a number of shares of CEC common stock equal to 7.0%
of the CEC common stock, $.01 par value, at the time of the exercise of the
Option (assuming full exercise of all outstanding warrants, options and
convertible securities), adjusted as set forth in the Option Agreement; and

     WHEREAS, CEC is pursuing an initial public offering of its common stock
pursuant to a Registration Statement on Form S-1, Registration No. 333-37601
(the "Offering"), and in contemplation of the Offering, Larson and CEC have
agreed to amend certain terms and conditions of the Option Agreement.

     NOW, THEREFORE, pursuant to Section 3.9 of the Option Agreement, CEC and
Larson agree as follows:

     1.   Paragraph(s) of Section 1.1 of the Option Agreement is hereby amended
by adding the following sentence at the end of such Paragraph:

     Notwithstanding the foregoing, after the closing (the "IPO Closing") of the
     initial public offering by CEC of the CEC Common (the "Offering"), "Option
     Termination Date" shall mean January 31, 2004.

     2.   Section 2.1 of the Option Agreement is hereby amended by adding the
following sentence at the end of such Section:

     Notwithstanding the foregoing, at any time after the IPO Closing, the
     Option shall be exercisable with respect to 7,960.2 shares of CEC Common,
     subject to adjustment from time to time as provided in this Article II.

     3.   Section 2.3 of the Option Agreement is hereby amended by adding the
following sentence at the end of such Section:

     Notwithstanding the foregoing, the Option will become exercisable in full
     (fully vested) upon the IPO Closing, and at the time of any exercise of the
     Option, Larson shall be entitled to exercise the Option with respect to a
     number of shares of CEC Common equal to 7,960.2 (subject to adjustment as
     provided in this Article II) less the number of shares previously purchased
     pursuant to the Option,


<PAGE>
 
     whether or not Larson is employed as an executive officer of CEC at such
     exercise time.

     4.   Section 2.4 of the Option Agreement is hereby amended by adding the
following sentence at the end of such Section:

     Notwithstanding the foregoing, at any time after the IPO Closing, the per
     share value of CEC Common referred to in this Section 2.4 shall be equal to
     the closing (last sale) price per share of CEC Common, as reported on the
     Nasdaq National Market (or, if other than the Nasdaq National Market, the
     principal market or exchange on which CEC Common is then traded) for the
     most recent day on which CEC Common is traded prior to the date on which
     CEC receives written notice of, and payment for, exercise of the Option
     pursuant to Section 2.2 of this Agreement.

     5.   The Option Agreement is hereby amended by adding the following Section
2.9:

          2.9  Subdivision or Combination of CEC Common.  If CEC at any time
     (whether prior to or after the IPO Closing) subdivides (by any stock split,
     stock dividend, recapitalization or otherwise), the outstanding shares of
     CEC Common into a greater number of shares, the number of shares of CEC
     Common obtainable upon exercise of the Option will be proportionately
     increased. If CEC at any time (whether prior to or after the IPO Closing)
     combines (by combination, reverse stock split or otherwise) the outstanding
     shares of CEC Common into a smaller number of shares, the number of shares
     of CEC Common obtainable upon exercise of the Option will be
     proportionately decreased.

     6.   The Option Agreement is hereby amended by adding the following Section
2.10:

          2.10  Reorganization, Reclassification, Consolidation, Merger or Sale.
     Any recapitalization, reorganization, reclassification, consolidation,
     merger, sale of all or substantially all of CEC's assets to another person
     or entity, or other transaction which is effected in such a way that
     holders of CEC Common are entitled to receive (either directly or upon
     subsequent liquidation) stock, securities or assets with respect to or in
     exchange for CEC Common is referred to herein as "Organic Change." Prior to
     the consummation of any Organic Change, CEC will make appropriate provision
     (in form and substance reasonably satisfactory to Larson) to insure that
     Larson will thereafter, upon the basis and the terms and in the manner
     provided in this Agreement, have the right to acquire and receive in lieu
     of or addition to (as the case may be) the shares of CEC Common immediately
     theretofore acquirable and receivable upon the exercise of the Option, such
     shares of stock, securities or assets as may be issued or payable with
     respect to or in exchange for the number of shares of CEC Common
     immediately theretofore acquirable and receivable upon the exercise of the
     Option Agreement

                                      -2-
<PAGE>
 
     had such Organic Change not taken place. CEC will not effect any such
     consolidation, merger or sale, unless prior to the consummation thereof,
     the successor entity (if other than CEC) resulting from consolidation or
     merger or the entity purchasing such assets assumes by written instrument
     (in form and substance reasonably satisfactory to Larson) the obligation to
     deliver to Larson such shares of stock, securities or assets as, in
     accordance with the foregoing provisions, Larson may be entitled to
     acquire.

     7.   Section 3.1 of the Option Agreement is hereby amended to read in its
entirety as follows:

          Notices.  All notices, demands or other communications to be given or
     delivered under or by reason of the provisions of this Agreement shall be
     in writing and shall be deemed to have been given when delivered personally
     to the recipient, sent to the recipient by reputable express courier
     service (charges prepaid), sent by facsimile or mailed to the recipient by
     certified or registered mail, return receipt requested and postage prepaid.
     Such notices, demands and other communications shall be sent to CEC and to
     Larson at the addresses indicated below:

          If to CEC:

               Career Education Corporation
               2800 West Higgins Road, Suite 790
               Hoffman Estates, Illinois 60195
               Attention:  President
               Facsimile:  (847) 781-3610

          With copies to:

               Heller Equity Capital Corporation
               500 West Monroe Street
               Chicago, Illinois 60661
               Attention:  Patrick K. Pesch
               Facsimile:  (312) 441-7236

               Heller International Corporation
               500 West Monroe Street
               Chicago, Illinois 60661
               Attention:  Charles P. Brissman, Esq.
               Facsimile:  (312) 441-7173

                                      -3-
<PAGE>
 
               Katten Muchin & Zavis
               525 West Monroe Street, Suite 1600
               Chicago, Illinois  60661-3693
               Attention:  Lawrence D. Levin, Esq.
               Facsimile:  (312) 902-1061

          and

               Goldberg, Kohn, Bell, Black, Rosenbloom & Moritz, Ltd.
               55 East Monroe Street, Suite 3700
               Chicago, Illinois 60603
               Attention:  William R. Loesch, Esq.
               Facsimile:  (312) 332-2196

          If to Larson:

               John M. Larson
               36 Lakeside Drive
               South Barrington, Illinois 60010

          With copies to:

               Arnold & Porter
               777 South Figueroa Street, 44th Floor
               Los Angeles, California 90017-2513
               Attention:  Russel Kully, Esq.
               Facsimile:  (213) 243-4199

     or to such other address or to the attention of such other person as the
     recipient party has specified by prior written notice to the sending party.

                                      -4-
<PAGE>
 
     IN WITNESS WHEREOF, CEC and Larson have executed this Amendment as of
October 20, 1997.


CAREER EDUCATION CORPORATION


By: /s/ W. A. Klettke                   /s/ John M. Larson
    -----------------------             ------------------
                                            John M. Larson
Name: William A. Klettke
      ---------------------

Title: Sr. VP & CFO
       --------------------

                                      -5-
