Stone Academy settles fraudulent student loan payment claims: Feds

EAST HARTFORD, CT – The for-profit career school Stone Academy has settled $1 million following allegations that it lowered the default rate of its former students by sending payments to loan companies at the name of his students, the Connecticut district attorney’s office said.

The school and its owner, Mark Scheinberg, have been accused of sending 154 small direct payments to loan companies on behalf of 102 students between February 2015 and March 2019 in an attempt to prevent these students from defaulting on their loans. , the prosecutor’s office said.

This would have influenced Stone Academy’s “cohort default rate” (CDR) – the percentage of an institution’s federal borrowers who defaulted on their loans.

“The cohort default rate is an important metric that students can use to research whether a school is providing a worthwhile education, as it can show whether the degree they would earn will help them find jobs that will keep them in school.” day on their student loans,” US Attorney Vanessa Avery said in a statement. “Educational institutions – especially private, for-profit schools – that attempt to hide high student loan default rates from the Department of Education and their students not only risk losing their eligibility and that of their students to receive federal funds, but they risk federal enforcement by our office and our investigative agency partners.”

According to the district attorney’s office, Scheinberg purchased and completed warrants to make the payments without the students’ knowledge or consent, and they were made in a manner that was intended to conceal the fact that he and the school did them.

“Stone Academy subsequently failed to disclose to the Department of Education its actual and higher CDR reflecting the alleged default of many borrowers in view of Scheinberg’s concealed payments,” the district attorney’s office said in a statement.

In addition to the payment of $1,023,950 (plus interest), under the agreement Stone Academy and Scheinberg reached with the Department of Education, Scheinberg must divest the operations of Stone Academy and Paier College. of Art (another for-profit school).

“Today’s settlement is the result of the work and efforts of the Office of Inspector General and the Department of Justice to protect and maintain the integrity of federal student assistance programs,” said Terry Harris. , special agent in charge of the office of the United States Department of Education. of the Eastern Regional Office of the Inspector General. “We will continue to work together to ensure that federal student aid funds are used according to law.”

In addition to its East Hartford campus, Stone Academy has campuses in Waterbury and West Haven that award career degrees in various medical fields.

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