A long-troubled for-profit nursing college in Connecticut that shut down last month is now swept up in two state investigations, as regulators try to deduce if its abrupt closure infringed on consumer protection law.
Stone Academy — which last month closed its three campuses in East Hartford, Waterbury and West Haven — faces twin state probes. One is being initiated by the Connecticut Office of Higher Education, which is hiring a third-party auditor to evaluate the legitimacy of the institution’s academic records and programs. The other comes from the state attorney general, who is investigating whether the closure violated the Connecticut Unfair Trade Practices Act.
The closure also coincides with increased federal oversight of poorly performing colleges, particularly for-profit institutions. The Biden administration has prioritized forgiving loans for students whose for-profit colleges defrauded them. And it’s considering crafting a public list of colleges with poor financial returns, which the for-profit sector fears will target its institutions.
At Stone Academy, local news reports document how the state regulatory clashes have harmed its some 850 students, who were already left in the lurch after the unexpected closure but now cannot access their transcripts while the state higher ed office’s audit continues.
The college has arranged options for students to transfer, called teach-out plans, with a few Connecticut institutions. Connecticut agencies have also promoted that Stone students can seek to have their tuition partially refunded through a state program and can also request the U.S. Department of Education discharge their loans.
Perry Rowthorn, a lawyer representing Stone, said in an emailed statement the college is “concerned with the misguided and chaotic conduct of the Officer of Higher Education in precipitating and compounding this crisis, misreading applicable regulations and misstating facts, impeding students’ access to their transcripts, and threatening to nullify hard-earned educational attainments of approximately 1200 current students and recent graduates.”
Rowthorn said the higher ed office had demanded the immediate closure of Stone’s programs, scrambling teach-out plans. He criticized the audit as “unprecedented and unnecessary,” also accusing state officials of seizing “Stone’s student records in a haphazard manner – removing records seemingly at random, failing to inventory them, and transporting them in their personal vehicles.”
About Stone Academy
Stone Academy has existed in some form since the 19th century, starting as the United States College of Business and Finance in 1864, according to an archived version of the institution’s website.
It was sold off and transformed multiple times over the years. At one point in the 1980s, it centered on “practical business instruction” before transitioning to an allied healthcare focus in the ‘90s.
However, the academy has been dogged by scandal. Its former owner, Mark Scheinberg, last year paid more than $1 million to federal prosecutors to settle allegations that he attempted to conceal certain loans from being counted in the college’s student loan default rate. He was also accused of not reporting Stone's higher default rate to the federal Education Department.
Scheinberg divested from the institution as part of the settlement.
This year, all three sides of what’s known as the higher ed regulatory triangle — state agencies, accreditors and the federal Education Department — began taking action against Stone.
Connecticut’s higher education office, which Stone notified of its closure on Feb. 6, had already raised concerns about the academy prior to its closure.
Colleges that offer practical nursing programs in Connecticut must see at least 80% of their students pass what’s known as the National Council Licensure Examination every year.
If a program fails to reach that benchmark for three years running, state regulators can yank their approval to operate.
None of the programs on Stone Academy’s three campuses attained the 80% pass rate last year, the higher ed office said. In fact, one of the East Hartford programs had not met that standard in three years, leading to the Connecticut Board of Examiners for Nursing in November to vote to end approval for it. West Haven’s day and evening programs both failed to reach the benchmark in 2021. Its day program failed in both 2019 and 2020.
The Connecticut Department of Public Health also determined Stone was offering “campus clinicals” to students so they could meet a state requirement for clinical experience. State regulation, however, does not allow for this work to occur on campus.
The institution’s accreditor, Accrediting Bureau of Health Education Schools, in February sent a letter to the institution outlining compliance issues with its standards. It asked the college to show cause as to why its accreditation should not be pulled.
The accreditor has since removed Stone from its database of active institutions.
And around the same time, the federal Education Department determined Stone was in such rocky financial shape that the agency restricted the college's participation in the government student financial aid program. This forced the institution to fund students' financial aid itself and then seek department reimbursement.
More to come?
Suspicion from multiple regulators already spelled trouble for the college, but students expressed new concerns upon its closure.
They have pointed out two of the colleges that Stone has identified as easy transfer opportunities — Goodwin University and the University of Bridgeport, both private nonprofit institutions in Connecticut — have ties to Scheinberg, the former owner.
Scheinberg is president of Goodwin, which in 2021 acquired the University of Bridgeport. He was formerly a member of Bridgeport’s governing board. His settlement with prosecutors last year dictates he retire from both institutions within five years.
Stone Academy was being run by Scheinberg’s stepson, Joseph Bierbaum, until it shuttered.
Students have also questioned why the college wasn’t financially stable after getting a nearly $1.8 million federal government loan under the pandemic-era Paycheck Protection Program. The initiative was meant to shield small businesses from having to lay off employees or cut pay during the health crisis.
The federal government forgave the entire loan in 2021, after Stone claimed it had covered 239 jobs.
Last month, Connecticut Attorney General William Tong asked Stone for a massive tranche of records as a part of his office’s investigation. Requested information includes how much tuition money the college took in, details on its marketing practices, and accreditation-related materials.
“The school was simply not preparing its students to become successful nurses,” Tong said in a statement. “We’re going to find out exactly what Stone promised these students and how things went so wrong. If we find any violations of the law, we won’t hesitate to hold Stone’s leaders accountable.”