Mark Scheinberg is a man of many responsibilities: president of Goodwin University, administrator of the University of Bridgeport and owner of two small for-profit universities: the Stone Academy and the Paier College of Art. Now, a Justice Department settlement will force him out of all three roles.
For years, Scheinberg paid off student loans to hide his college cohort’s default rate from the Department of Education, according to a settlement with the Justice Department made public May 27.
Between 2015 and 2019, Scheinberg made 154 payments from himself and Stone Academy by money order to loan officers on behalf of 102 Stone Academy students. Its goal was to keep students from defaulting, which would have increased the college cohort’s default rate — the share of federal borrowers who default within a certain time frame — according to Justice Department details.
Scheinberg paid $1 million as part of the settlement, which also requires him to retire from his positions at Goodwin University and the University of Bridgeport within five years.
Additionally, Scheinberg has “entered into an administrative agreement with the Department of Education in which Scheinberg has agreed to cease involvement and participation in operations and to cede direct ownership” of Stone Academy and Paier College of Art. .
“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 allow them to stay in school. day on their student loans,” Vanessa Roberts Avery, U.S. Attorney for the District of Connecticut, 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 investigative agency partners.
Stone Academy, which has three separate campuses in Connecticut, has a default rate of 15%, according to the most recent data from the Department of Education’s College Scorecard. This is more than double the national average default rate of 7.3% in 2018.
Goodwin University did not respond to Inside Higher Educationrequest for comment, but Scheinberg provided a statement to the log requestera local newspaper, acknowledging that the payments were a mistake.
The statement said that while Stone Academy’s increased default rate would have been “insignificant”, it agreed to the settlement to “put the dispute behind” it. “At 66 and with much more to accomplish, I have chosen to dedicate the rest of my educational career to the important work that brings joy to my life – creating new opportunities that students of diverse talents and backgrounds can utilize. to succeed,” Scheinberg told a newspaper.
A spokesperson told the log requester that Scheinberg’s retirement is not imminent. Scheinberg founded Goodwin in 1999 and served as its sole chairman. Goodwin acquired the nonprofit University of Bridgeport in 2021. Although Bridgeport has a separate administration and president, Scheinberg is a trustee.
Reaction to settlement
Kevin Kinser, head of the department of education policy studies and professor and senior researcher of education at Pennsylvania State University, said it was unclear how much retirement and Divestment of regulation were common, but it makes sense, given accreditation standards, that a board would want leadership “untainted by regulatory concerns.” He added that five years seemed like a long ramp out of Scheinberg’s retirement.
“I don’t know why, if the president’s tenure as leader was untenable, why the board would wait to end the relationship. I also wonder if the time frame was affected by a credentialing review, for example, the president had to leave before the next credentialing review,” Kinser wrote via email.
Jonathan Glater, professor of law and faculty director of the Center for Consumer Law & Economic Justice at the University of California, Berkeley, law school, said that while he hadn’t heard of a program where university owners were paying student loans, hardly shocking considering what is at stake.
“I’ve never heard of this particular tactic before, but I’m not that surprised due to the high default rate of the cohort. The type of scheme prosecutors describe here demonstrates the importance of oversight in the federal student aid system, to protect individual borrowers,” Glater wrote via email.
Graded reviews of for-profit colleges were more pointed.
“Gaming liability measures have been standard practice in the for-profit university sector for more than a decade,” Mike Pierce, executive director of the Student Borrower Protection Center, said via email. “Ten years ago next month, a senate investigation hished light on how top for-profit schools have worked to evade cohort default rate measures by hiring sleazy consultants to call alumni and pressure them into suspending loan payments rather than falling behind . For these borrowers, interest continues to accrue, making their debt more expensive, but colleges are spared the consequences of default. »