Stephanie Kaye's last episode was the season finale of Season 2! Her last ever Degrassi moment was informing Mr. Raditch that Joey had arrived to the year end dance (despite his disappointment over flunking grade 7) and that the Zit Remedy was setting up the equipment to perform "Everybody Wants Something" @ the dance!

In that same episode, it was learned that Grade 9 was gonna be included into Degrassi Junior High's curriculum. Stephanie then griped about how adamant she was against staying there for another year!

That conveniently set the stage for Arthur telling Yick in the Season 3 premiere of what you mentioned above about her going to private school for grade 9 ... and her mom's ability to pay for private school after winning the lottery!

In reality, the actress who played Stephanie Kaye (Nicole Stoffman) left the show to be a part of some new Canadian show on CTV called "Learning the Ropes"! Alas, that move ultimately turned out to be a bad one as that show got cancelled ... and by that time, Caitlin had already emerged as the eye-candy character in Stephanie's place! (I wouldn't be surprised if Nicole Stoffman fired her agent for that move! )

Hope that answers your question!