July 26, 2023
Thom Carroll/for PhillyVoice
Thomas Jefferson University agreed to pay $2.7 million to settle claims that it violated the terms of the Primary Care Loan program by investing money meant for students into its endowment from 2009 to 2016.
Thomas Jefferson University has agreed to pay $2.7 million to resolve claims that it improperly invested federal funding into its endowment instead of using it to offer student loans to aspiring primary care physicians.
The settlement, announced Tuesday by the U.S. Attorney for the Eastern District of Pennsylvania, did not deem Jefferson University liable for misusing the money.
Jefferson received the money from a student loan program established by the federal government to address a national shortage of primary care doctors. Medical schools that receive funding are to create accounts that provide loans to qualified students committed to practicing as primary care physicians for 10 years after receiving their medical degrees.
Any earnings on the accounts are supposed to be reinvested, thereby increasing the money available for loans. Any unused money is to be returned each year to the federal government.
Jefferson allegedly invested nearly all of the program money it received from 2009 to 2016 into its endowment, and retained the interest. In 2017, the university returned $5.6 million in excess money. The $2.7 million payment included in the settlement covers the earnings on the money the university invested.
"When a medical school wrongfully retains Primary Care Loan program funds that exceed its lending needs, it doesn't just deprive students at other participating schools the opportunity to use that money to finance their educations," U.S. Attorney Jacqueline Romero said. "It deprives our communities of the very resource the program was implemented by Congress to provide—primary care physicians to keep them healthy and strong."
Jefferson maintains that it did not misuse the loan money.
"We have agreed to this civil settlement to bring this 15-year-old legacy matter to a close so that we may continue to focus upon delivery of high quality academic, research and clinical services during highly challenging times," the university said in a statement to the Inquirer.
