Thomas Jefferson University to pay millions in federal student loan settlement

A loan program was meant to train more community doctors, but federal regulators claim that the Philadelphia university used leftover cash to boost its investment portfolio.

Thomas Jefferson University East Falls campus in Philadelphia, Thursday, May 23, 2019

Thomas Jefferson University East Falls campus in Philadelphia, Thursday, May 23, 2019. (AP Photo/Matt Rourke)

Thomas Jefferson University is expected to pay a $2.7 million settlement to resolve allegations that it misused federal student loan program money between 2009 and 2016, the U.S. Attorney for the Eastern District of Pennsylvania announced this week.

Thomas Jefferson University admitted no liability, according to the settlement.

“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,” according to a statement from the university which denied the allegations.

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The Primary Care Loan program is a low interest federal loan program earmarked for students committed to becoming primary care doctors for at least 10 years to address a shortage of health care workers.

Thomas Jefferson University, which operates Sidney Kimmel Medical College, has roughly 1,000 students each year and has awarded 31,000 medical degrees since it was founded in 1824.

The university is accused of investing nearly all those federal funds meant for student loans with its endowment and kept returns it earned on that money — which is a violation of the program rules. Universities are required to only use the funds for direct loans and return any excess cash each year.

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In 2017, Thomas Jefferson University did return $5.6 million in excess money back to the U.S. Department of Health and Human Services’ Health Resources and Services Administration from the Primary Care Loan program.

“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,” said U.S. Attorney Jacqueline Romero in a statement. “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.”

Thomas Jefferson University has been navigating rough waters in recent weeks.

University president Mark Tykocinski stepped down from his role after complaints of his Twitter activity such as liking controversial tweets about COVID-19. Jefferson Health told employees this week it would lay off 400 workers in an effort to save the organization $300 million in expenses.

In fiscal 2022, between Jefferson Health and Thomas Jefferson University, the organization had a net loss of $125.8 million on $8.1 billion in revenue.

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