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Dive Brief: 

  • Thomas Jefferson University has agreed to pay $2.7 million to settle allegations that it improperly used federal student loan funds to boost its investments, the U.S. Attorney’s Office for the Eastern District of Pennsylvania announced this week.  
  • The allegations stem from a federal loan program called the Primary Care Loan award, which is intended to address the nation’s dearth of primary care physicians. Colleges use the program to provide loans to their medical students. 
  • However, the private Philadelphia research university was accused of investing into its endowment nearly all the funds it received for the program between 2009 and 2016. 

Dive Insight: 

The Primary Care Loan award is meant to provide low-interest loans to medical students who commit to becoming primary care practitioners for a decade after graduating. 

Participating medical schools must loan the program’s funding to medical students and can invest any earnings back into their funds. Each year, any program funding that exceeds a college’s student educational needs must be returned to the U.S. Department of Health and Human Services, which administers the program. 

Thomas Jefferson University was accused of violating several of those requirements, including by investing program funding into its endowment and retaining the gains.  

In 2017, the university gave back around $5.6 million in excess program funding to the federal government, according to prosecutors. But the new settlement focuses on earnings the university allegedly made by improperly investing the program funding that it kept. 

“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 in a Tuesday 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.” 

The 8,300-student Thomas Jefferson University is home to the Sidney Kimmel Medical College. Since 1824, the college has awarded more than 31,000 medical degrees, according to its website. 

The university denied the allegations via an emailed statement Wednesday, saying it followed its understanding of standard accounting procedures when managing the program’s funding.

“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,” it said. 

The settlement isn’t the only trouble the university has faced recently. 

Its president, Mark Tykocinski, resigned last week after just a year in the role. He stepped down a few months after concerns arose about him liking controversial tweets on his presidential Twitter account, though the university’s CEO, Joseph Cacchione, did not mention the Twitter incident when announcing Tykocinski’s resignation, the Philadelphia Inquirer reported.  

Tykocinski will remain a full professor, the announcement said.