PHILADELPHIA (KYW Newsradio) — Thomas Jefferson University has been ordered to pay a $2.7 million settlement to resolve allegations that it misused and improperly retained federal funds meant for student loans, violating the terms of the program.
Allegations stated that from 2009 through 2016, the university improperly invested federal money that was specifically intended to be loaned to qualified medical students, according to the U.S. Attorney’s Office for the Eastern District of Pennsylvania. Instead, the university was accused of retaining all returns gained from that investment for its own purposes.
The money was part of a loan program, the Primary Care Loan (PCL) Fund, established by Congress to address the nation’s shortage of primary care physicians.
Under the terms of the program, participating medical schools must loan money in the PCL Fund to qualifying medical students, and the school is required to add any earnings that accrue back into the fund, thus expanding the program’s impact.
Any funds that exceed a school program’s lending needs must be returned.
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The settlement resolves allegations that Jefferson invested nearly all of its PCL Fund with its endowment and retained the earnings for its own purposes, which is in violation of loan program terms.
Jefferson returned $5.6 million of excess cash in the fund to the federal government back in 2017, the U.S. Attorney’s Office said. Tuesday’s settlement resolves claims of Jefferson’s accrued earnings and retention between 2009 and 2016.
“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. 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,” U.S. Attorney Jacqueline C. Romero said in a statement.
KYW Newsradio reached out to Jefferson for comment but has not heard back.
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