Building The 'ROTC For Healthcare': How Clasp Is Erasing Medical Student Debt

Tess Michaels, founder and CEO of Clasp, is revolutionizing healthcare staffing by applying the ROTC model to address critical shortages and high educational costs. Clasp partners with healthcare systems to connect them with future nurses, physical therapists, doctors, and other clinical professionals while they are still in school. These partnerships involve employers offering significant student loan repayment assistance in exchange for a multi-year work commitment from the graduates. This approach aims to create a more loyal talent pipeline, reduce turnover, and ultimately improve patient care. Michaels, whose husband is a hand surgeon deeply in student loan debt, personally understands the financial burden of medical education. Clasp’s model targets various clinical roles beyond just doctors and nurses, including radiology technicians, respiratory therapists, veterinarians, and optometrists. The program typically engages with students one to two years before graduation, facilitating early job commitments with employers who provide substantial student loan support – for roles like nurse anesthesia, this can amount to up to $180,000 over a six-year commitment, translating to $30,000 annually. A key feature of Clasp's offering is its "no clawback" policy: as individuals work, they receive loan repayment, but if they need to leave their commitment due to unforeseen circumstances, payments simply stop, and they are not required to repay the funds already received. This provides crucial flexibility and choice for clinicians. Addressing the challenge of matching students to specific specialties, Michaels explains that for physicians, Clasp primarily works with those already in residency, as they have a clearer idea of their specialization. For other roles like nurse anesthetists, physician assistants, and physical therapists, where the career path is more defined earlier, Clasp helps students choose employers who will invest in them and understand their professional needs. Clasp employs creative channels to reach students, including collaborations with TikTok influencers in the healthcare space, alongside traditional relationships with educational institutions. The "no clawbacks" feature is particularly attractive, especially when contrasted with models like military ROTC, where early departure can result in significant financial obligations. Clasp operates as a for-profit entity by demonstrating to healthcare employers the financial inefficiencies in their current hiring and retention strategies. These inefficiencies include substantial spending on costly contract labor (locum tenens and travel nurses), which not only drains resources but also negatively impacts hospital culture. Additionally, employers often rely on upfront sign-on bonuses, which are less tax-advantaged than student loan repayment and less effective at fostering long-term retention. Statistics highlight the severity of the problem, with nearly 50% of new graduate nurses leaving their first job within two years. Clasp advocates for reallocating these funds towards direct investment in clinical talent through student loan repayment. Major healthcare organizations like Memorial Sloan Kettering, Warby Parker (for its optometrists), OhioHealth, and Northwestern Medicine have partnered with Clasp. The company has seen significant growth, quadrupling the number of healthcare employers it supports in the past year. Clasp’s model demonstrably reduces annual turnover from an average of nearly 20% to single digits, transforming hospital culture and significantly cutting down on rehiring costs. Furthermore, Clasp attracts talent from across the country, with an average employer receiving applicants from ten different states, indicating a broader geographic reach for recruitment. The company emphasizes understanding the personal stories of the individuals it helps, ensuring they are not just numbers but individuals whose lives are positively impacted. Clasp also offers solutions for individuals who are already a few years out of school and still burdened by student debt. They provide products that allow employers to offer student loan repayment support to their existing employees, or to help current employees return to school for further education and career advancement. Recent legislative changes, such as the Secure Act 2.0 and caps on federal student loans for medical school (at $50,000 annually and $200,000 total), have impacted the landscape. Michaels notes that these caps are insufficient to cover the full cost of medical education, including living expenses. Moreover, new federal loan limits for non-physician clinical roles (like PTs, PAs, and NPs) set at $20,500 annually, create further challenges. This situation makes it harder for individuals from less affluent backgrounds to enter healthcare, as private loans, which often require a co-signer and come with higher interest rates, become more necessary. The traditional appeal of public service loan forgiveness (PSLF) for those working at non-profit hospitals is also diminished, as only federal loans are eligible. Clasp’s model, by providing immediate debt relief through employer-funded loan repayment, offers a crucial solution to bridge these financial gaps and ensure continued access to the healthcare profession. Michaels clarifies that Clasp is designed to handle the potential influx of demand driven by these legislative changes and even assists schools in establishing their own loan programs. Regarding Artificial Intelligence (AI), Clasp primarily utilizes it as an internal productivity tool rather than for direct talent matching. The company fosters a culture of AI adoption through initiatives like "Can’t Spell Friday Without AI," where team members share AI demos and are rewarded for submissions. AI champions in each division help identify areas for AI integration, and a dedicated AI lab explores scalable solutions. This internal focus ensures that all team members, not just technical staff, are engaged with AI's potential. Clasp’s HR tech platform, which incorporates gamified retention strategies and a fintech platform for loan repayment, is built on a more straightforward infrastructure. The loan repayment process is seamless: employers make a single monthly payment on Clasp's platform, which then directly repays the loan providers. This integration with nearly 95% of federal and private student loan providers simplifies administration for individuals, ensures compliance with PSLF rules, and helps maintain eligibility for tax advantages. Clasp generates revenue through multi-year agreements with employers, charging setup and administration fees for its services, with no charges to individuals or schools. The company's fundraising strategy, including a recent $20 million Series B round, targets investors with strong thesis alignment in the healthcare sector, understanding of its ecosystem, and the ability to add value through their networks. They prioritize investors who are committed to growing with the company. Michaels’ entrepreneurial journey began with her first startup, Sociana, founded at age 19, which focused on managing corporate philanthropy and volunteerism. This experience taught her the critical lesson that products must be "need-to-have" for customers, not just "nice-to-have," and underscored the importance of deeply understanding the buyer. Her subsequent role as a healthcare banker at Goldman Sachs honed her hard skills in data analysis and efficiency, while her time at Vista Equity Partners emphasized pattern recognition and observing high-performing teams. An early inspiration for Clasp came from a military leadership camp at age 15, where she witnessed the power of aligned incentives through the ROTC program. This experience, coupled with observing Robert Smith’s philanthropic act of paying off Morehouse students’ student loans, solidified her belief in the transformative impact of financial freedom and incentivized investment. Michaels attributes her ability to lead a team, many of whom are older and more experienced, to a commitment to learning from others, embracing ambiguity, and fostering a flexible mindset. She highlights the importance of listening tours and seeking advice from experienced founders. Her background in improv comedy, which she pursued at Vista, has been instrumental in developing her leadership style, encouraging embracing failure, creative thinking, and open-mindedness within her team. Exercises like "failure vows" and brainstorming sessions that encourage unconventional thinking are integrated into Clasp’s culture. Looking ahead, Michaels envisions Clasp expanding to every state and every sub-vertical of healthcare, including physical therapy clinics, optometry groups, and veterinary practices. The goal is to make Clasp’s model the norm rather than the exception, influencing employer behavior and creating a new category in healthcare staffing and retention. She also notes Clasp's ability to identify and address trends in healthcare professions, such as shortages in primary care and the rise of advanced practice providers, by tailoring loan programs to specific needs and specialties. Clasp’s holistic approach aims to ensure the stability and soundness of the entire healthcare system by supporting multiple roles within an employer.