The money was bequeathed to the University of New England (UNE) and the University of Newcastle (UON) by long-time nurse Elizabeth 'Betty' Fyffe, who passed away earlier this year.

Ms Fyffe grew up in Tamworth, where her father owned the Cahills chain of chemist shops. She dedicated much of her life to caring for others and wanted to leave a legacy to improve regional health.

UNE will provide up to 50 scholarships of $4000 to students from regional and rural areas enrolled in medicine every year.

UNE vice chancellor Brigid Heywood said the bequest would train healthcare professionals in a regional context, "so they are more likely to live and work in our regional communities when they enter the workforce".

"The quality of your healthcare shouldn't depend upon having a postcode in a capital city," Professor Heywood said.

"The urgent need to create quality healthcare outcomes for our regional communities is an issue of national significance that UNE sees as an important priority."

The donation will also support a UNE program that aims to find practical solutions to the lack of regionally-based doctors, such as funding student residencies and placements in regional hospitals.

UON will use the donation to support 20 regionally-based students across three scholarship programs for the next five years, with each receiving $10,000.

One of the UON scholarships will be specifically for disadvantaged students, including those with disabilities, Indigenous Australians and refugees, and individuals suffering financial hardship.

A further $150,000 per year will be allocated to fund the Chair in Rural Health, a key leadership position based in Tamworth at UON's rural health campus.

UON vice chancellor Alex Zelinsky said the scholarships would give students from regional areas "the educational platform to make a difference in the areas that need it most".