A group of attorneys general and governors from 25 states and the District of Columbia are suing the Trump administration over new rules limiting federal student loans for graduate students in professions including accounting, nursing, architecture, engineering and many other fields.
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Earlier this month, the U.S. Department of Education issued
The state attorneys general of Colorado, Maryland, Nevada and New York are leading the lawsuit. They are joined by Arizona, California, Connecticut, Delaware, Hawaii, Illinois, Maine, Massachusetts, Michigan, Minnesota, New Jersey, New Mexico, North Carolina, Rhode Island, Oregon, Vermont, Virginia, Washington, Wisconsin, and the District of Columbia, as well as the governors of Kentucky and Pennsylvania.
They especially singled out the restrictions on healthcare workers, arguing that the restrictions will worsen the existing healthcare workforce shortage and make it harder for communities to access care. The coalition is asking the court to block the rule and restore access to the federal student loans these students are entitled to receive.
As part of last year’s One Big Beautiful Bill Act, Congress enacted new federal student loan caps that distinguish between “graduate” and “professional” degree programs. The law set higher federal loan limits for students enrolled in professional degree programs, which often require extensive training, clinical placements and professional licensure. Loans were capped at $100,000 total for graduate programs and $200,000 for professional degree programs. Congress used the existing federal definition of a “professional degree,” which includes programs that prepare students to begin practice in a profession and generally require professional licensure.
In May 2026, however, the Department of Education issued a final rule narrowing that definition and imposing new restrictions not enacted by Congress, leaving many healthcare and other professional degree programs such as accounting unable to qualify for the higher loan limits. The Education Department has acknowledged that several excluded programs meet Congress’ definition of a professional degree, but still refused to classify them as such under its new rule. As a result, students pursuing degrees in nursing, physical therapy, occupational therapy, physician assistant studies, social work, speech-language pathology, audiology, athletic training and other fields will only be able to access $20,500 per year in federal student loans.
“You should not have to be wealthy to serve your community as a nurse, physical therapist or physician assistant,” said Attorney General Letitia James in a statement. “Higher education is expensive, and our health care system is already under immense strain. This rule will shut talented people out of critical professions and leave communities with fewer health care providers they desperately need. We cannot afford fewer nurses, fewer providers, or fewer opportunities for working people to enter these essential fields.”
The 11 professions that were included in the final regulations are law, medicine, pharmacy, dentistry, chiropractic, optometry, osteopathic medicine, podiatry, veterinary medicine, clinical psychology and theology. They are eligible for up to $200,000 in borrowing. Students who pursue a degree in other graduate or doctoral programs would be capped at $100,000 in federal loans. Undergraduate students would not be affected by the lending limits.
The lawsuit also challenges provisions that limit protections for students already enrolled in programs. The statute includes a grandfathering provision that delays implementation of the loan caps for currently enrolled students. Under the rule, however, some students who transfer institutions or temporarily withdraw and later return to their programs could lose eligibility for grandfathering, creating additional financial barriers.
“This unlawful rule doesn’t just limit loans for graduate students: it limits students’ futures,” said Maryland Attorney General Anthony Brown in a statement. “By capping loan amounts, the Trump Administration will force Marylanders who want to be nurses, physician assistants or physical therapists to decide between taking on more expensive private loans, or walking away from their chosen career. We will not allow this Administration to price our future health care professionals out of the workforce.”
The rule that takes effect July 1, 2026, caps federal student loans for most graduate students at $20,500 per year and $100,000 total. Students pursuing certain professional degrees may borrow up to $50,000 annually and $200,000 total. Congress defined professional degree broadly as a degree that signifies completion of the academic requirements for beginning practice in a profession and a level of professional skill beyond a bachelor’s degree. While Congress provided 10 examples, including medical and law degrees, it made clear that professional degrees are “not limited to” those examples.
The Education Department’s rule would instead treat that list as exclusive, adding only clinical psychology. As a result, graduate programs in nursing, physician assistant studies, physical therapy and other essential health fields would be excluded from higher loan eligibility limits.
“Communities throughout Colorado, especially in rural and underserved areas, need highly trained healthcare professionals to provide needed care,” said Colorado Attorney General Phil Weiser in a statement. “Congress made clear that professional degrees are not limited to a short list drafted decades ago. But this rule unlawfully limits student loan access for needed professions, including health care.”
In their lawsuit, Colorado and the other states claim that the rule’s narrow and unreasoned definition of “professional degree” is in direct conflict with federal law and in violation of the Administrative Procedure Act. Federal law provides that currently enrolled students who borrowed federal student loans as of June 30, 2026, are exempted from the new loan limits. But the final rule excludes students who transfer institutions or withdraw and re-enroll from the exemption, which the lawsuit says is also both contrary to the statute and arbitrary and capricious.
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