A coalition of 24 states and the District of Columbia filed a federal lawsuit Tuesday challenging an administration rule that narrows which graduate-level healthcare programs can access larger federal student loans. The plaintiffs say the rule, issued as the Education Department implemented last year’s One Big Beautiful Bill Act, will block many nurses and other health professionals from borrowing enough to complete advanced training.
New federal law changed graduate student borrowing limits: undergraduates are unaffected, but most graduate students are now capped at $20,500 per year and $100,000 in total. Previously, many graduate borrowers could borrow up to the full cost of their programs. In response, the Education Department published a rule that limits the list of degree programs considered “professional” — and therefore eligible for higher loan caps ($50,000 per year and $200,000 total) — to 11 categories. Those categories are chiropractic, clinical psychology, dentistry, law, medicine, optometry, osteopathic medicine, pharmacy, podiatry, theology and veterinary medicine.
The department’s list excludes a number of healthcare programs that advocates say are critical, including many advanced nursing degrees, physical therapy and nurse anesthesia programs. Plaintiffs — including Arizona, California, North Carolina, Kentucky and Nevada among others — say the department unlawfully narrowed a prior federal definition of “professional” degrees and imposed restrictions Congress did not adopt. They also note the department relied on regulatory examples dating back to the 1950s, long before graduate programs in nursing and other modern health professions existed.
New York Attorney General Letitia James warned the rule will “shut talented people out of critical professions” and worsen shortages in communities that already lack providers. The American Nurses Association called the change “profoundly dismayed,” saying it makes it harder for nurses to advance and will be felt in places such as rural areas where nurse practitioners, midwives and nurse anesthesiologists often provide primary care.
The American Association of Colleges of Nursing cautioned that many nursing students could be forced into high‑interest private loans or to abandon advanced practice training under the new regime. By contrast, a study from the American Enterprise Institute argued the effect will be limited, saying the caps mostly hit a small number of programs charging very high tuition.
Education Secretary Linda McMahon has defended the policy, telling lawmakers the limits apply only to graduate programs and do not affect undergraduate nursing degrees. She has also argued many advanced nursing programs would still fall within or near the new caps and that the caps are intended to pressure colleges to lower prices. Facing questions from members of Congress, McMahon said her goal is to reduce college costs so more students will be able to pursue health professions.
The lawsuit sets up a legal fight over how the federal government defines professional graduate degrees and who can access larger federal loan limits. For students and employers, the immediate uncertainty is whether schools will lower tuition as the department hopes or whether affected students will have to rely on private loans or curtail plans for advanced healthcare training.