A coalition of 25 Democratic-led states filed a federal lawsuit Monday against the U.S. Department of Education, challenging a new rule they say illegally restricts access to student loans for people pursuing advanced degrees in nursing, physical therapy, and other healthcare fields.
The complaint, filed in the U.S. District Court for the District of Maryland, argues that the Education Department’s May 1 final rule unlawfully narrowed the definition of “professional degree” established by Congress — effectively locking out many healthcare students from higher federal borrowing limits that could make or break their ability to finish their degrees.
At the center of the dispute is the One Big Beautiful Bill Act, which Congress passed in July 2025 and President Trump signed into law. The legislation set new federal student loan caps: graduate students can borrow up to $20,500 per year (capped at $100,000 total), while students in “professional” degree programs — such as law or medicine — can borrow up to $50,000 annually, with a $200,000 lifetime limit. That $29,500-per-year difference is consequential.
The law incorporated an existing federal regulatory definition to distinguish professional degrees from graduate ones, which states that a professional degree signifies completion of academic requirements for a licensed profession and a skill level exceeding a bachelor’s degree. The original regulation offered an illustrative — not exhaustive — list of qualifying fields, including pharmacy, dentistry, law and medicine.
But the Education Department’s implementing rule added new requirements: that degrees be at the doctoral level, require at least six years of postsecondary coursework, and fall within a narrow set of approved program classification codes. That, the states argue, effectively turned a non-exclusive list into a hard ceiling — one that left out nurses, physician assistants, physical therapists, audiologists and others.
The lawsuit notes that the Education Department itself acknowledged that advanced practice nursing degrees and speech-language pathology programs meet the statutory three-part test for a professional degree, yet excluded them anyway by applying what the rule calls “contextual requirements” — criteria the states say Congress never authorized.
“You should not have to be wealthy to serve your community as a nurse, physical therapist, or physician assistant,” said New York 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.”
The Education Department pushed back, with Undersecretary Nicholas Kent defending the caps as a corrective to years of unchecked borrowing. “Clearly, these Democratic governors and attorneys general are more concerned about institutions’ bottom-line rather than American students and families’ ability to access affordable postsecondary education,” he said.
The states also challenge a second aspect of the rule affecting students already enrolled before the caps take effect on July 1, 2026. Congress included a grandfathering provision to shield those students from the new limits — but the department’s rule would strip that protection from students who transfer schools or temporarily withdraw and later re-enroll, even if they return to the same program. The coalition argues that restriction has no basis in the statute.
The complaint was co-led by the attorneys general of Maryland, New York, Nevada and Colorado, and joined by 21 additional states, the District of Columbia, and the governors of Kentucky and Pennsylvania. The states are asking the court to vacate the challenged provisions and block their implementation.
