Education Department Professional Degree Student Loan Limits Lawsuit Sued by 25 States Over Federal Student Loan Cuts to Healthcare Graduate Programs

A coalition of 24 states and the District of Columbia filed a lawsuit in federal court Tuesday challenging a Trump administration rule that limits access to federal student loans for borrowers earning a graduate degree in several popular, healthcare-related fields. The total coalition, including Maryland as a co-leader, brings the count to 25 states plus D.C.

Quick Facts: The Professional Degree Student Loan Lawsuit

Field	Detail
Lawsuit Filed	May 19, 2026
Defendant	U.S. Department of Education
Alleged Violation	Higher Education Act of 1965, Title IV — unlawful narrowing of “professional degree” definition
Who Is Affected	Graduate students in nursing, physical therapy, physician assistant, social work, and other healthcare fields
Current Court Stage	Lawsuit filed May 19, 2026 — litigation phase, no ruling yet
Court & Jurisdiction	TBD — federal court, specific district not yet confirmed in public filings
Lead Attorneys General	New York AG Letitia James; co-leaders include Maryland AG Anthony Brown
Rule Takes Effect	July 1, 2026
Official Rule Source	Federal Register, FR Doc. 2026-08556 (published May 1, 2026)
Last Updated	May 19, 2026

This lawsuit is not about a settlement — no money is on the table yet. If you are a graduate student in nursing, physical therapy, social work, or a related healthcare field, this case is about whether you can still access federal student loans at all after July 1, 2026.

Why 25 States Are Suing Over the New Federal Student Loan Rule

Last summer, Congress passed the Working Families Tax Cuts Act (previously called the “One Big Beautiful Bill Act”), which eliminated the Graduate PLUS loan program and replaced it with two new borrowing tiers. The law established new loan caps that limit graduate students to borrowing $20,500 per year or $100,000 in total, and professional students to borrowing $50,000 per year or $200,000 in total.

The distinction between “graduate” and “professional” matters enormously. Professional students get more than double the annual borrowing limit. So the question of who counts as a “professional” student is the entire fight.

On April 30, the Department of Education issued a final rule that narrowed the definition of a professional degree to just 11 fields: chiropractic, clinical psychology, dentistry, law, medicine, optometry, osteopathic medicine, pharmacy, podiatry, theology, and veterinary medicine. Nursing, physical therapy, physician assistant studies, social work, and occupational therapy did not make the list.

The lawsuit alleges that the Department of Education unlawfully altered that definition by adding new requirements and narrowing eligibility in ways Congress never authorized.

This is a consumer rights lawsuit at its core. Students who planned to borrow under professional degree limits now face the far lower graduate caps — and for many, that gap cannot be covered by private loans. If you are pursuing a graduate healthcare degree, you may have fewer federal borrowing options starting July 1, 2026, unless this court challenge succeeds.

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If you have questions about how changing loan limits affect your options, our article on the MOHELA student loan servicing class action lawsuit 2026 covers related federal loan administration issues worth understanding.

Which States Joined This Lawsuit Against the Education Department

Arizona, California, North Carolina, Kentucky, and Nevada are among the states that joined the lawsuit. Connecticut Attorney General William Tong confirmed his state joined the coalition as well. Maryland Attorney General Anthony Brown co-led the coalition, along with Nevada and New York.

The full list of states in the May 19, 2026 lawsuit includes: New York, Maryland, Arizona, California, Connecticut, Colorado, Delaware, the District of Columbia, Hawaii, Illinois, Kentucky, Maine, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New Mexico, North Carolina, Oregon, Rhode Island, Vermont, Virginia, Washington, and Wisconsin.

Vermont Attorney General Charity Clark put it directly: “Vermont is already experiencing a workforce shortage, particularly in critical fields such as nursing. In the face of increased need to serve our aging population, the federal government has invented illegal barriers for students pursuing careers in these fields.”

New York AG Letitia James called out the real-world stakes: “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.”

How the New Loan Caps Would Hit Healthcare Students

The average cost of attendance for nurses and social workers pursuing graduate degrees exceeds $30,000 per year, already above the $20,500 annual loan cap for graduate degrees. For physical therapists, the average cost of attendance is between $108,212 and $126,034, before living expenses, fees, and other costs.

As of May 2026, approximately 106 million people lived in a primary care Health Professional Shortage Area. The narrowed definition of a professional degree could make these shortages worse.

The American Association of Colleges of Nursing warned that under the rule, nursing students could be forced to seek high-interest private loans or abandon advanced practice education.

Data from the department shows that about 429,000 borrowers took out $12.3 billion more than the new annual loan limit during the 2023–24 academic year. Previous research found that nearly four in 10 borrowers either have subprime credit scores or no credit score at all and could struggle to secure private loans.

The plaintiffs also flag a historical problem with the rule itself: the department’s list of professional degree examples was taken from a regulation that had not been changed since the 1950s — a time when graduate programs in nursing and other healthcare professions barely existed.

Are You Part of the Class Affected by This Lawsuit?

This is not a traditional class action seeking money damages. It is a challenge to a federal rule. But if you fall into the categories below, this case directly affects your access to federal loans starting July 1, 2026.

You may be directly affected if you are:

• Currently enrolled in or planning to enroll in a graduate program in nursing, physical therapy, physician assistant studies, social work, occupational therapy, public health, or education
• Relying on federal student loans to cover costs above $20,500 per year
• Attending a public or private university where annual program costs exceed $20,500

You are likely NOT affected by this specific loan cap change if you are:

• An undergraduate nursing or healthcare student — the rule does not touch undergraduate loan limits
• Enrolled in one of the 11 fields the Education Department defined as “professional” (medicine, law, dentistry, pharmacy, etc.)
• Relying entirely on grants, scholarships, or private financing

What Congress Members Are Doing About It

This fight is not just in the courts. Republican Rep. Mike Lawler of New York said he “fundamentally disagrees” with the rule and has introduced the Professional Students Degree Act, a bipartisan bill that would codify an expanded definition of who qualifies for the higher loan limits. The bill would add degree programs like master’s in public health, social work, and education to the professional degree list without changing the $50,000-per-year cap itself.

Education Secretary Linda McMahon defended the rule before the House education committee, arguing that the caps are intended to pressure colleges into lowering tuition. McMahon told lawmakers: “It is our overall goal to bring down the cost of college and education. And I do think that, relative to the shortages we’re having, if we can bring down the cost for nurses in schools, we can get more students to apply.”

Critics say that argument ignores students who need to borrow now, under current tuition levels, in a system that has not reduced prices.

What Should You Do If You Are a Graduate Healthcare Student Right Now

No claim form exists — this is an active lawsuit, not a settlement. But here is what you should do today:

• Know your loan type. Log into your StudentAid.gov account and confirm what federal loans you currently hold or have been offered for the next academic year.
• Talk to your school’s financial aid office now. Ask specifically how the July 1, 2026 rule change affects your program’s loan eligibility.
• Save all financial aid documents. Keep copies of your award letters, cost of attendance estimates, and any communication from your loan servicer.
• Monitor the case. The rule is set to take effect July 1, 2026, but a court could issue an injunction blocking it before then. Check back here for updates.
• Consider a free legal consultation if you believe the loan cap will force you to leave your program — a consumer rights lawyer can explain your individual options.

Lawsuit Timeline: Education Department Professional Degree Rule Challenge

Milestone	Date
One Big Beautiful Bill Act signed	July 4, 2025
Education Department proposed rule published	January 30, 2026
Coalition comment letter filed (25 states + 2 governors)	March 2026
Final rule published in Federal Register	April 30 / May 1, 2026
Lawsuit filed in federal court	May 19, 2026
Rule scheduled to take effect	July 1, 2026
Next court hearing / ruling on injunction	TBD — no date set as of May 19, 2026

Frequently Asked Questions

Is there a class action lawsuit against the Education Department over student loan limits?

 Yes. A coalition of 25 states and the District of Columbia filed a federal lawsuit on May 19, 2026, challenging a final rule that narrows the definition of “professional degree” under the Higher Education Act of 1965. The lawsuit asks the court to declare the rule unlawful and block it before it takes effect on July 1, 2026.

How to join the Education Department professional degree lawsuit — do I need to do anything? 

No action is required right now. This lawsuit is filed by state attorneys general on behalf of the public — you are not required to register or opt in. Individual graduate students are not named parties. Monitor the case for updates as the July 1, 2026 effective date approaches.

Which graduate programs lose access to higher federal loan limits under this rule?

 Nursing, physical therapy, physician assistant studies, social work, occupational therapy, public health, and education programs are among those excluded from the “professional degree” definition. Students in those programs would be capped at $20,500 per year and $100,000 total under the new rule.

When will the Education Department student loan lawsuit be resolved?

 TBD — the case was just filed on May 19, 2026. The states may seek an emergency injunction before July 1, 2026 to block the rule from taking effect while the litigation continues. No hearing date has been confirmed as of this publication.

Can I file my own lawsuit against the Education Department over loan limits?

You have the right to consult a private attorney if the rule causes you direct harm. However, most individuals do not file separate suits in cases like this — state attorneys general represent the public interest in challenging federal rulemaking. A free legal consultation can clarify your individual options.

Does this rule affect undergraduate nursing or healthcare students? 

No. The Education Department confirmed that the new loan caps apply only to graduate-level borrowers. Undergraduate nursing programs, including four-year BSN and two-year associate degree programs, are not affected.

What happens if the court blocks the rule before July 1, 2026?

 If a court issues a preliminary injunction, the rule would be paused while the lawsuit plays out. Graduate students would continue under current loan access rules until a final ruling is issued. No injunction has been granted as of May 19, 2026.

Sources & References

• Federal Register, FR Doc. 2026-08556 — U.S. Department of Education Final Rule, published May 1, 2026: https://www.federalregister.gov/documents/2026/05/01/2026-08556/reimagining-and-improving-student-education-federal-student-loan-program-final-regulations
• Vermont Attorney General’s Office, press release, May 19, 2026: https://ago.vermont.gov
• Office of New York Attorney General Letitia James, press release: https://ag.ny.gov
• Office of Maryland Attorney General Anthony Brown: https://oag.maryland.gov
• American Hospital Association fact sheet, federal student loan limits: https://www.aha.org/fact-sheets/2026-02-11-fact-sheet-federal-student-loan-limits-graduate-and-professional-programs

Disclaimer: This article is for informational purposes only and does not constitute legal advice. Legal claims and outcomes depend on specific facts and applicable law. For advice regarding a particular situation, consult a qualified attorney.

Prepared by the AllAboutLawyer.com Editorial Team and reviewed for factual accuracy against official state attorney general press releases, the Federal Register final rule (FR Doc. 2026-08556), and official government sources on May 19, 2026. Last Updated: May 19, 2026