A coalition of 25 Democratic-led states and the District of Columbia sued the Education Department on Tuesday over new graduate student loan limits, arguing the restrictions will worsen the health care workforce shortage.

“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 healthcare providers they desperately need,” New York Attorney General Letitia James, who is co-leading the coalition with Maryland, Nevada and Colorado, said in a statement.

The lawsuit, filed in federal court in Maryland, comes nearly three weeks after the Education Department finalized rules that lower the amount of money graduate students can borrow from the federal government.

The rules, which take effect July 1, are a feature of the One Big Beautiful Bill that President Donald Trump signed into law last summer. They implement borrowing caps based on whether students are pursuing a degree in what is designated as a professional or graduate program.

Students in professional programs can borrow up to $50,000 a year and $200,000 total, while those in graduate programs will face annual limits of $20,500 and a lifetime limit of $100,000.

The law listed examples of professional programs, including pharmacy, dentistry, veterinary medicine, chiropractic, law, medicine, optometry, osteopathic medicine, podiatry and theology.

In the fall, the Education Department and a committee of higher education experts negotiated the details of the loan caps, but the terms sparked a backlash over the exclusion of some professions from the higher loan limits, including nursing, physical therapy and social work. The department received more than 80,000 comments on the proposed rule, with many industry groups challenging the professional designation and warning that students would be shut out of critical fields.

Professional degrees are not limited to the list, the regulation says, but the Education Department held fast to the examples — only agreeing to add clinical psychology after intense debate with experts. The Education Department refused to further expand the list of degrees deemed professional in the final rules.

In the lawsuit, the states claim the department exceeded its authority with an arbitrary definition of “professional degree” that Congress never envisioned.

“The Department heavily relied on ‘its own historical practice’ in defining ‘professional degrees’ … as well as whether a worker was ‘supervised by another professional who has … more education, training, and qualifications,’ … neither of which Congress intended it to consider,” the legal complaint states.

The coalition of states fears the rules will force many students to rely on more expensive private loans, delay completing their education or abandon their pursuit of an advanced degree altogether. The group worries the rules will worsen workforce shortages and make it harder for patients, especially those in rural and underserved communities, to access health care. The states are asking the court to block the rules. (Source: The Washington Post)

Story Date: May 20, 2026