A group of Democratic state attorneys general representing 23 states and the District of Columbia, together with the governors of Kentucky and Pennsylvania, have brought a federal lawsuit in Maryland disputing a Department of Education regulation that implements new federal student loan limits.
The rule, announced on April 30, puts into effect borrowing caps Congress adopted last July when it approved President Donald Trump’s tax and spending measure known as the One Big Beautiful Bill Act. Under that statute, students enrolled in professional degree programs - identified by lawmakers as programs such as law and medical schools - face limits of $50,000 per year and $200,000 in total federal borrowing. Students in other graduate programs are subject to lower caps: $20,500 per year and $100,000 overall.
The states argue that Congress, in setting those caps, relied on an existing federal definition of a "professional degree" that was intended to include programs that prepare students for careers that generally require professional licensure. According to the complaint, the Education Department’s implementing regulation departs from that congressional definition by narrowing who qualifies as a professional student. The narrower rule, the states say, excludes many advanced health-related programs such as nursing, physician assistant, and physical therapy tracks.
"This rule will shut talented people out of critical professions and leave communities with fewer health care providers they desperately need," New York Attorney General Letitia James said in a statement.
Officials at the Education Department have defended the caps. Under Secretary of Education Nicholas Kent described the limits as a commonsense response to "decades of unchecked student loan borrowing that gave schools no reason to control costs." He said the states bringing the suit are more concerned with institutional finances than with students and families' access to affordable postsecondary education.
The lawsuit contends the department’s regulation violates the Administrative Procedure Act, arguing it contradicts the statute Congress enacted and is arbitrary and capricious. The filing requests judicial relief invalidating the rule on those grounds.
In addition to the dispute over which programs qualify for the higher professional degree caps, the states are challenging a separate aspect of the Education Department’s regulation governing a statutory "grandfather" provision. The law provided protections for current students who had borrowed federal student loans before the caps take effect on July 1. The states maintain the department’s interpretation would strip those protections from borrowers if they transfer to another school or temporarily withdraw and later re-enroll, a result the plaintiffs say is unlawful under the statute.
The litigation frames two central legal claims: first, that the department exceeded its authority by departing from Congress’s definition of professional degrees; and second, that the department unlawfully narrowed statutory protections intended to preserve loan terms for current borrowers. The case is now pending in federal court in Maryland.