States Sue to Block U.S. Student Loan Caps for Graduate Programs

A coalition of states filed a federal lawsuit on Tuesday challenging a new rule from the U.S. Department of Education that will cap federal student loan borrowing for graduate students, arguing it will unlawfully restrict access to advanced degrees in critical healthcare fields. The rule, announced on April 30, implements loan limits established by the One Big Beautiful Bill Act passed by Congress last year.

Under the law, students in programs classified as "professional degrees" can borrow up to $50,000 annually and $200,000 total. Students in other graduate programs face lower caps of $20,500 per year and $100,000 overall. The law lists examples of professional programs, including pharmacy, dentistry, veterinary medicine, law, and medicine.

The states contend that the Education Department's final rule unlawfully narrows the definition of a professional degree program beyond congressional intent, excluding several healthcare tracks from the higher borrowing category. These exclusions include programs for nurse practitioners, physician assistants, physical therapists, occupational therapists, and speech-language pathologists. The lawsuit argues Congress intended the higher caps...