Student Loan Caps Under New Law Face Legal Challenge from States
A coalition of 24 state attorneys general and two governors are challenging a proposed rule stemming from the One Big Beautiful Bill Act (H.R. 1) that would cap federal student loans for graduate students in critical healthcare fields. The challenge centers on concerns that the rule could exacerbate existing healthcare worker shortages.
The Dispute Over Loan Limits
The One Big Beautiful Bill Act, signed into law on July 4, 2025, included new limitations on federal student loan amounts. The law initially set a borrowing limit of $20,500 annually and $100,000 total for graduate students. However, it allowed for higher limits – $50,000 per year and $200,000 total – for students pursuing “professional” degrees. Congress defined “professional degree” with a list of ten examples, including medical and law degrees, but stated the list was not exhaustive.
The proposed rule from the U.S. Department of Education seeks to restrict the definition of “professional degree” to only those ten examples, plus Clinical Psychology. This would exclude students in fields like nursing, physician assistance, and physical therapy from accessing the higher loan amounts.
States Argue Rule Contradicts Congressional Intent
Attorney General Anthony G. Brown of Maryland, leading the coalition, argues the Department’s proposed rule misinterprets Congressional intent. The coalition contends that the Department is inappropriately turning a list of examples into a rigid limitation, thereby excluding health professionals who clearly fall within the broader definition of “professional degree” as envisioned by Congress. They point out the original list was created in the 1950s, before many modern health profession graduate programs were common.
The coalition’s comment letter highlights the financial realities of graduate health programs. For example, a Master of Science in Nursing at the University of Maryland, Baltimore, can cost up to $74,196 annually for in-state residents, even as a Doctorate of Nursing Practice costs up to $57,425 per year. These programs require significant investment in equipment and maintain low student-to-faculty ratios to ensure safety.
Potential Impact on Healthcare Workforce
The attorneys general and governors warn that limiting loan access will discourage students from pursuing careers in essential healthcare fields, worsening existing workforce shortages. They urge the Department of Education to adopt a broader definition of “professional degree” that aligns with Congressional intent and encompasses the full range of health professions.
States Involved in the Challenge
In addition to Maryland, the following states are participating in the challenge: Nevada, Colorado, New York, Arizona, California, Connecticut, Delaware, the District of Columbia, Hawai‘i, Illinois, Maine, Massachusetts, Michigan, Minnesota, New Jersey, New Mexico, North Carolina, Oregon, Rhode Island, Vermont, Virginia, Washington, and Wisconsin. The governors of Kansas and Kentucky are also joining the effort.
This is a developing story and will be updated as more information becomes available.