A coalition of 26 states and municipal governments has filed a federal lawsuit against the Trump administration, attempting to strike down a Department of Education rule that slashes federal student loan limits for advanced healthcare and professional degrees.
The 49-page complaint, filed in the U.S. District Court for the District of Maryland, alleges that the federal government overstepped its statutory authority and violated the Administrative Procedure Act by narrowing the definition of a “professional degree.” The multi-state coalition argues the policy shift effectively caps the amount of money graduate students in vital fields like nursing, physical therapy, and speech-language pathology can borrow annually.
The legal battle stems from the One Big Beautiful Bill Act, known as H.R. 1, which President Donald Trump signed into law in July 2025. Set to take effect on July 1, 2026, H.R. 1 split advanced degree borrowing into two distinct categories. Under the statutory text, standard “graduate students” face an annual borrowing cap of $20,500, with a $100,000 aggregate limit. Meanwhile, “professional students” are permitted to borrow up to $50,000 annually, with a $200,000 aggregate cap.
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To differentiate between the two, Congress explicitly tied the definition of a professional program to a federal regulation in place on July 4, 2025. That regulation defined a professional degree as one signifying the “completion of the academic requirements for beginning practice in a given profession” and a “level of professional skill beyond that normally required for a bachelor’s degree,” noting that “professional licensure is also generally required.” The statute included a non-exclusive list of examples, such as medicine, law, pharmacy, and theology.
However, the states argue that a final rule published by the Department of Education on May 1, 2026, narrows that statutory definition. The department’s new criteria mandate that professional degrees must generally be at the doctoral level, require at least six years of postsecondary coursework, and fit strictly within the specific instructional program categories of the original example list.
According to the lawsuit, the Department of Education explicitly acknowledged during the rulemaking process that advanced practice registered nurses, speech-language pathologists, and audiologists meet the three-part test established by Congress. Despite this, the department excluded those programs from the higher loan caps, citing “degree inflation” and the fact that some professions are subject to supervision by other licensed professionals.
The plaintiff states contend this regulatory change ignores the evolution of modern clinical training and will financially damage state-operated universities by cutting into tuition revenues. The complaint highlights the University of Maryland School of Nursing’s entry-level Master’s of Science in Nursing, where in-state tuition and fees run $77,155 per year. Under the new rule, these students will be capped at the lower $20,500 limit rather than the $50,000 professional allowance, creating a $29,500 annual funding gap that could force students to drop out or turn to higher-interest private loans.
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Additionally, the lawsuit challenges the department’s implementation of H.R. 1’s grandfathering clause. While Congress exempted students enrolled as of June 30, 2026, from the new loan limits for up to three academic years, the department’s rule strips away that exemption if a student transfers to a different institution or briefly withdraws and re-enrolls. The states call this restriction unreasoned and contrary to the clear text of the law.
The legal action is led by Maryland Attorney General Anthony G. Brown and New York Attorney General Letitia James, alongside the attorneys general of Arizona, California, Colorado, Connecticut, Delaware, the District of Columbia, Hawai‘i, Illinois, Maine, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New Mexico, North Carolina, Oregon, Rhode Island, Vermont, Virginia, Washington, and Wisconsin. The governors of Kentucky and Pennsylvania are also named plaintiffs.
The defendants in the case are the U.S. Department of Education and Education Secretary Linda McMahon. The state coalition is asking the court to declare the challenged portions of the final rule unlawful, vacate the regulations, and issue a permanent injunction to prevent their enforcement before the July 1 deadline.
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