25 States Sue Over Student Loan Limits on Nursing Degrees

A coalition of 25 states and the District of Columbia filed a federal lawsuit Tuesday challenging a new Education Department rule that restricts access to federal student loans for graduate students pursuing nursing and other healthcare-related degrees. The lawsuit argues the restrictions will worsen already critical healthcare workforce shortages across the country.

Filed in the U.S. District Court of Maryland, the lawsuit targets a rule finalized on April 30 that defines which graduate degrees qualify as “professional” — and therefore eligible for higher federal loan limits. Under the new rule, only 11 categories of degrees make the cut: chiropractic, clinical psychology, dentistry, law, medicine, optometry, osteopathic medicine, pharmacy, podiatry, theology, and veterinary medicine. Conspicuously absent are nursing, physical therapy, occupational therapy, social work, and physician assistant programs, among others.

The Loan Limits at Stake

The rule stems from the One Big Beautiful Bill Act (OBBBA), signed into law by President Trump in July 2025, which overhauled federal graduate student lending. The law eliminated the Grad PLUS program — which previously allowed graduate students to borrow up to the full cost of attendance — and replaced it with strict caps. Under the new system, students in non-professional graduate programs face a $20,500 annual borrowing limit and a $100,000 lifetime cap, while those in designated professional programs can borrow up to $50,000 per year with a $200,000 lifetime limit.

According to NPR, the Education Department drew its list of professional degrees from a federal regulation that “had not been changed since the 1950s, a time when graduate programs in nursing and other healthcare professions barely existed.”

Legal Challenge: Overstepping Authority?

The plaintiff states — all led by Democratic governors or attorneys general — argue that the Education Department unlawfully narrowed Congress’s definition of a professional degree. The original law listed examples using the phrase “include but are not limited to,” but the department made the list exclusive.

“This is not just a workforce shortage issue, this is a respect issue,” North Carolina Attorney General Jeff Jackson said at a press conference, as reported by Inside Higher Ed. “Saying that these folks earned degrees that aren’t professional degrees — it’s not true, it’s not fair and it’s unlawful.”

New York Attorney General Letitia James, who is co-leading the lawsuit, said in a statement: “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 health care providers they desperately need.”

The states joining the lawsuit include Arizona, California, Colorado, Connecticut, Delaware, Hawaii, Illinois, Kentucky, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New Mexico, New York, North Carolina, Oregon, Pennsylvania, Rhode Island, Vermont, Virginia, Washington, Wisconsin, and the District of Columbia.

Healthcare Workforce Concerns

Healthcare workforce shortages are at the heart of the lawsuit. Advanced practice registered nurses — including nurse practitioners, midwives, and nurse anesthesiologists — are increasingly relied upon to provide primary care, especially in rural and underserved areas where physicians are scarce. North Carolina alone faces a primary care shortage in 93 of its 100 counties.

The American Nurses Association condemned the rule, with President Jennifer Mensik Kennedy warning: “Make no mistake, this is not a technicality or a footnote. This rule will be felt in real communities, for example, in rural areas where nurse practitioners, midwives, and nurse anesthesiologists are often the only providers of core care services.”

Connecticut Attorney General William Tong echoed those concerns: “We need more nurses, therapists and social workers, and our federal government should be supporting their studies, not defunding them.”

The Administration’s Defense

Education Secretary Linda McMahon has defended the rule, arguing that the caps will force colleges to lower tuition prices. “It is our overall goal to bring down the cost of college and education,” McMahon told the House Education Committee last week. “And I do think that, relative to the shortages we’re having, if we can bring down the cost for nurses in schools, we can get more students to apply.”

Education Undersecretary Nicholas Kent struck a sharper tone, accusing Democratic states of prioritizing institutional interests over students: “For years, Democrats parroted illegal student loan forgiveness to ‘end the debt crisis’ and buy votes, and now the same people are fighting against the Trump Administration’s legal efforts to drive down the cost of college.”

Some conservative analysts, like Preston Cooper of the American Enterprise Institute, have also argued the impact is overstated, noting that most nursing students already borrow within the new limits and that the caps will only affect expensive programs charging exorbitant prices.

What’s Next

The lawsuit seeks to block the rule before its July 1 effective date. The case will test how much discretion federal agencies have in defining terms left ambiguous by Congress — and could have far-reaching implications for the future of federal student loan programs and the healthcare workforce alike.

With bipartisan criticism already emerging — including from Republican Rep. Randy Fine of Florida, who questioned McMahon directly on the workforce impact — the political pressure is mounting. Whether the courts or Congress ultimately intervene remains an open question.