Coalition of 25 States Sue ED Over OBBBA Loan Limits, Claim New Rule Will Worsen Workforce Shortages
By Maria Carrasco, NASFAA Staff Reporter
A coalition of 25 states on Tuesday sued the Department of Education (ED) over its final rule implementing new student loan limits enacted under the One Big Beautiful Bill Act (OBBBA), claiming that this rule will price many students out of entering the healthcare workforce and harm public higher education institutions.
The lawsuit, which was filed in federal court in Maryland, includes a coalition of 25 state attorneys general from Maryland, Colorado, Nevada, New York, Kentucky, Pennsylvania, Arizona, California, Connecticut, Delaware, Hawai‘i, Illinois, Maine, Massachusetts, Michigan, Minnesota, New Jersey, New Mexico, North Carolina, Oregon, Rhode Island, Vermont, Virginia, Washington and Wisconsin, along with the District of Columbia.
In the lawsuit, the attorneys general list multiple consequences that ED’s final rule will have on students and institutions, which was finalized earlier this month and is set to take effect on July 1.
The enactment of OBBBA made several changes to the student loan system, including new loan limits for graduate, professional, and parent borrowing, as well as the elimination of the Graduate PLUS loan program. Under ED’s final rule, graduate students’ Direct Unsubsidized Loan annual limit will remain at $20,500, but will have a new aggregate limit of $100,000. Professional students’ Direct Unsubsidized annual limit will be $50,000, with a new aggregate limit of $200,000.
The differentiation in loan limits for graduate and professional students has been a concern for lawmakers and the higher education community, with many noting that these limits could push students into the private loan market, which doesn’t offer safeguards like borrower defense or benefits like the Public Service Loan Forgiveness (PSLF) program. And some students won’t be able to access private loans to fund their education, and ultimately would be priced out of continuing their graduate education.
“As a result, if the restrictive definition of ‘professional degree’ is maintained, then many students will face the prospect of exceeding the federal-loan caps,” the lawsuit reads. “Some of those students will be unable to obtain private loans; others will determine that the higher costs of private loans outweigh the benefits of a graduate degree and decline to enroll altogether.”
The attorneys general warn that this “professional degree” definition in ED’s final rule will especially harm the healthcare workforce, particularly students who are seeking graduate education in nursing.
Listed as an example in the lawsuit, the attorneys general note that the University of Maryland School of Nursing offers an entry-level Master of Science in Nursing degree that would not be classified as a “professional degree” and therefore would be subject to the lower loan limits. Some students seeking to enroll in that program will struggle to borrow funds through private loans to cover the gap, wrote Maryland Attorney General Anthony Brown.
“This unlawful rule doesn’t just limit loans for graduate students: it limits students’ futures. By capping loan amounts, the Trump Administration will force Marylanders who want to be nurses, physician assistants, or physical therapists to decide between taking on more expensive private loans, or walking away from their chosen career,” Brown said in a statement. “We will not allow this Administration to price our future healthcare professionals out of the workforce.”
The lawsuit goes on to argue that ED’s final rule will not just hurt students, but also institutions and state workforces.
“The Final Rule’s unlawful definition of 'professional degree' will harm Plaintiff States by reducing funding for many State institutions of higher education and impeding the States’ abilities to meet critical workforce needs and provide services to their residents,” the lawsuit reads.
Already, lawmakers have taken action to rescind ED’s student loans final rule, with a group of Democratic lawmakers introducing a bicameral resolution under the Congressional Review Act (CRA) earlier this month.
Last week, Education Secretary Linda McMahon defended ED’s final rule on loan limits, fielding questions from both Republican and Democratic lawmakers about how it could impact the healthcare workforce. McMahon claimed that the country is mostly meeting its graduate-level nursing needs, and the final rule is “closed.”
Stay tuned to Today’s News for more updates on this lawsuit.
Publication Date: 5/20/2026
Andrew F | 5/20/2026 9:6:14 AM
good thing there is plenty of time for all this to get figured out... :-l
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