A coalition of 24 states and the District of Columbia filed a federal lawsuit on Tuesday challenging a Trump administration rule that restricts federal student loan access for graduate degrees in several healthcare fields. The lawsuit targets regulations implementing the One Big Beautiful Bill Act, which imposes new borrowing limits on graduate students.
New Borrowing Limits and Program Exemptions
The legislation, passed by Republicans last year, establishes annual graduate student borrowing caps of $20,500 with a $100,000 total lifetime limit. The Grad PLUS federal loan program will cease issuing new loans starting next July.
Medical students will face an annual borrowing limit of $50,000, with a cumulative cap of $200,000 over four years. Some private medical schools report total costs, including living expenses, exceeding $300,000.
The administration exempted 11 professional degree categories from the new limits: chiropractic, clinical psychology, dentistry, law, medicine, optometry, osteopathic medicine, pharmacy, podiatry, theology, and veterinary medicine.
Advanced nursing degrees, physical therapy, occupational therapy, and nurse anesthesia programs were not included in the exemption list. For these non-exempt graduate programs, the $20,500 annual limit applies.
The Education Department's list of exempted professional degrees was drawn from regulations unchanged since the 1950s, according to the lawsuit.
Lawsuit Arguments
The lawsuit argues that the Trump administration unlawfully narrowed the federal definition of a professional degree, imposing restrictions not enacted by Congress. The coalition seeks to block implementation of the rule.
Workforce Impact Concerns
The Association of American Medical Colleges (AAMC) has projected a physician shortage of up to 86,000 doctors by 2036. The organization stated that increased financial obstacles for medical students could reduce the supply of qualified applicants, leading to fewer practicing physicians.
The American Nurses Association expressed concern about the rule's impact on rural areas, where nurse practitioners and nurse anesthesiologists often serve as primary care providers.
The American Association of Colleges of Nursing warned that nursing students might need to seek high-interest private loans or abandon advanced practice education.
The lawsuit states that the new caps significantly reduce borrowing amounts compared to previous policies, which allowed graduate students to borrow up to the full cost of their program.
Educational and Demographic Considerations
Vineet Arora, vice dean of education at the University of Chicago's Pritzker School of Medicine, indicated that the limits could influence students' choices about where to attend school. Arora noted that most current medical students come from families within the upper 40% of income brackets, suggesting reduced loan access might further limit representation from middle and lower-income families.
Data from the AAMC and its osteopathic medicine counterpart, published in JAMA Network Open, indicate that since the June 2023 Supreme Court ruling prohibiting race-based admissions, Black or African American medical school enrollment fell by 11.6% and Latino enrollment by 10.8%, while Asian and White student enrollment increased.
Atul Grover, former policy official at the AAMC, commented that the financing limits for healthcare providers could contribute to a future workforce that is less diverse and more affluent.
Public Service Loan Forgiveness Program Changes
A federal regulation issued on October 30 introduces new conditions for the Public Service Loan Forgiveness (PSLF) program. Under the new policy, loan forgiveness may not be available for individuals working for entities engaged in specific activities deemed illegal by the Education Secretary, including those involving immigration, gender-affirming care, or activities labeled as "terrorism" aimed at obstructing federal policy. The Education Secretary retains authority to determine which organizations are ineligible.
Administration and Supporter Positions
Education Secretary Linda McMahon defended the limits at a House education committee hearing, arguing that the caps aim to reduce college costs and that most advanced nursing degree costs fall within or near the new caps.
Supporters of the legislation, including Senate HELP Committee chairman Sen. Bill Cassidy, contend that these changes will promote reforms in higher education financing. They argue the measures aim to reduce tuition costs and prevent graduates from accumulating excessive debt.
Elle Keast, the Education Department's Press Secretary for Higher Education, stated that the administration is implementing "long-needed loan limits on graduate loans to drive down the cost of programs."
Preston Cooper of the American Enterprise Institute stated that the caps will affect only a small number of programs charging high prices.
Bipartisan Criticism
Bipartisan criticism of the rule has emerged, with Republican Rep. Randy Fine of Florida questioning its impact on healthcare worker shortages.