25 states file lawsuit over student loan caps for nursing and healthcare degrees

May 20, 2026 - 19:33

A coalition of 25 states and Washington, D.C. has filed a lawsuit against the U.S. Department of Education, challenging new limits on federal student loans for graduate programs in nursing, healthcare, and other professional fields. The legal action, announced on Tuesday, argues that the Biden administration overstepped its authority by capping the amount of money graduate students can borrow through the Grad PLUS loan program.

The new rules, which took effect in July, set a maximum borrowing limit of $138,500 for graduate students pursuing degrees in healthcare, nursing, and other high-demand areas. Previously, students could borrow unlimited amounts to cover the full cost of attendance, including tuition, fees, and living expenses. The states leading the lawsuit claim the caps will make it harder for low-income and middle-class students to afford advanced degrees, worsening shortages of nurses and healthcare workers in rural and underserved areas.

Attorneys general from states like California, New York, and Illinois argue that the Department of Education failed to follow proper rulemaking procedures and did not adequately consider the economic impact on students and universities. They point out that many graduate programs in healthcare cost well over the new cap, forcing students to turn to private loans with higher interest rates or abandon their studies entirely.

The lawsuit seeks to block the caps nationwide, asking a federal court to declare them unlawful. The Department of Education has defended the limits as a way to curb rising student debt, which now tops $1.7 trillion nationally. Critics of the caps, however, say they will disproportionately harm women and people of color, who make up a large share of the healthcare workforce. The case is expected to move quickly, with a hearing likely in the coming weeks.