25 States, DC Sue Over Federal Student Loan Caps

Twenty-five states and DC are suing the Education Department over new federal student loan restrictions.

On May 19, 2026, a coalition representing 25 states and the District of Columbia filed suit against the U.S. Department of Education, challenging new federal student loan restrictions enacted under the 2025 One Big Beautiful Bill Act.

• The Act established $100,000 caps for graduate student loans and $200,000 for designated professional degrees—including medicine, law, and dentistry.
• The Department's recent rule excludes fields such as nursing, physical therapy, dental hygiene, social work, and occupational therapy from the higher 'professional degree' cap, limiting students in these areas to $100,000.
• Plaintiffs argue the Department exceeded its authority by narrowing the statutory definition of 'professional degree' without Congressional approval, restricting financial aid access for advanced healthcare education.

Letitia James, New York Attorney General, criticized the rule for potentially “shutting talented people out of critical professions” and deepening shortages of healthcare providers. Connecticut Attorney General William Tong said, “We need more nurses, therapists and social workers, and our federal government should be supporting their studies, not defunding them.”

The coalition contends this move could leave rural and underserved communities with even fewer essential healthcare professionals.

Department of Education Under Secretary Nicholas Kent defended the rule, arguing that it is intended to keep postsecondary education affordable for students and families rather than institutions.

This high-profile litigation highlights tensions between federal rulemaking and state interests in shaping higher education policy, particularly as it affects student access and agency regulatory powers.