Trump Administration Sued By 23 Blue States Over Student Loan Crackdown On Healthcare Degrees

A coalition of Democratic-led states filed a lawsuit against the Trump administration over a new federal student loan rule that could sharply reduce borrowing access for students pursuing healthcare-related professional degrees. The lawsuit was filed Tuesday in the U.S. District Court for the District of Maryland by 23 states, the District of Columbia, and the governors of Kentucky and Pennsylvania. The states argue the U.S. Department of Education unlawfully narrowed the definition of "professional degree" under the One Big Beautiful Bill Act passed in 2025. Under the law, graduate students face federal borrowing caps of $20,500 annually and $100,000 total, while students classified under "professional degree" programs can borrow up to $50,000 annually and $200,000 overall. States Challenge Healthcare Degree Limits The lawsuit claims the Department of Education's final rule improperly excludes several healthcare programs from the higher borrowing category, including nurse practitioner, physician assistant, physical therapy, occupational therapy and speech-language pathology programs. According to the complaint, Congress intended the higher loan caps to apply broadly to licensed professional programs. The states argue the administration added new restrictions that were never included in the statute, including requirements tied to doctoral-level education, supervision standards and historical classifications. The lawsuit also challenges limits placed on "grandfathered" borrowers. The states said students who transfer schools or temporarily withdraw could lose protections that allow them to keep existing borrowing limits. Read Also: Michael Burry Fears Crypto-Based Stocks Will Add To An Era Of No 'Long-Term Personal Relationships' In A Cyber-Punk Future Borrowing Pressure Continues To Rise The lawsuit comes as financial strain across the U.S. student loan system continues to intensify. Recent data showed delinquent federal student loan debt climbed to a record $171.4 billion in the first quarter of 2026, surpassing the previous peak reached before the pandemic. Millions of borrowers have also entered default as repayment pressures accelerate following the end of pandemic-era relief measures. At the same time, more than 7 million borrowers are expected to transition out of the Biden-era SAVE repayment program after a federal court struck down the plan earlier this year. Alternative repayment plans generally require borrowers to contribute a larger share of discretionary income toward monthly payments, raising affordability concerns for many households. Borrowing costs are also expected to increase. Earlier estimates showed federal student loan interest rates for the 2026-27 academic year could rise slightly as Treasury yields remain elevated amid inflation concerns and growing U.S. borrowing needs. The states argue the Education Department's latest rule could further limit access to advanced healthcare education at a time when borrowers are already facing rising repayment burdens and tighter financing conditions. Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors. Image via Shutterstock Read Also: Microsoft-Owned GitHub Faces Security Scare After Hackers Claim Access To Internal Systems, Threaten Public Leak Of Stolen Repositories