New York Attorney General Letitia James joined a coalition of 24 states and the District of Columbia in a federal lawsuit challenging new student loan restrictions that could sharply limit borrowing access for students pursuing careers in nursing, physical therapy, physician assistant studies, and other health care fields.
The lawsuit, filed Tuesday in federal court in Maryland, targets a new U.S. Department of Education rule set to take effect July 1 that narrows which academic programs qualify for higher federal student loan limits. State attorneys general argue the rule directly contradicts federal law passed by Congress last year and could worsen already severe health care workforce shortages nationwide.
Under the 2025 law, Congress created separate borrowing caps for graduate and professional degree programs, allowing students in professional programs to access up to $200,000 in federal loans, compared to $100,000 for standard graduate programs. Congress based those distinctions on an existing federal definition of “professional degree,” which includes programs requiring advanced education and professional licensure.
But according to the lawsuit, the Department of Education’s new rule unlawfully narrows that definition by excluding numerous health care-related degree programs that previously qualified. The filing says programs in nursing, occupational therapy, physical therapy, physician assistant studies, speech-language pathology, audiology, athletic training, and social work could all lose access to higher borrowing limits.
The complaint argues the department added restrictions Congress never authorized, including requiring many qualifying programs to operate at the doctoral level and fit within narrowly defined federal classification codes. The lawsuit also accuses the administration of acting arbitrarily by excluding some professions even after acknowledging they met Congress’ original three-part test for professional degrees.
James said the restrictions would make it harder for working-class students to enter critical health care professions at a time when hospitals and providers are already struggling with staffing shortages.
“You should not have to be wealthy to serve your community as a nurse, physical therapist, or physician assistant,” James said in a statement announcing the lawsuit.
The coalition also challenged provisions affecting students already enrolled in qualifying programs. While Congress grandfathered in many existing borrowers before the changes take effect, the lawsuit says the administration’s rule strips protections from students who transfer schools or temporarily leave and later re-enroll in the same program.
The states are asking the court to block enforcement of the rule before it takes effect this summer.
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