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Democratic-led states sue over Trump administration's student loan restrictions

The coalition says the rule could force students in nursing and other health fields toward private loans and deepen workforce shortages.

  • On Tuesday, 24 states and the District of Columbia sued the Education Department in U.S. District Court in Maryland, challenging new rules that restrict federal loan eligibility for graduate-level health programs.
  • The lawsuit targets a provision in the "Big, Beautiful Bill" signed by President Donald Trump last July, which created strict caps of $20,500 annually and $100,000 total for graduate student borrowing.
  • States argue the rule is "arbitrary" and unlawfully excludes fields like physician assistant, physical therapy, and graduate-level nursing from professional degree status, potentially worsening healthcare worker shortages.
  • The Education Department previously described the caps as a practical measure, asserting that most nursing students borrow less than the annual limit and the policy will incentivize lower program costs.
  • This challenge occurs amid broader efforts by Under Secretary Linda McMahon to reduce the department's workforce by nearly 50 percent, while 43 million borrowers currently owe $1.6 trillion in federal student loans as of 2023.
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Reuters broke the news in United Kingdom on Tuesday, May 19, 2026.
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