26 states sue Education Department over graduate loan caps

On Tuesday, May 19, 2026, attorneys general from 26 jurisdictions filed a lawsuit against the U.S. Department of Education in the U.S. District Court for the District of Maryland in Baltimore. The suit names Education Secretary Linda McMahon as a defendant. Maryland Attorney General Anthony Brown, Colorado Attorney General Phil Weiser, Nevada Attorney General Aaron Ford, and New York Attorney General Letitia James are co-leading the case.

The coalition includes 24 attorneys general and two governors, with the governors of Kentucky and Pennsylvania joining alongside the District of Columbia. Every participating jurisdiction is led by a Democratic governor or a Democratic attorney general, which NPR described as a coalition of Democratic states.

The fight starts with a law. Last summer Congress passed the One Big Beautiful Bill Act through budget reconciliation, a process that needs only a simple Senate majority instead of 60 votes. President Trump signed it on July 4, 2025. The law ended the Grad PLUS program, which had let graduate students borrow up to the full cost of their program.

In its place, the law set hard caps. Most graduate students can borrow $20,500 per year and $100,000 total. Students in a "professional" program can borrow up to $50,000 per year and $200,000 total. The law did not spell out every degree that counts as professional, so the rest fell to the Education Department to define.

The department finalized its rule on April 30, 2026, and published it in the Federal Register on May 1, 2026. The rule is called the Reimagining and Improving Student Education rule, or RISE. It takes effect July 1, 2026.

The rule limits the higher "professional" loan tier to 11 fields: pharmacy, dentistry, veterinary medicine, chiropractic, law, medicine, optometry, osteopathic medicine, podiatry, theology, and clinical psychology. Every other graduate program, including nursing, physician assistant studies, physical therapy, occupational therapy, and social work, falls into the lower tier.

The states' central argument is about the words Congress chose. The statute borrowed an older definition that listed example degrees and said professional degrees "include but are not limited to" those examples. The lawsuit says the department turned an open list into a closed list, adding only clinical psychology and shutting out everything else.

The complaint also notes the example list came from a regulation that had not changed since the 1950s, when graduate nursing programs barely existed and law students still earned bachelor of laws degrees. The states say the department froze a decades-old snapshot into a binding rule.

The lawsuit raises three legal claims. First, the rule conflicts with the plain text of the statute Congress passed. Second, the department acted without congressional approval, taking a policy choice that belongs to the legislature. Third, the rule violates the Administrative Procedure Act because it is arbitrary and capricious.

The states say the department leaned on factors Congress never told it to weigh, such as whether a profession involves supervision and the "historical context" of an old regulation. They argue the department applied those factors in ways that contradict each other.

The dollars are concrete. The lawsuit points to the University of Maryland School of Nursing, where an entry-level master of science in nursing program costs about $77,155 a year in tuition and fees for in-state students. Under the rule, that program counts as "graduate," not "professional."

A student there could borrow only $20,500 a year in federal loans, a gap of roughly $29,500 a year the student would have to cover through private loans, savings, or family help. The states say students will either take on costlier private debt or skip the degree.

Healthcare workforce shortages run through the states' case. North Carolina Attorney General Jeff Jackson said his state has a primary care shortage in 93 of 100 counties, concentrated in rural areas. He said the rule could make that worse by pricing students out of advanced nursing degrees.

Debra Barksdale, president of the American Academy of Nursing, said the rule would strip loan access from nurses pursuing the advanced degrees needed for higher levels of patient care. Nursing groups had already pushed back during the rulemaking. The American Association of Colleges of Nursing said the department abandoned nursing as a professional degree despite the rigor of post-baccalaureate nursing education.

The Education Department defends the rule as Congress's own work. Under Secretary of Education Nicholas Kent said the loan caps were created by Congress and are already pushing colleges to lower tuition. He accused the suing officials of caring more about institutions' budgets than about families' costs.

The department's fact sheet notes the caps hit only graduate programs and do not touch four-year bachelor of science in nursing degrees, and it points out that most of the nursing workforce does not hold a graduate degree. Preston Cooper of the American Enterprise Institute argued the new caps will affect only a small number of programs that charge unusually high prices.

The rule has one more contested piece. Federal law shields students who already borrowed for their program before the new limits take effect, letting them keep the old, higher caps. But the department's rule says a student who transfers schools or withdraws and re-enrolls loses that protection.

The states say that exclusion also contradicts the statute and is arbitrary. They are asking the court to declare the challenged parts of the rule unlawful, vacate them, and block the department from enforcing them before the July 1, 2026 effective date.