Five states have filed lawsuits challenging a Biden administration rule that caps federal student loans available to graduate students pursuing degrees in nursing, physical therapy, and related healthcare fields.
New York, Arizona, North Carolina, Kentucky, and Nevada lead the legal challenge against the Education Department's new borrowing limits. The rule restricts how much graduate students can borrow through federal loan programs for certain healthcare credentials that the department deemed to have weaker labor market outcomes or lower earnings potential.
The states argue the restrictions harm their ability to train healthcare workers and may worsen workforce shortages in critical areas. They contend the federal government overstepped its authority by implementing borrowing caps based on employment data the states view as flawed or outdated.
Healthcare programs affected include master's degrees and certificates in nursing, physical therapy, occupational therapy, and other allied health fields. The Education Department justified the limits by citing repayment data showing some graduates struggle to repay loans relative to their earnings.
The legal challenge reflects broader tension over federal student loan policy. While the administration argues the rule protects borrowers from taking on unsustainable debt for degrees with limited earning potential, healthcare industry groups and state officials worry the restrictions will discourage enrollment in programs facing worker shortages.
Graduate nursing programs particularly feel the pressure. Nursing schools across the country report difficulty filling seats despite high job demand, a problem exacerbated if prospective students cannot access federal loans needed to afford tuition.
The lawsuits test whether the Education Department can unilaterally restrict federal loan access based on program-level employment outcomes. Courts will decide whether the rule falls within the department's authority or whether it requires congressional approval.
The case outcome could reshape federal student loan eligibility across multiple healthcare and professional degree programs nationwide.