Five states are suing the Biden administration over a federal rule that restricts student loans for certain graduate healthcare degrees.
New York, Arizona, North Carolina, Kentucky and Nevada filed the challenge against limits on federal loans for programs in nursing, physical therapy and related fields. The rule, issued by the U.S. Department of Education, caps how much students can borrow for these degrees relative to their projected earnings after graduation.
The Department of Education implemented the restrictions under gainful employment rules that require educational programs to demonstrate graduates earn enough to repay their loans. Programs failing to meet the standard face losing access to federal student aid entirely. The nursing and physical therapy programs affected by the new limits fall into this category.
States argue the rule overreaches federal authority and unfairly targets healthcare professions experiencing workforce shortages. They contend the restrictions will discourage students from pursuing these degrees and worsen healthcare worker shortages nationwide. The states claim programs like nursing and physical therapy serve public interests that justify higher debt thresholds than other fields.
The nursing industry has faced persistent staffing gaps since the pandemic. Graduate-level nursing programs prepare advanced practice nurses, nurse anesthetists and nurse practitioners who fill critical roles in hospitals and clinics. Physical therapy programs similarly face high demand from aging populations and rehabilitation needs.
Federal officials say the new rules protect students from taking on excessive debt relative to job market reality. The Department argues that monitoring debt-to-earnings ratios prevents students from borrowing their way into unpayable debt burdens.
This lawsuit reflects broader tension over federal oversight of educational lending and program accountability. The states challenge whether Washington should dictate how much students can borrow for degrees the states deem essential to their healthcare systems. The dispute will likely proceed through federal courts, potentially affecting thousands of students considering healthcare graduate programs.