Attorney General James Sues to Stop Student Loan Cuts for Future Health Care Workers

 

New Federal Rule Would Harm Students Working to Become Nurses, Physical Therapists, Physician Assistants, and Other Health Care Professionals

New York Attorney General Letitia James today co-led a coalition of 24 other states and the District of Columbia in suing the Trump administration to stop unlawful restrictions on federal student loans for students pursuing careers in critical health care fields. In May, the U.S. Department of Education issued a rule dramatically limiting which degree programs qualify for higher federal student loan limits. The rule makes it significantly harder for students pursuing careers in nursing, social work, physical therapy, occupational therapy, physician assistant studies, and other essential fields to afford the education and clinical training they need. Attorney General James and the coalition argue that these restrictions will worsen the existing health care workforce shortage and make it harder for communities in New York and nationwide to access care. The coalition is asking the court to block the rule and restore access to the federal student loans these students are entitled to receive.

“You should not have to be wealthy to serve your community as a nurse, physical therapist, or physician assistant,” said Attorney General James. “Higher education is expensive, and our health care system is already under immense strain. This rule will shut talented people out of critical professions and leave communities with fewer health care providers they desperately need. We cannot afford fewer nurses, fewer providers, or fewer opportunities for working people to enter these essential fields.”

Last year, Congress enacted new federal student loan caps that distinguish between “graduate” and “professional” degree programs. The law set higher federal loan limits for students enrolled in professional degree programs, which often require extensive training, clinical placements, and professional licensure. Loans were capped at $100,000 total for graduate programs and $200,000 for professional degree programs. Congress used the existing federal definition of a “professional degree,” which includes programs that prepare students to begin practice in a profession and generally require professional licensure.

In May 2026, however, the Trump administration issued a final rule unlawfully narrowing that definition. The rule imposes new restrictions not enacted by Congress, leaving many health care and other professional degree programs unable to qualify for the higher loan limits. The Department of Education has acknowledged that several excluded programs meet Congress’ definition of a professional degree, but nevertheless refused to classify them as such under its new rule. As a result, students pursuing degrees in nursing, physical therapy, occupational therapy, physician assistant studies, social work, speech-language pathology, audiology, athletic training, and other fields will only be able to access $20,500 per year in federal student loans.

Attorney General James and the coalition argue that the rule will force many students to rely on more expensive private loans, take on unsustainable debt, delay completing their education, or abandon these programs altogether. The coalition warns that the rule will reduce the number of graduates entering critical health care fields, worsen workforce shortages, and make it harder for patients – especially those in rural and underserved communities – to access care. Public colleges and universities also stand to lose critical tuition revenue.

The attorneys general are also challenging the Department of Education’s unlawful restrictions on students who Congress intended to protect from the new loan limits. Although Congress grandfathered in many students already enrolled in programs before the changes take effect, the administration’s rule strips those protections from students who transfer schools or temporarily withdraw and later re-enroll, even if they continue pursuing the same course of study. Attorney General James and the coalition argue that these additional restrictions are unsupported by law and will cause serious financial disruption for students and schools.

Attorney General James and the coalition argue that the rule violates the Administrative Procedure Act because it directly contradicts federal law and is arbitrary and capricious. They are asking the court to block the rule and ensure the loans are made available as Congress intended.

Joining Attorney General James in filing this lawsuit are the attorneys general of Arizona, California, Colorado, Connecticut, Delaware, Hawaii, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New Mexico, North Carolina, Rhode Island, Oregon, Vermont, Virginia, Washington, Wisconsin, and the District of Columbia, as well as the governors of Kentucky and Pennsylvania.