OAKLAND (LN) — California Attorney General Rob Bonta, leading the coalition, filed the lawsuit in the U.S. District Court for the District of Maryland. The suit argues the new rule arbitrarily excludes students seeking graduate degrees in nursing, physician assistant studies, physical therapy, and other professions from higher federal borrowing limits, violating the Administrative Procedure Act.
The dispute centers on the July 2025 One Big Beautiful Bill Act, which established annual and aggregate borrowing caps for federal student loans. Under the statute, “graduate students” face a $20,500 annual and $100,000 aggregate cap, while “professional” students are allowed $50,000 annually and $200,000 in aggregate. Prior to the Act, students could borrow up to the full cost of attendance for graduate programs regardless of classification.
The coalition contends the rule is “contrary to law, in excess of statutory authority, and arbitrary and capricious.” They argue the redefinition will push students toward “often-predatory private student loans” and discourage advanced training in critical healthcare fields.
The complaint also challenges the rule’s implementation of the Act’s grandfathering provision. The Act protects currently enrolled students who borrowed federal loans as of June 30, 2026, but the final rule excludes those who transfer institutions or withdraw and re-enroll from grandfathering.
“Across the nation, healthcare systems are underwater, with doctors, nurses, and other health professionals stretched to meet the needs of their communities,” Bonta said in a statement. “Now, the Trump Administration is threatening to make this crisis even worse by limiting students' access to the federal student loans that make it possible to pursue the professional degrees needed for critical specialized work.”
Bonta joined attorneys general from Colorado, Maryland, Nevada, New York, Arizona, Connecticut, Delaware, the District of Columbia, Hawaii, Illinois, Maine, Massachusetts, Michigan, Minnesota, New Jersey, New Mexico, North Carolina, Oregon, Rhode Island, Vermont, Virginia, Washington, and Wisconsin in the filing. The governors of Kentucky and Pennsylvania also joined the coalition.
The complaint alleges the changes will exacerbate shortages in teaching positions and reduce access to medical care in underserved and rural communities.