The lawsuit, filed in the U.S. District Court for the District of Maryland, alleges the Department unlawfully altered a definition incorporated into federal law by Congress in July 2025. The coalition contends the agency added new requirements and narrowed eligibility in ways Congress never authorized.
Attorney General William Tong of Connecticut, who joined the suit, criticized the administration's approach. "The Trump/McMahon plan to magically drive down education costs by barring student loans defies Congress, defies the law, defies reality, and will do real damage to Connecticut students and workers," Tong said.
The coalition argues the rule could harm states by reducing support for public institutions of higher education, creating barriers for students pursuing advanced training, and worsening workforce shortages in critical professions. The complaint notes that these impacts could be particularly significant in fields such as healthcare, where states already face ongoing workforce challenges.
The lawsuit also challenges provisions that limit protections for students already enrolled in programs. The statute includes a grandfathering provision that delays implementation of the loan caps for currently enrolled students. Under the rule, however, some students who transfer institutions or temporarily withdraw and later return to their programs could lose eligibility for grandfathering, creating additional financial barriers.
The lawsuit is being co-led by Colorado Attorney General Phil Weiser, Maryland Attorney General Anthony G. Brown, Nevada Attorney General Aaron D. Ford and New York Attorney General Letitia James.
It is joined by the attorneys general of Arizona, California, Connecticut, Delaware, the District of Columbia, Hawai‘i, Illinois, Maine, Massachusetts, Michigan, Minnesota, New Jersey, New Mexico, North Carolina, Oregon, Rhode Island, Vermont, Virginia, Washington and Wisconsin, as well as the governors of Kentucky and Pennsylvania.