Loan Limits Finalized, but Litigation Looms

The Trump administration finalized regulations Thursday that will put in place new loan limits for postbaccalaureate degree programs, which could potentially limit college access for hundreds of thousands of students and weaken pipelines for several high-demand health-care professions. Multiple trade associations quickly announced plans to challenge the rule in federal court.

The lawsuit has yet to be filed, but leaders from the American Academy of Physician Associates and the Physician Assistant Education Association say it can be expected “soon.” They plan to argue that the rule exceeds executive authority and overrides lawmakers’ intent when they established a framework for the loan limits in the One Big Beautiful Bill Act, which passed last summer.

A spokesperson from the American Federation of Teachers, one of the largest higher education faculty unions, said the union is also considering legal action.

The crux of the lawsuit will be which programs have access to how much in federal loans.

OBBBA ended the Grad PLUS program, which allowed graduate students to borrow up to the full cost of attendance. In its place, Congress established new loan caps that would limit “graduate students” to borrowing $20,500 per year or $100,000 in total and “professional students” to borrowing $50,000 per year or $200,000 in total. But it was up to the Education Department to determine which degree programs fell into each category.

In the end, the department opted for a narrow definition of professional, limiting access to a select 11 degree programs: pharmacy, dentistry, veterinary medicine, chiropractic, law, medicine, optometry, osteopathic medicine, podiatry, theology and clinical psychology. All other degree programs will be deemed “graduate.”

The physician assistant groups said in a statement that excluding PAs from the professional category “will create unnecessary barriers to PA education and undermine efforts to strengthen the healthcare workforce at a time of growing national need.”

Despite qualms from a panel of higher ed policy experts as well as comments from more than 80,000 students, bipartisan lawmakers and institutions, the Education Department opted to stick with its existing definition of professional.

Under Secretary Nicholas Kent has repeatedly said maintaining the narrow definition is in the best interest of students and taxpayers—the rule is intended to drive down college costs and prevent borrowers from taking on “unmanageable” debt levels that they can’t repay.

But critics argue that much of the tuition sticker price is beyond institutions’ control due to factors like rising employee salaries, decreased state funding and inflated demands from accreditors when it comes to equipment or the length of programs. They fear that with loan caps in place, many students may no longer be able to finance their education.

Data from the department backs those concerns, showing that about 429,000 borrowers took out $12.3 billion more than the annual loan limit during the 2023–24 academic year. That means that if the policy had already taken effect, in order to stay enrolled those students would have to find a private lender—likely with a far higher interest rate—to cover the gap. Previous research from outside groups has found that nearly four in 10 borrowers either have subprime credit scores or no credit score at all and could struggle to secure private loans.

Combined, these hurdles could lead to declines in enrollment and revenue, forcing some master’s and terminal degree programs to shutter.

Neither the department’s decision to stand firm on its narrow definition, nor the lawsuit challenging that policy, surprised higher ed experts. Still, many lobbying groups and academic associations expressed “profound” disappointment with ED’s decision to dismiss public concerns.

“This definition will result in fewer students being able to pursue careers in architecture, public health and health administration, mental health counseling, naturopathic medicine, occupational and physical therapy, and athletic training, among other fields, particularly those in the health professions,” said a spokesperson from the Advanced Professional Workforce Alliance, a coalition opposed to the loan caps. “While the Department claims there is no value judgment in their definition, it ignores the value the excluded programs provide to society and the economy.”

Now, advocates and experts are watching closely to see whether the courts will rule in favor of academic institutions and, if they do, if the ruling will come down fast enough to block the Trump administration’s rule before it takes effect July 1. If not, they add, it will be up to Congress to spearhead any change in the definition.

“It’s a matter of how long it will take for Congress to act on this issue, and outside of that, we will have to see what happens in the judicial branch,” said Emmanual Guillory, senior director of government relations at the American Council on Education.

ED Not Backing Down

Kent once again stood his ground, defending the department’s approach on a call with reporters Thursday morning, arguing that limiting loans is not only legal but also in the best interest of students and taxpayers.

“This is just basic economics. When there is more money in the system, institutions of higher education are going to raise their prices … and that is exactly what we have seen over the course of the last two decades with Grad PLUS,” he said. “We feel that nurses, police officers, firefighters—all of these professions—are professional in nature. We need them in our society, but we value them so much that we do not want them taking on unmanageable debt that they’re not able to repay.”

A department spokesperson later added that 71 percent of college graduates with student debt report delaying major life milestones like buying a home or a car as a result of their loans.

In the department’s response to public comments critical of the professional definition, policy experts say the ED officials were largely dismissive of the concerns raised.

For example, the department acknowledged concerns that students might not be able to secure private loans, noting that “these loan limits will create several new costs for students.” But officials added that the department didn’t have discretion to modify the statutory loan limits that Congress passed and that it was implementing the definition that lawmakers passed. (The federal statute listed 10 programs as examples of professional degree programs but says the definition includes but isn’t limited to those identified.)

Officials also argued that their approach “provides a clearer and more uniform boundary than commenter-suggested approaches.”

“Through these reasonable loan caps, we are instituting a ceiling for institutions to live within their means,” Kent added during the press call.

Congress Sounds Off

In Congress, lawmakers had mixed reactions.

Rep. Tim Walberg, the Michigan Republican who chairs the Education and Workforce Committee, praised the department for putting its foot down, adding that the new rule encourages colleges to “deliver real value.”

“The current system has too often left borrowers worse off,” he said in a statement Thursday. “I commend the Trump administration for advancing these reforms and remain committed to strengthening our higher education system so it delivers real value for students, families, and taxpayers.”

Meanwhile, Rep. Mike Lawler, a New York Republican, told Inside Higher Ed he “fundamentally disagree[s] with this rule,” adding that he is actively working to undo it. Lawler and 12 bipartisan co-sponsors have introduced the Professional Students Degree Act, a bill that would codify an expanded definition of who qualifies for the higher level of loans. It would not change the $50,000-per-year cap itself, but simply add degree programs like master’s in public health, social work and education to the list. “Simply put, the Department of Education’s implementation ignores the realities facing nurses, physical therapists, physician assistants, and others who require additional schooling and licensing to serve our communities,” Lawler said. “I will use every tool necessary to have Congress take action.”

Multiple other pieces of legislation with similar goals have been introduced by House Democrats, who have sharply criticized the rule. But action in Congress will likely be an uphill battle, since Republicans passed the legislation initially and control both chambers. Still, more than a dozen affected groups told Inside Higher Ed they will continue to push Congress to expand the definition.

“Congress created the law that led to these regulations, and Congress can change the law,” Waded Cruzado, president of the Association of Public and Land-grant Universities, said in a statement.