New student loan limits challenged by Democratic attorneys general, governors in lawsuit

WASHINGTON — A coalition of Democratic attorneys general and governors sued the U.S. Department of Education on Tuesday over forthcoming regulations that will impose new borrowing limits for students pursuing certain advanced degree programs. 

The lawsuit — filed in the U.S. District Court for the District of Maryland — challenges a portion of the incoming federal student loan system overhaul that sets stricter loan caps for students partaking in postbaccalaureate degree programs

The department finalized regulations, published May 1, that implement the student loan overhaul outlined in congressional Republicans’ mega tax and spending cut bill signed into law by President Donald Trump last year. Most of the student loan provisions will take effect July 1. 

The forthcoming regulations eliminate the Grad PLUS program, which allowed graduate and professional students to borrow up to the full cost of attendance. 

Graduate student loans will have a $20,500 annual limit and $100,000 aggregate cap. Professional student loans will have a yearly limit of $50,000 and aggregate cap of $200,000. 

However, the programs that fall under the department’s “professional” category — and thus are eligible for the higher borrowing limit — are limited to pharmacy, dentistry, veterinary medicine, chiropractic, law, medicine, optometry, osteopathic medicine, podiatry, theology and clinical psychology.

‘Professional degree’ definition at issue 

The states allege that the department “unlawfully altered” the “professional degree” definition “by adding new requirements and narrowing eligibility in ways Congress never authorized,” per a press release regarding the lawsuit. 

The states also argue that the “professional degree” definition will harm them by “reducing funding for many State institutions of higher education and impeding the States’ abilities to meet critical workforce needs and provide services to their residents.” 

The states also allege that the regulations will threaten their “ability to meet critical workforce needs, especially in healthcare,” and that the forthcoming reduced loan limits will “likely cause students to graduate with more debt, discouraging them from finding less remunerative jobs in rural areas or the classroom.” 

The lawsuit included attorneys general in Arizona, California, Colorado, Connecticut, Delaware, the District of Columbia, Hawaii, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New Mexico, New York, North Carolina, Oregon, Rhode Island, Vermont, Virginia, Washington and Wisconsin, in addition to the governors of Kentucky and Pennsylvania.

Administration defends loan caps 

Under Secretary of Education Nicholas Kent said that “after decades of unchecked student loan borrowing that gave schools no reason to control costs, these commonsense loan caps — created by Congress — are already incentivizing colleges and universities to lower tuition,” in a statement shared with States Newsroom. 

“Clearly, these Democratic governors and attorneys general are more concerned about institutions’ bottom-line rather than American students and families’ ability to access affordable postsecondary education,” Kent added.