By Nate Raymond
May 19 (Reuters) - A group of Democratic-led states filed a lawsuit on Tuesday challenging a new rule the Trump administration issued that could limit access to federal student loans for people pursuing advanced professional degrees in healthcare-related fields.
Democratic attorneys general from 23 states and the District of Columbia joined with the governors of Kentucky and Pennsylvania to file a lawsuit in federal court in Maryland arguing that the U.S. Department of Education's new
rule is unlawful.
The department announced the rule on April 30 in order to implement new federal student loan caps the Republican-led Congress adopted in July when it passed President Donald Trump's tax and spending bill known as the One Big Beautiful Bill Act.
Under that law, borrowing for students enrolled in professional degree programs, such as law schools and medical schools, was capped at $50,000 per year and $200,000 total while students pursuing other graduate degrees would be limited to $20,500 per year and up to $100,000 overall.
The states say that Congress, in enacting the caps, defined professional degree programs subject to the higher cap using an existing federal definition of a "professional degree" that captured programs that ready students for careers that generally require professional licensure.
But the states contend that the Education Department's new rule unlawfully narrowed who counted as professional students to exclude those working to become nurses, physician assistants and physical therapists, among other health-related career tracks.
"This rule will shut talented people out of critical professions and leave communities with fewer health care providers they desperately need," New York Attorney General Letitia James said in a statement.
Under Secretary of Education Nicholas Kent in a statement called the loan caps a commonsense step to address "decades of unchecked student loan borrowing that gave schools no reason to control costs."
"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," he said.
The lawsuit contends that the department's rule violates the Administrative Procedure Act because it contradicts federal law and is arbitrary and capricious.
The states are also challenging another part of the Education Department's rule relating to a provision of the law that "grandfathered" in current students who had borrowed federal student loans before the caps take effect on July 1.
The states say that the rule would unlawfully strip those students of those protections if they transfer schools or temporarily withdraw and later re-enroll.
(Reporting by Nate Raymond in Boston; Editing by Mark Porter)
