Lawsuit over federal student loan caps highlights impact on nursing shortage

A coalition of 25 states and the District of Columbia sued the Trump administration this week over the new limits on federal student loans. For students pursuing careers in healthcare fields, such as nursing, social work, physical therapy and occupational therapy, the lawsuit comes at a critical time, experts say.

Starting this year, the legislation established in President Donald Trump’s One Big Beautiful Bill Act caps the amount of federal loans students can borrow for graduate school at $100,000 over a lifetime — and sets a lifetime loan limit of $200,000 for professional programs, such as medical, dental or law school, according to rules finalized by the U.S. Department of Education at the end of April. 

“Higher education is expensive, and our health care system is already under immense strain,” New York Attorney General Letitia James said in a statement on Tuesday announcing the lawsuit. “This rule will shut talented people out of critical professions and leave communities with fewer health care providers they desperately need.”

The Education Department has said the new loan limits will provide a much-needed check on soaring tuition costs, which have jumped significantly in recent decades, outpacing inflation and other household expenses. Higher costs have made college and graduate school seem out of reach for some, while saddling others with crippling student loan debt.

“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,” Under Secretary of Education Nicholas Kent told CNBC in an email.

“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 said.

For students pursuing careers in nursing and other high-need fields, “the path forward is increasingly uncertain, with consequences not just for individual borrowers but for the workforce pipelines these communities depend on,” said Megan Walter, a senior policy analyst at the National Association of Student Financial Aid Administrators, a financial aid organization.

The American Nurses Association, a professional advocacy group, said the new rules could result in fewer registered nurses nationwide, just as demand for healthcare professionals is soaring. Aging baby boomers are causing a massive long-term demographic shift and driving up the need for health services — and workers, research shows.

Over the next decade, the demand for registered nurses is projected to grow faster than the number of full-time workers, according to a December brief from the federal government’s National Center for Health Workforce Analysis. By 2038, there is a projected 3% shortage, assuming that attrition, graduation and labor force participation remain the same.

“This rule, if implemented, will have a direct and devastating impact on healthcare across our country,” Jennifer Mensik Kennedy, president of the American Nurses Association, said in a statement.

About 20% of nursing students will borrow more than is allowed under the new loan limits, according to calculations by higher education expert Mark Kantrowitz. Compared to other graduate degrees, “nursing programs tend to be more expensive because they require a lot of hands-on training,” he said.

Also on Tuesday, Senators Jeff Merkley, D-Ore., and Roger Wicker, R-Miss., introduced a bill to classify post-baccalaureate nursing degrees as “professional degrees,” which would entitle nursing students to the higher federal student loan limit.

“It is imperative that Congress address the nursing shortage across the United States,” Merkley said in a statement. “This legislation would make nursing a more achievable profession by expanding the loan limits for nursing students.”

But some experts say the new rules may pressure schools to bring costs down, and several nursing programs are already cutting tuition costs to increase access.

Other graduate schools have also started offering discounts on tuition next fall.

For example, both Purdue University and the University of California, Irvine cut tuition at their business schools by up to 40% to fall below the federal loan cap for graduate business degrees. For a limited time, Johns Hopkins is offering class of 2026 graduates from any Maryland college or university a 50% tuition discount to any master’s program.

Although some institutions have responded quickly, it could take much longer for real progress to happen across the board, according to NASFAA’s Walter.

“Those processes take time, and students are making enrollment decisions now,” Walter said. “Budget cycles and operational realities don’t move that fast, and meaningful changes to program pricing could take years.”

In the meantime, higher education experts also say the federal loan cap could push more students into the private lending market to cover costs, often resulting in higher interest rates and fewer protections.

As it stands, rates on federal student loans currently range from 6.39% to 8.94%, while the rates on private student loans can be as high as 23%, according to NerdWallet.

In a release announcing the lawsuit, the attorneys general said that “the rule will force many students to rely on more expensive private loans, take on unsustainable debt, delay completing their education, or abandon these programs altogether.”

— CNBC’s Kamaron McNair contributed reporting.

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