President Donald Trump suffered yet another legal setback after a federal judge temporarily blocked part of his administration’s new rule limiting how much certain graduate students can borrow through federal student loans. The ruling prevents the Department of Education from narrowing the definition of “professional” degree programs just days before the policy was scheduled to take effect on July 1. The decision leaves broader federal borrowing caps intact while allowing more graduate programs to be eligible for higher loan limits under existing rules.
Rule stems from Republican-backed tax and spending package
The now-blocked regulation implemented portions of the 2025 Republican-backed tax and spending package known as the One Big, Beautiful Bill Act. Under the law, most graduate students are limited to borrowing $20,500 annually with a lifetime cap of $100,000, while students enrolled in designated professional degree programs, including law and medicine, can borrow up to $50,000 annually, with a lifetime limit of $200,000. Prior to the legislation, many graduate students were able to borrow up to the full cost of attendance through federal loan programs.
Critics argued that narrowing the definition of professional degrees disproportionately affects lower-paying but high-demand professions such as nursing, teaching and public health.
“Many argue that this interpretation unfairly targets one of the country’s most essential professions and could limit access to educational opportunities for future healthcare workers,” Kevin Thompson, CEO of 9i Capital Group and host of “The 9innings Podcast,” said, adding that the Trump admin “is unlikely to back away from this policy and will likely characterize judges who block it as ‘rogue actors.’”
Judge halts key portion of Donald Trump’s new student loan rule
U.S. District Judge Beryl Howell temporarily blocked the implementation of the new loan caps after siding with a coalition of healthcare and education organizations challenging the policy. The plaintiffs argued the Trump administration had “arbitrarily and capriciously” redefined professional degree programs, potentially restricting access to federal loans for students pursuing careers in nursing, education, public health and marriage and family therapy.
The court’s ruling pauses only the Trump administration’s narrower definition of qualifying professional programs. The broader borrowing limits established by Congress remain in place, which means higher annual and lifetime loan caps continue to exist while more degree programs remain eligible for student loans.
Plaintiffs welcome temporary victory
The coalition challenging the rule said Howell’s ruling protects students preparing for careers that serve their communities. “We are pleased that those who rely on the Direct Loan Program to contribute to their communities by seeking degrees in nursing, public health, education, and marriage and family therapy will be able to do so,” said Skye Perryman, president and CEO of Democracy Forward.
Education Department defends policy, vows ‘appropriate action’
The Department of Education defended the regulation, saying it is reviewing the court’s decision and will take “appropriate action.” The agency previously rejected claims that the policy would worsen the nation’s nursing shortage. In a November 2025 press release, it said, “Myth: Nurses will have a harder time securing federal student loans for their programs and this would contribute to the nationwide nursing shortage. Fact: Department of Education data indicates that 95% of nursing students borrow below the annual loan limit and therefore are not affected by the new caps.” Officials also argued that imposing a cap on student loans would encourage graduate nursing programs to reduce tuition costs, “ensuring that nurses will not be saddled with unmanageable student loan debt.”