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By Suzanne Blake
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Several major labor unions have launched a new lawsuit against the Trump administration's student loan overhaul.
The group’s newly filed lawsuit on Tuesday argues that changes to the federal definition of a "professional degree" could make it harder for students to enter critical public-service fields such as education, social work and public health.
The case is just the latest legal challenge to President Donald Trump's efforts to reshape the federal student loan system.
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"We are already facing staffing crises in too many public service professions, and this rule threatens to make the situation even more dire," Lee Saunders, president of the American Federation of State, County and Municipal Employees (AFSCME), said in a statement. "The court must strike down this illegal rule to protect quality patient care, social services and public health, and ensure that workers aren't priced out of these critical public service professions."
Why It Matters
The lawsuit comes as millions of student loan borrowers are already adjusting to significant changes that took effect July 1.
Under the new law, graduate students are subject to a $100,000 lifetime federal borrowing cap, while students pursuing qualifying professional degrees can borrow up to $200,000.
Critics have since said that the administration's interpretation of which programs qualify as "professional degrees" could restrict access to higher education in fields that are already experiencing workforce shortages.
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What To Know
The lawsuit was filed Tuesday by a coalition that includes AFSCME, the American Federation of Teachers (AFT), National Nurses United and the AFL-CIO.
The groups are seeking to block portions of the Education Department's student loan changes, arguing that the administration failed to follow proper rulemaking procedures and adopted an unlawfully narrow definition of a professional degree.
“The unions aren't suing to block the borrowing caps. They're challenging how ED redrew the line between professional and graduate degrees,” Michael Ryan, finance expert and founder of MichaelRyanMoney.com, told Newsweek.
“Congress pointed to a definition that already existed. The claim is that ED added extra requirements to push nursing, teaching, and social work out of the professional tier.”
The dispute specifically centers on the administration's decision to limit eligibility for the higher $200,000 borrowing cap to a select group of professional programs. When the rules were announced, the Education Department identified 11 programs that would qualify for the higher lending threshold.
A federal court previously blocked the narrowed definition from taking effect while litigation proceeds, prompting the department to issue an interim list of programs that would qualify for the higher borrowing limits. However, the unions say the revised list still excludes master's degree programs in social work, education and public health.
“A nursing student can technically qualify for $50k per year but get packaged at $20,500 because schools are told to use the lower cap to hedge against the ruling changing,” Ryan said. “Grad PLUS is gone... that's statute. So the gap gets filled with private loans. Private loans are the one thing PSLF [Public Service Loan Forgiveness] can never forgive. The forgiveness program built for public service workers is steering them toward debt it can't touch.”
According to the complaint, the exclusions could worsen staffing shortages in public-service professions by making graduate education less affordable for prospective workers.
“It potentially forced students into fields that will require financing substantially more of their education outside the federal loan system. For borrowers and prospective students, the administration’s broader overhaul is one supporters believe will create tighter borrowing limits and will pressure universities to control tuition and prevent students from accumulating more and more debt,” Alex Beene, financial literacy instructor at the University of Tennessee at Martin, told Newsweek.
“At the same time, critics warn that eliminating Grad PLUS loans, imposing lifetime caps, and restructuring repayment could make expensive graduate programs inaccessible to students without significant wealth.”
The new lawsuit adds to a growing number of legal battles over Trump's student loan agenda. Separate cases challenging the administration's borrowing caps and other repayment-related changes are already moving through the courts.
Newsweek reached out to the Department of Education for comment via email.
“This latest lawsuit, coupled with the ones that came before it, makes one thing clear: nearly every program believes it should be entitled to the higher federal loan limits. For nearly two decades, the Department has consistently used a narrow, technical definition of what constitutes a professional degree," Ellen Keast, press secretary for higher education, told Newsweek.
"Now that Congress has tied higher loan limits to that longstanding definition, institutions, unions, and trade associations that benefited from the status quo are suddenly trying to rewrite history. The Department is confident in its interpretation of the law and will continue to fight for policies that put students and families—not institutions, unions, or special interests—first and make higher education more affordable.“
What's Driving the Fight Over Professional Degrees?
The controversy stems from larger changes enacted under the Trump administration's student loan overhaul.
Along with eliminating some existing borrowing pathways, the policy established new borrowing limits intended to curb rising student debt and encourage colleges to control tuition costs.
While the changes could lower American taxpayers’ responsibility and help rein in escalating education expenses, the restrictions could also push students into more expensive private loans or even discourage them from entering lower-paying public-service careers.
Still, some are looking to the private sector to make up for the staffing shortages with higher starting salaries.
“If there are indeed major staffing shortages and significant demand in areas such as social work, nursing, and education, shouldn’t the market increase salaries to attract workers into these professions?” Kevin Thompson, CEO of 9i Capital Group and host of the 9innings podcast, told Newsweek.
“Instead, these changes could make it more difficult for students to finance degrees in fields that already face significant labor shortages. Students may have to borrow elsewhere, contribute more out of pocket, or simply decide the economics of pursuing the degree no longer make sense.”
Healthcare and education advocates have been particularly concerned about the impact on graduate programs that require advanced training but do not always lead to high-paying careers.
Nursing organizations and education groups previously challenged the administration's definition in court, arguing it conflicts with congressional intent and could worsen existing labor shortages.
Of the lawsuit, Thompson said, “I’m not convinced it ultimately changes much.”
He added: “The larger question is whether the administration has the legal authority to determine which programs qualify for the higher loan limits. Until the courts answer that question, students entering these professions are left dealing with greater uncertainty.”
What Happens Next
The lawsuit will proceed in federal court as judges continue weighing challenges to multiple components of the Trump administration's student loan changes.
The Education Department's guidance remains in place while litigation continues.
A final ruling could determine whether additional graduate programs qualify for the higher federal borrowing limits and whether the administration can maintain its narrower interpretation of professional degrees.
“Odds are this will continue to be heavily debated in the courts system in the coming months, as we've seen on past student loan decisions,” Beene said.
Contact Newsweek editors on this story: Edward T. Cummins.
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