Federal student loans for graduate degrees in nursing, physical therapy and other healthcare fields have long helped fill workforce gaps across the country. Those loans are now at the center of a multistate legal fight.
The lawsuit
Five states — New York, Arizona, North Carolina, Kentucky and Nevada — filed suit challenging a federal rule that limits how much graduate students in certain healthcare programs can borrow through federal student loan programs. The challenge, reported Monday, May 19, 2026, targets caps on borrowing for degrees in nursing, physical therapy and related fields.
Details on the specific dollar thresholds weren’t immediately available. But the states argue the rule cuts off a pipeline of students who need federal loans to complete expensive graduate healthcare programs — programs that often take years and don’t come cheap.
The coalition of attorneys general spans both red and blue states, which isn’t common. Kentucky and Arizona joining New York and Nevada on the same side of a lawsuit says something about how broadly the concern cuts.
The stakes
Nursing shortages have dogged hospitals and clinics for years. Physical therapy programs face similar recruitment struggles. Graduate-level training is required for many advanced clinical roles, and tuition for those programs frequently runs into six figures — far beyond what most students can cover without borrowing.
Capping federal loans doesn’t eliminate demand for those degrees. It just shifts the cost burden. Students either take on private loans at higher interest rates, or they don’t enroll at all. Neither outcome helps a healthcare system that’s already short-staffed.
The states haven’t said publicly how many students could be affected by the caps, and the federal government hasn’t responded to the suit yet. Whether additional states plan to join the challenge isn’t clear either.
A court date hasn’t been set.
