New Trump Rule on Student Loan Caps Blocked in Court
A federal judge has temporarily blocked part of a new Trump administration rule that would limit how much certain graduate students can borrow in federal student loans just days before the policy was set to take effect.
The ruling halts the U.S. Department of Education's effort to narrow which degree programs qualify for higher borrowing limits, a move that has been criticized for potentially restricting access to training in key fields like nursing and education.
Why It Matters
Sweeping changes were made to federal student loans under the 2025 Republican-backed tax and spending package known as the One Big Beautiful Bill Act. The law introduced new caps on graduate borrowing, limiting most graduate students to $20,500 per year and setting a lifetime cap of $100,000.
Students in certain "professional" programs, such as law or medicine, could borrow up to $50,000 annually, with a total cap of $200,000. However, before many graduate students could borrow up to the full cost of attendance.
Some critics of the rule changes have said that narrowing the ‘professional' degree definition could disproportionately affect students pursuing careers in lower-paying but high-demand professions, including nursing, public health and teaching.
"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, the CEO of 9i Capital Group and the host of the 9innings podcast, told Newsweek.
What To Know
U.S. District Judge Beryl Howell in Washington, D.C., issued an order temporarily blocking the Trump administration's rule shortly before it was set to take effect on July 1. The judge sided with the coalition of trade organizations representing healthcare and education groups, which have argued that the rule unlawfully restricted access to federal loans.
Plaintiffs argued that the rule "arbitrarily and capriciously" defined a professional degree, causing major harm to fields like nursing and education.
"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, the president and CEO of Democracy Forward, in a statement.
While placing limits on certain degree programs could eventually help reduce tuition, Thompson said many feel that certain professions, like nursing, should never be singled out or restricted.
"The administration is unlikely to back away from this policy and will likely characterize judges who block it as ‘rogue actors,'" Thompson said.
What the Ruling Does and Doesn't Do
The court ruling does not eliminate the new loan caps entirely:
- The broader borrowing limits set by Congress remain in place.
- Only the stricter definition of which programs qualify as "professional" has been paused.
That means higher borrowing caps will still exist, but, at least for now, more programs may qualify under the older, broader definition.
The Education Department said it is reviewing the decision and will take "appropriate action." Previously, the department pushed back on claims that it is downgrading nursing with the new classification.
"Myth: Nurses will have a harder time securing federal student loans for their programs and this would contribute to the nationwide nursing shortage," the Department of Education said in a press release from November. "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."
The department said that placing a cap on loans will push the remaining graduate nursing programs to reduce their program costs, "ensuring that nurses will not be saddled with unmanageable student loan debt."
What Happens Next
The ruling is temporary, and the broader legal challenge is ongoing, so uncertainty still remains for students and schools as the July 1 rollout approaches.
Although this court order is a setback for the administration, it is more of a speed bump than a roadblock. Expect the administration to continue pursuing its broader agenda through the courts.
Contact Newsweek editors on this story: Samantha Beech and Sam Wilson.
2026 NEWSWEEK DIGITAL LLC.
This story was originally published June 25, 2026 at 5:34 PM.