A coalition of four major unions (the AFL-CIO, AFSCME, the American Federation of Teachers, and National Nurses United) filed a lawsuit on August 11, 2026 (PDF File) in the U.S. District Court for the District of Columbia challenging the Department of Education's Reimagining and Improving Student Education (RISE) rule on setting graduate versus professional student loan limits.
The complaint asks the court to vacate the rule's definition of "professional student" — the definition that determines whether a graduate borrower can access $50,000 per year and $200,000 total in federal loans, or just $20,500 per year and $100,000 total.
The unions collectively represent millions of workers, including nurses, teachers, social workers, librarians, and public health employees, which the new rules classify as "non-professional" for student loan borrowing purposes.
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Why It Matters
The One Big Beautiful Bill Act eliminated Grad PLUS loans and created a two-tier graduate borrowing system that took effect July 1, 2026.
Congress defined "professional student" by pointing to an existing regulation, 34 C.F.R. 668.2, which used a three-part functional test and a non-exhaustive list of ten example degrees. The RISE rule converted that open-ended test into a closed list of eleven programs (adding clinical psychology), layered on doctoral-level, six-year, licensure, and CIP-code requirements, and excluded advanced nursing (MSN and DNP), education, social work, public health, library science, occupational therapy, physical therapy, and physician assistant programs, among others.
A separate lawsuit challenging the rule has already forced the Department to at least temporarily expand the list of qualifying degrees - adding 29 new degrees to the original list of 11.
For students in the excluded fields, that means half the annual borrowing limit and a potential gap that private lenders are expected to fill on worse terms, with loans that carry no federal protections and never qualify for Public Service Loan Forgiveness.
The complaint notes that more than 80,000 public comments were filed on the proposed rule, and roughly 97% objected.
The Legal Arguments
The complaint brings seven claims under the Administrative Procedure Act, which fall into three buckets:
- The "professional student" definition is unlawful. The statute set an open-ended functional test with illustrative examples but the final rule swapped in a fixed eleven-program list, required licensure as a universal prerequisite, and leaned on CIP codes that NCES itself disclaimed as "a regulatory device." The unions argue this conflicts with the statute, exceeds the Department's authority, and is arbitrary and capricious.
- The grandfathering carve-out was narrowed illegally. The statute exempts anyone enrolled in a program and borrowing as of June 30, 2026 for their expected time to credential (up to three years). The rule strips that protection from students who transfer schools (even in the same program) or temporarily withdraw and re-enroll.
- The rule took effect a year too early. The Higher Education Act's master calendar requires loan program rules to be published by November 1 to take effect the following July. The RISE rule was published May 1, 2026 and made effective July 1, 2026, which the unions say means it could not lawfully apply before July 1, 2027.
That last claim isn't as simple though: the Higher Education Act gives the Secretary authority to designate rules for early implementation, and the Department argues Congress itself waived the calendar by requiring the loan cap provisions to take effect July 1, 2026.
This Is The Third Major Challenge To The New Loan Limits
This is the third major lawsuit targeting the loan caps and the professional degree definition. A coalition of 23 state attorneys general sued earlier this year, and a union representing physician assistants was successful in getting a preliminary injunction that blocked part of the definition on June 24 days before the caps hit.
The Department of Education responded by temporarily expanding the professional degree list to 29 programs, then updated the list again to add more nursing and psychology programs.
But the unions point out that the expanded list exists only for the duration of the court's stay, still excludes critical degrees like social work, public health, library science, and education master's degrees, and comes with no explanation of the criteria the Department used.
How This Connects
The stakes are biggest in healthcare, where new loan limits are already reshaping graduate nursing programs that routinely cost more than the $100,000 graduate cap. However, it also has significant impacts in education and social work, where some states require a master's degree to work.
Congress has taken notice too: a proposed House bill would classify graduate nursing as a professional degree by statute, which would double borrowing limits for those students regardless of how the litigation ends.
As this moves forward, watch for the Department's response and any motion for a preliminary injunction, plus whether this case lands alongside the nurse practitioner litigation already before the D.C. federal courts.
In the meantime, the expanded 29-program list is in effect while the existing court stay lasts, so students in excluded fields should plan around the lower caps in the future unless a court says otherwise.
You can follow this case here: American Federation of Labor and Congress of Industrial Organizations et at v. United States Department of Education, Case:1:26-cv-02833
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Editor: Colin Graves
Robert Farrington is the founder of The College Investor and is widely recognized as one of the nation’s leading voices on student loan debt and saving for college. He holds an MBA from UC San Diego Rady School of Management and has spent over 15 years researching, writing, and advising on student loans, 529 plans, financial aid programs, and saving and investing for young professionals.
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