Arizona Attorney General Kris Mayes has joined a federal lawsuit challenging the U.S. Department of Education’s new student loan rule, arguing that the policy unlawfully restricts access to federal borrowing for students pursuing advanced professional degrees, including several health care fields central to the state’s workforce needs.

The lawsuit, filed in the U.S. District Court for the District of Maryland, targets a recently finalized Education Department rule that implements new federal loan limits for graduate and professional students. Arizona joined a broad coalition of attorneys general and other state officials who say the department went beyond what Congress authorized by narrowing which degree programs qualify as “professional” programs eligible for higher federal borrowing caps.

The case centers on loan limits enacted under the 2025 One Big Beautiful Bill Act. Under the new framework, students in professional degree programs may borrow up to $50,000 annually and $200,000 in total through federal loans, while other graduate students face a $20,500 annual limit and a $100,000 aggregate cap. Previously, graduate and professional students could generally use federal Graduate PLUS loans to borrow up to the cost of attendance, subject to program and borrower rules.

The Education Department’s final rule defines professional programs to include areas such as medicine, law, dentistry, pharmacy, veterinary medicine, optometry, osteopathic medicine, podiatry, chiropractic and theology. The suing states argue that the department improperly excluded other programs that often require advanced training, licensure or certification, including nursing, physician assistant studies, physical therapy, occupational therapy, social work, dental hygiene, accounting and education.

Mayes said the rule could have a direct effect in Arizona, where state officials have repeatedly pointed to shortages in health care staffing, especially outside major metro areas. Her office said the policy could make professional degree programs financially unreachable for Arizona students preparing to work in fields that already face supply constraints.

“Arizona is already facing a serious healthcare workforce shortage, particularly in rural communities,” Mayes said in the Arizona Attorney General’s Office announcement. “This unlawful rule would make that crisis worse by putting professional degree programs out of financial reach for Arizona students who are working hard to fill those gaps.”

The coalition argues that Congress incorporated an existing federal definition of “professional degree” when it established the new loan limits, and that the Education Department had no authority to add new restrictions that exclude programs the states say should qualify. The complaint alleges the rule violates the Administrative Procedure Act because it conflicts with federal law and is arbitrary and capricious.

The lawsuit also challenges the department’s treatment of current students. The statute included a grandfathering provision meant to delay application of the new caps for students already enrolled and borrowing before the limits take effect. The states contend the final rule narrows those protections by allowing some students to lose grandfathered status if they transfer institutions or temporarily withdraw and later re-enroll.

For students, the practical issue is whether federal loans remain sufficient to cover the cost of advanced training. The states and higher education advocates say students who hit the lower graduate cap could be forced to seek private loans, which may have higher costs, stricter underwriting and fewer borrower protections than federal loans. Some students may not qualify for private credit at all, and others may decide not to enroll in graduate programs if federal financing no longer covers enough of the cost.

The Education Department has defended the rule as part of a broader effort to control student debt and limit incentives for colleges to raise tuition. Under Secretary of Education Nicholas Kent said in a statement reported by Reuters and the Associated Press that the loan caps are intended to address years of unchecked borrowing and encourage institutions to make postsecondary education more affordable.

That argument has drawn a sharp response from states and professional associations that say the rule may reduce access to programs that train workers in shortage fields. The Associated Press reported that nursing, physical therapy, dental hygiene, social work and occupational therapy were among the health-related fields excluded from the department’s professional-degree list, while Reuters reported that the suing states say the rule could affect students preparing to become nurses, physician assistants and physical therapists.

The Arizona case is part of a larger national dispute over how the federal government should balance student debt controls with access to graduate and professional education. Supporters of the department’s approach argue that unlimited federal borrowing can contribute to tuition inflation and leave borrowers with debt loads that are hard to repay. Opponents argue that blunt caps can shift costs to students, reduce access for lower-income applicants and weaken public-sector pipelines in education, health care and social services.

For Arizona colleges and universities, the case could affect graduate enrollment and program planning if students become less able to finance advanced degrees through federal loans. Public universities and professional schools often depend on predictable federal aid rules when building programs in nursing, behavioral health, teaching and other workforce-linked areas. A lower loan ceiling could put more pressure on institutional aid, state funding or employer-sponsored tuition support.

The coalition includes Arizona, California, Colorado, Connecticut, Delaware, the District of Columbia, Hawai‘i, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New Mexico, New York, North Carolina, Oregon, Rhode Island, Vermont, Virginia, Washington and Wisconsin, along with Kentucky and Pennsylvania officials. The lawsuit is being co-led by Colorado Attorney General Phil Weiser, Maryland Attorney General Anthony Brown, Nevada Attorney General Aaron Ford and New York Attorney General Letitia James, according to the Arizona Attorney General’s Office.

The challenged rule is scheduled to take effect July 1, making the litigation time-sensitive for incoming and continuing graduate students. The states are seeking court intervention before the caps are applied in a way they say could reshape access to professional education. Unless a court blocks or narrows the rule, students in excluded fields may soon have to plan around lower federal borrowing limits or find alternative financing.

The lawsuit also arrives as lawmakers and education groups press for separate changes. Higher education organizations and financial aid administrators have warned that the department’s interpretation may create confusion for students comparing programs with similar career outcomes but different federal loan treatment. Some lawmakers have also sought changes that would include advanced nursing programs within the professional-degree category.

For now, Arizona’s role in the litigation gives the state a formal stake in a national education finance fight that links student borrowing policy to health care access, workforce development and public higher education budgets. The outcome could determine whether the Education Department’s narrower definition remains in place before the first cohort of students faces the new limits this summer.