New rules will limit federal student loans for nursing degrees to $20,500 per year with a maximum total of $100,000. The Trump administration argues these caps will lower tuition costs, but critics say they will exacerbate the country's serious nursing shortage.
A group of 24 Democratic-led states and the District of Columbia have sued the federal government to block the new rule, set to take effect on July 1. Opponents argue that the caps will not only fail to reduce tuition but also discourage people from pursuing medical careers, particularly harming rural areas that already struggle to find healthcare providers.
Background of the New Loan Limits
The new parameters, approved by Congress as part of the One Big Beautiful Bill Act, limit borrowing for graduate degrees termed "professional" (such as medicine, dentistry, and law) to $50,000 per year with a maximum of $200,000. Other graduate students, including those pursuing nursing, physical therapy, and nurse anesthetist programs, will be limited to $20,500 per year and a total of $100,000.
The Trump administration claims these restrictions will stop graduate schools from continually increasing tuition and make education more affordable. Since 2000, the average cost of earning a graduate degree has more than tripled, according to a 2024 Georgetown University report. The US Department of Education stated that "for the last two decades, graduate students have been able to borrow up to the full cost of attendance, enabling colleges and universities to raise tuition and fees with few constraints while shifting the financial burden on to students."
However, evidence for the so-called Bennett hypothesis—that increased financial aid drives up tuition—is mixed, according to a 2022 Federal Reserve report. Beth Akers, a senior fellow at the right-leaning American Enterprise Institute, supports the new limits but admits there is no evidence they will drive down tuition because "we have never gone in this direction with policy."
Critics Warn of Increased Reliance on Private Loans
Jennifer Zhang, a policy analyst at Protect Borrowers, argues that the caps will actually increase tuition costs. With cuts to Medicaid and the Supplemental Nutrition Assistance Program, states face budget shortfalls, and higher education funding is often cut first. "Students at public institutions are going to actually see their tuition and cost of attendance likely increase," Zhang said.
Students will also need to rely more on private loans, which carry higher interest rates. While federal student loans for graduate students have a 7.9% interest rate, private loans can reach almost 18%, according to the Education Data Initiative. This could dissuade people from pursuing careers like nursing, critics argue.
New York State Attorney General Letitia James, a plaintiff in the lawsuit, stated: "This rule will shut talented people out of critical professions and leave communities with fewer healthcare providers they desperately need. We cannot afford fewer nurses, fewer providers or fewer opportunities for working people to enter these essential fields."
Impact on Rural Areas and Individual Students
If fewer people study nursing, rural areas could be hit hardest. In 2022, urban areas had about 98 registered nurses per 10,000 people, while rural areas had only 64, according to a report in the Medical Care journal. Nebraska, a largely rural state, faces a shortage of almost 6,700 nurses, or 21% of demand, as reported by the Nebraska Center for Nursing in 2025.
Lepaine Sharp-McHenry, dean of the University of Nebraska Medical Center College of Nursing, said: "The decision to move in this direction really indicates a lack of understanding of the impact on the primary care provider workforce."
Coby Rodriguez, who will soon graduate with a master's in nursing from Johns Hopkins University, wants to become a certified registered nurse anesthetist and practice rural medicine in his home state of Washington. He had planned to start school after one year of ICU nursing but now expects to work three to four years due to the new loan limits. With $70,000 in existing debt and the additional degree costing at least $100,000, Rodriguez wants to avoid private loans because he lacks a co-signer. He said the caps are already causing classmates to reconsider their career paths: "The interest rates on private loans, as well as just taking out more money in general, it might not be worth it for some of these salaries."
Despite these challenges, the University of Nebraska nursing school expects a 19% increase in graduate enrollment in fall 2026 over fall 2025, attributed to an "aggressive marketing campaign" highlighting the value of graduate education. School officials are also working with private financial institutions to offer attractive loans, Sharp-McHenry said: "That would allow them to continue to move on with their educational goals and not be overly concerned about the finance piece."
