A coalition of major labor unions filed a lawsuit on Tuesday against the Trump administration’s changes to federal student loan borrowing limits, arguing the rules could restrict access to critical public service professions.
The lawsuit targets new borrowing caps that took effect July 1, which limit graduate students to $100,000 in lifetime federal borrowing and cap professional degree borrowers at $200,000. The plaintiffs, including the American Federation of State, County and Municipal Employees (AFSCME), American Federation of Teachers (AFT), National Nurses United, and the AFL-CIO, claim the administration’s definition of a “professional degree” is unlawfully narrow and threatens workforce shortages in education, social work, and public health.
The lawsuit alleges the Education Department failed to follow proper rulemaking procedures in implementing the changes. The plaintiffs are seeking to block portions of the new policy, arguing it will disproportionately harm students in fields already facing staffing crises.
Borrowers face shifting repayment rules
Separately, student loan borrowers continue to navigate confusion over recent repayment changes. The Trump administration eliminated the Biden-era SAVE plan in March, which had offered lower payments and faster debt relief. Since July 1, servicers have begun notifying SAVE borrowers of a 90-day window to transition to a new plan, with automatic placement on the standard repayment plan if no action is taken.
Borrowers report inconsistent notifications from servicers, with some receiving notices months after the July 1 deadline and others switching plans without adequate time to adjust budgets. The Education Department had previously encouraged borrowers to act early, but many say the process has been poorly communicated. An ongoing lawsuit seeks to halt the involuntary transfers off SAVE.
What the new rules mean for borrowers
Under the revised policy, students pursuing professional degrees—such as law, medicine, or nursing—now face stricter borrowing limits. The administration argues the caps are necessary to control rising federal student loan costs, while critics say the changes could price out students from essential public service careers.
The lawsuit marks the latest legal challenge to the Trump administration’s overhaul of the federal student loan system, which has already drawn criticism for its abrupt implementation and lack of clarity for borrowers. The Education Department has not yet responded to requests for comment on the lawsuit or the repayment transition process.