Pennsylvania Student Loan Cutoff Sparks Federal Lawsuit Against Department Of Education
Two national healthcare education groups filed a federal lawsuit against the U.S. Department of Education and Education Secretary Linda McMahon on Wednesday, seeking to block a new rule that restricts access to federal loans for physician assistant students.
The PA Education Association and the American Academy of Physician Associates filed the complaint in the U.S. District Court for the District of Columbia. The groups argue that the agency’s “Reimagining and Improving Student Education” final rule, published on May 1, 2026, unlawfully prevents PA students from accessing higher federal student loan limits.
The Financial Conflict
Historically, graduate and professional students relied on the Grad PLUS loan program to cover full tuition and living expenses. In 2025, Congress passed the One Big Beautiful Bill Act, which eliminated the uncapped Grad PLUS program. The Act capped standard graduate loans at $20,500 per year but preserved a higher cap of $50,000 per year for “professional students.”
According to the lawsuit, Congress adopted a long-standing 2007 regulatory definition of “professional degree” for this new statutory cap. The plaintiffs state that PA degrees meet all original requirements of that definition: they signify completion of academic requirements to begin practice, demand skills beyond a bachelor’s degree, and lead to professional licensure.
However, the Department of Education’s new rule added extra-statutory requirements. Under the revised rule, a professional degree must generally be at the doctoral level, require at least six years of postsecondary coursework, and match specific programmatic classification codes. Because entry into the PA profession requires a master’s degree rather than a doctorate, PA students are excluded from the $50,000 professional loan tier.
Alleged Institutional and Healthcare Impacts
The plaintiffs state that the funding restriction will cause widespread disruption to the healthcare education pipeline. According to Department of Education data cited in the complaint, 76% of PA student borrowers relied on Grad PLUS loans during the 2023–24 academic year. Average PA tuition exceeds $68,323 for in-state public programs and averages $113,744 at private institutions, excluding living expenses.
The complaint alleges that without access to the higher federal limits, students will be forced to rely on private loans with higher interest rates, stricter approval rules, and fewer repayment protections. The associations argue this will lower enrollment, decrease institutional revenue, and ultimately worsen provider shortages in an already overburdened healthcare system, particularly in rural areas.
Legal Arguments and Contradictions
The lawsuit brings three counts of violating the Administrative Procedure Act, asserting that the Department of Education acted without congressional authority to alter statutory definitions.
The plaintiffs point out internal inconsistencies within the government’s new rule. For example, the Department’s approved list of professional degrees still includes the Master of Divinity and the Bachelor of Laws—neither of which are doctoral degrees, meaning they fail the department’s own new standard.
Furthermore, the Department of Education justified the exclusion by noting that most states require PAs to practice under the supervision of or in collaboration with a physician. The plaintiffs argue this “supervision standard” appears nowhere in the text of the law or the regulations. They also note that other professions on the approved list, such as medical graduates before residency or pharmacists under collaborative practice agreements, also operate under professional supervision but retain their professional student status.
Requested Relief
The lawsuit asks the court to declare the Department of Education’s definition of a professional degree unlawful under the Administrative Procedure Act. The plaintiffs are seeking a court order declaring that PA degrees are professional degrees under the federal statute, which would restore student access to the $50,000 loan limit.
Additionally, the lawsuit asks the court to postpone the rule’s scheduled July 1, 2026 effective date until the litigation is resolved.