Vermont, 24 other states sue Trump’s Education Department over loan caps

May 23, 2026 - 12:14

A coalition of 25 states, led by Vermont, has filed a lawsuit against the U.S. Department of Education, challenging new federal limits on student loans. The legal action targets the department's decision to cap borrowing for graduate and professional students, a move the states argue will harm both students and the broader economy.

The lawsuit specifically objects to the exclusion of certain high-demand degree programs from the loan program. According to the complaint, the department's rules block funding for fields like nursing, which the states say will worsen an already strained healthcare system. "This is a direct attack on our ability to train the next generation of doctors, nurses, and teachers," Vermont's attorney general said in a statement. The suit claims the caps violate federal law by failing to consider the cost of education or the needs of the workforce.

The Trump administration has defended the caps as a way to reduce federal spending and prevent students from taking on excessive debt. But the states argue the policy is arbitrary and will push students toward for-profit lenders or force them to abandon their careers altogether. The coalition includes both Republican and Democratic attorneys general, reflecting bipartisan concern over the impact on rural and underserved areas.

The case now heads to federal court, where the states are seeking an injunction to block the rules from taking effect. A hearing is expected within weeks.