Maryland leads states suing Education Department for 'unlawful' student loan cap

May 20, 2026 - 02:20

Maryland is spearheading a legal challenge against the U.S. Department of Education, joined by 25 other Democratic-led states and jurisdictions. The lawsuit targets a new federal rule that critics say unlawfully restricts access to federal student loans for students pursuing certain graduate and professional degrees.

The coalition argues the regulation imposes an arbitrary cap on borrowing, effectively blocking low-income and middle-class students from entering fields like law, medicine, and social work. Maryland Attorney General Anthony Brown stated the rule undermines Congress's intent to make higher education accessible and places an unfair burden on students who rely on loans to cover tuition and living expenses.

The contested policy, set to take effect this summer, would limit how much graduate students can borrow through the federal Direct PLUS Loan program. Supporters of the cap say it prevents excessive debt accumulation, but the plaintiffs contend it is an overreach that will disproportionately harm minority and rural students.

The lawsuit, filed in federal court, seeks to block the rule before it goes into effect. It argues the Education Department exceeded its statutory authority and failed to follow proper rulemaking procedures. The case is expected to draw significant attention as debates over student debt and higher education funding continue to intensify across the country.