Beryl A. Howell of the U.S. District Court for the District of Columbia tossed the Education Department’s rule defining which programs count as a professional degree under new federal student loan caps. The late Wednesday ruling leaves the department’s narrower definition out of place as the July 1 limits approach.
Howell said the department’s approach was “misguided” and wrote that “Congress could not have been clearer as to the meaning of ‘professional degree.’” Congress passed OBBBA last summer, ending Grad PLUS and setting two borrowing tiers: $20,500 per year, or $100,000 in total, for graduate students, and $50,000 per year, or $200,000 in total, for professional students.
Education Department rule
The Education Department issued its rule earlier this spring and limited the higher professional borrowing cap to 11 degree programs: pharmacy, dentistry, veterinary medicine, chiropractic, law, medicine, optometry, osteopathic medicine, podiatry, theology and clinical psychology. It treated all other programs as graduate, which meant those students would fall under the lower cap once the law takes effect.
Howell’s ruling keeps the department from applying that narrow reading while the case continues. Her order technically stayed the rule pending final resolution of the litigation, but it rejected the department’s effort to narrow the statutory definition on its own.
OBBBA and loan caps
The definition at the center of the case turns on whether a program signifies completion of the academic requirements for beginning practice in a profession and a level of skill beyond what is normally required for a bachelor’s degree. Professional licensure is generally required as well. Those criteria now matter because they determine whether a student faces the higher professional cap or the lower graduate cap when borrowing for next year.
For universities and students, the ruling means the department cannot rely on the 11-program list as written while the litigation is unresolved. Programs outside that list are no longer boxed into the lower cap by Howell’s decision alone, and financial aid offices will need to plan around the statutory definition rather than the department’s narrower one.
National Association of Student Financial Aid
The Education Department told Inside Higher Ed, “this order allows ED to enforce the statutory professional degree definition and loan caps. ED is reviewing the order and will take appropriate action.” The National Association of Student Financial Aid Administrators said on its website that “significant uncertainty remains as the ruling is only a day old. ED has not yet appealed, a path they can pursue, or commented publicly on any plans to issue guidance. For now, institutions should consult their own legal counsel before deciding how to proceed.”
That leaves the July 1 launch date intact, with schools and borrowers waiting to see whether the department issues new guidance or takes the fight to appeal before the caps apply.
