In a previous post, we walked through the devastating impact the Department of Education’s (DOE) proposed degree reclassification would have on the already dire national workforce shortage in social work and behavioral health by cutting access to federal loans by half for MSW students; thus forcing essential mental health professionals into the predatory private-loan market. Sadly, that post was written while the rule was still a proposal — it is now law. This law was supposed to take effect on July 1, but has already landed in federal court twice.
This brief describes:
- What’s changed since the final rule,
- Two separate federal court cases challenging the law, and
- What this means for MSW students, programs, and the broader workforce right now.
What the Final Rule Actually Did
The DOE’s Notice of Proposed Rulemaking (NPRM) published on 1/30/2026 contained an extremely narrow list of only 11 “professional degree” programs that omitted many essential groups including social work, nursing, and occupational therapy. This means that most graduate students now have greatly restricted federal loan limits and are only eligible to borrow $20,500/year (a lifetime total of $100,000) in federal loans. In contrast, graduate students in the 11 “professions” are eligible to borrow $50,000/year (a lifetime total of $200,000) in federal loans.
Our Coalition for Social Work and Health (CSWH) formally objected to these changes in a comment letter to the DOE. Our letter argued that the NPRM’s treatment of social work lacked an evidentiary basis and ignored the federal government’s own consistent position that the MSW is the entry credential for clinical practice. Our letter also pointed to the Department of Labor’s Occupational Outlook Handbook, the VA’s job postings for social workers, and Medicare Conditions of Participation — all of which listed an MSW as the operative professional credential. Our comments also walked through the math – a typical MSW graduate already has an annual after-tax debt of roughly $35,000. This new law will add an additional $13,000–$24,000 in private borrowing.
Despite approximately 82,000 public comments submitted — one of the largest responses to a DOE rulemaking in recent memory — the final rule, published 5/1/2026, retained this narrow definition. Thus, MSW programs, along with degrees in nursing, physician assistant studies, physical therapy, and speech-language pathology, remained outside the “professional degree” category.
Two Lawsuits, Two Different Targets
As will be described in the following sections, two separate lawsuits went to federal court. Each lawsuit is unique and took a different approach to the same root problem in the final rule.
The Maryland-Led Coalition Case
On 5/19/2026, a coalition of 26 Democratic-led states and jurisdictions — co-led by the attorneys general of Maryland, Colorado, Nevada, and New York, and the governors of Kentucky and Pennsylvania — sued the DOE and Secretary Linda McMahon in the U.S. District Court for the District of Maryland. The suit made two central arguments. First, the states argued that the DOE’s definition of “professional degree” contradicts the statutory text Congress wrote into the One Big Beautiful Bill Act (OBBBA), which was considerably broader than what the DOE adopted. Second, the states argued that the DOE unjustly fabricated new restrictions that fell outside the scope of the legislation Congress intended. When Congress passed the OBBBA which established new, lower federal loan caps for graduate students, it included a provision to grandfather in student protection for those who were already enrolled and borrowing before 7/1/2026. The intent was straightforward — students who had already made financial and educational decisions based on the old rules had protected status and should be allowed to finish their degrees under the original terms they had planned on.
However, the DOE’s final rule added conditions that Congress never wrote. Under the new law, if a grandfathered student transfers to a different institution, even to continue the exact same program, the DOE treats this as a new program of study; thus, the student loses their protected status. Students also lose protected status if they take any sort of personal or medical leave of absence, or any other temporary withdrawal and later re-enroll.
Maryland’s position is that the Congress statute protects enrolled students and does not carve out exceptions for transfers or leaves of absence. Further, that by adding these conditions without statutory authority, and with almost no explanation in the rulemaking record, the DOE acted beyond what the law allows. Maryland argues this is contrary to the law and arbitrary and capricious under the Administrative Procedure Act.
The states use similar evidence to what the CSWH raised in our comments. Specifically, the lawsuit cited that the University of Maryland School of Nursing’s entry-level MSN program is an example of a degree improperly excluded because it met every substantive marker of a professional credential. As of this writing, no ruling has been issued in the Maryland case.
The D.C. District Court Ruling
The lawsuit in D.C. moved faster and in 6/24/2026, the U.S. District Court for the District of Columbia ruled in two consolidated cases. The first was brought by the American Association of Nurse Practitioners. Essentially, the court ruling cancelled (stayed) the DOE’s extra-statutory requirements for what counts as a “professional degree.” For example, requirements that do not appear in the underlying statute, e.g., a general requirement that programs be doctoral-level and share a four-digit CIP code with one of the 11 listed professions. Thus, court’s ruling invalidates these arbitrary and needlessly complex requirements that were never part of the the OBBBA’s statutory text.
While this is meaningful, it is not a win because the court did not strike down the DOE’s list. Rather, it struck down the additional criteria outside of the scope of the OBBBA that the DOE arbitrarily added to the statute. This means that the DOE needs to stick to the following three-part test that Congress created to decide which professions should be considered “professional degrees”. Specifically, a qualifying professional degree must signify:
- Completion of the academic requirements for beginning practice in a given profession.
- A level of professional skill beyond that normally required for a standard degree.
- That professional licensure is generally required to practice in that profession.
It is also important to note that the judge wrote in their ruling that this is this DC case is “likely to succeed on merits,” underscoring its strength. While this is not a final resolution, and it is very likely to be appealed by the DOE, it temporarily blocked the DOE from using its narrow professional degree classification to push nursing and some other healthcare graduate programs into the lower borrowing tier. On 6/29/2026, the DOE posted an electronic announcement to its website listing the updated list of “professional degrees” following the ruling – social work is not included in this amended list.
Congressional Action to Stem the Bleed
Fortunately, solutions are not limited to the Judicial branch. Advocates have successfully turned their attention to the Legislature, which has yielded some promising results. Since all federal spending must originate in Congress, every year the House of Representatives puts together its annual budget for all federal agencies which is made up of 12 separate Appropriations packages. The “Labor, Health and Human Services and Related Agencies” (LHHS) Appropriations bill that was released recently includes report language that directs the DOE to include nursing in the list of 11 “professional degrees” as a condition for using the next year’s federal budget. This is significant because it signals that there is some legislative appetite to hold the current Administration to account. Even more significant is that this effort was led by Chairman Aderhodlt, an ardent fiscal conservative who serves as the top Republican committee member charged with developing this annual budget plan. Efforts are currently underway to do the same for social work.
What This Means for Students and Programs Right Now
Here is the uncomfortable truth — as of today, the loan caps are in effect. The D.C. ruling sends the DOE back to the drawing board until it can justify excluding programs like the MSW. However, it does not automatically restore the higher loan limits for social work students. The D.C. cases are centered on nursing, public health, education, marriage and family therapy, and physician assistants. Social work is not explicitly named as a plaintiff or focus field in those cases. The Maryland case, which most directly challenges the underlying definition that excluded MSW programs in the first place, is still pending. Thus, the D.C. injunction is the immediate win for adjacent fields, while the Maryland case remains the primary vehicle for social work specifically.
This all means that student borrowers and schools of social work should assume that the $20,500/$100,000 caps apply. If the Maryland coalition prevails, or if the D.C. ruling’s logic is extended to require the DOE to apply the statute’s three-part test honestly, MSW programs could be restored to professional-degree status. Sadly, litigation timelines are not the same as academic calendars and we are not there yet. Once the Maryland case reaches a verdict, we may see the inclusion of an MSW, but until then, the D.C. ruling provides the legal basis contradicting the rulemaking’s arbitrary and capricious justifications.
Next Steps
The DOE’s analysis of social work was based on, and a strong majority of the allied stakeholders still believe that. The legal arguments now playing out in Maryland and D.C. echo many of the same points: that the statute’s own three-part test for a “professional degree” — completion of academic requirements to begin practice, a level of skill beyond a standard degree, and licensure as a precondition for practice — is one that clinical social work clearly meets, and that the Department’s narrower categorical exclusions do not hold up against the statutory text.
We will continue to track both cases and report back as rulings come down. In the meantime, we would encourage MSW programs and prospective students to stay close to financial aid offices for guidance on navigating the gap. Keep an eye on this space — the legal landscape is shifting quickly, and what is true today may not be true in a few weeks.
Read our earlier analysis, Ineffective and Harmful: The Trump Administration’s Degree Reclassification Plan Risks Adverse Outcomes and Limits Access to Talent for a full breakdown of the financial impact of the original proposed rule.