The court concluded that when Congress adopted the preexisting regulatory definition “as in effect on July 4, 2025,” it codified that definition and removed the Department’s authority to narrow it.
On June 24, 2026—just one week before the July 1, 2026, effective date of the new student loan limits—the U.S. District Court for the District of Columbia issued a significant ruling in American Association of Nurse Practitioners v. McMahon and the consolidated case PA Education Association v. Department of Education, staying in part implementation of the U.S. Department of Education’s new regulatory definition of “professional degree.” The stay prevents the Department from enforcing its narrowed definition, which would have limited the categories of graduate students eligible for higher federal student loan limits under the Working Families Tax Cuts Act (also known as the “One Big Beautiful Bill Act”), pending resolution of the litigation.
Why It Matters
The district court’s decision—which applies nationwide, not just to the parties in the case—represents a positive significant development for graduate and professional programs, particularly those in nursing, therapy, mental health and related fields. While the stay prevents the Department from implementing its narrowed definition, it does not resolve which additional programs will qualify as professional or when such determinations will be made. The court left this to the Department to address. Institutions must likely wait for the Department to take further action before anything changes in how aid is administered. Until the Department takes further action—whether through guidance, rulemaking or case-by-case determinations—the 11 enumerated professional degree fields remain the only programs for which institutions can likely certify students at the higher professional loan limits. Detailed analysis is provided below.
Background
The Working Families Tax Cuts Act, enacted in July 2025, imposed new borrowing limits on Direct Unsubsidized Loans for graduate students and eliminated the Grad PLUS Loan Program, which had previously permitted borrowing up to the full cost of attendance for graduate or professional students in any field of study. Under the new framework, graduate students may borrow up to $20,500 annually ($100,000 aggregate), while “professional” students may borrow up to $50,000 annually ($200,000 aggregate) in Direct Unsubsidized Loans. Congress defined “professional degree” by incorporating into the Act the Department’s existing regulation at 34 C.F.R. § 668.2 “as in effect on July 4, 2025.” That regulation had been issued in 2007.
The incorporated preexisting regulatory definition provided a three-part test for determining whether a degree qualifies as “professional”: (1) the degree signifies completion of the academic requirements for beginning practice in a given profession; (2) the degree signifies a level of professional skill beyond that normally required for a bachelor’s degree; and (3) professional licensure is “generally required.” The regulation also included an illustrative list of 10 professional degree fields, explicitly stating that the list “included but was not limited to” those enumerated fields.
On May 1, 2026, the Department published a Final Rule that materially altered this definition. The new rule added requirements that a professional degree be “generally at the doctoral level,” require “at least six academic years of postsecondary education,” include a CIP code from a defined list and (in the preamble to the Final Rule) not lead to employment supervised by another professional. The Department also converted the illustrative list into an exclusive list of 11 fields (adding only Clinical Psychology to the original 10).
The Court’s Decision and the Scope of the Stay
Judge Beryl A. Howell found that the plaintiffs were likely to succeed on their Administrative Procedure Act claim that the Department’s new definition is contrary to law. The court concluded that when Congress adopted the preexisting regulatory definition “as in effect on July 4, 2025,” it codified that definition and removed the Department’s authority to narrow it.
The court granted plaintiffs’ request to set aside and stay the Department’s additional substantive requirements to the regulatory definition—the doctoral-level requirement, six-year education requirement, CIP code requirement, conversion of the illustrative list into an exclusive list and free-from-supervision requirement. The stay does not apply to the list of 11 degree fields that the Department determined qualify as professional. At the hearing, while the court did not expressly hold that the list is illustrative rather than exhaustive, both plaintiffs and the Department agreed that staying these substantive requirements would suffice, with the understanding that the enumerated list would not be interpreted as the only list of qualifying degrees. The practical effect, as the parties understood it, is to restore the original three-part test as the operative standard—meaning programs outside the 11 enumerated fields could qualify if they satisfy that test. This does seem to have left the question of which additional programs qualify to the Department “in the first instance.”
The court also declined to issue broader relief. It also refused to enjoin the statutory loan caps, reasoning that the statutory definition already provides the operative test and the Department can “simply apply the existing definition” without new rulemaking. It refused to declare that Physician’s Assistant/Associate (PA) degrees are professional, leaving that determination to the agency “in the first instance.” Finally, the court denied the Department’s request for a stay pending appeal.
How the Decision Potentially Affects Different Degree Programs
The stay creates an unusual implementation situation. Because the stay applies to the Department’s additive requirements for professional status but does not disturb the enumerated list of 11 fields, the operative standard going forward is the original three-part test from the 2007 regulation as codified by Congress. The court did not provide the Department with specific instructions about how to proceed, but the opinion and the hearing colloquy reveal important distinctions among different types of programs.
Degrees in the 11 fields enumerated in the Final Rule—Pharmacy (Pharm.D.), Dentistry (D.D.S. or D.M.D.), Veterinary Medicine (D.V.M.), Chiropractic (D.C. or D.C.M.), Law (L.L.B. or J.D.), Medicine (M.D.), Optometry (O.D.), Osteopathic Medicine (D.O.), Podiatry (D.P.M., D.P., or Pod.D.), Theology (M.Div. or M.H.L.) and Clinical Psychology (Psy.D. or Ph.D.)—are definitively professional degrees. The court’s stay did not impact these programs. Beginning July 1, 2026, institutions may treat enrolled students in these programs as professional students eligible for the $50,000 annual ($200,000 aggregate) loan limits.
The opinion recounts that the Department’s counsel represented that determinations could be made “relatively quickly” as to whether certain degrees satisfy the preexisting definition’s three-part test. The court noted that the Department had already performed the three-part analysis for other degree programs in the preamble to the Final Rule. This is important because the Department acknowledged in the preamble that a number of programs meet or may meet the three-part operative test, but were excluded solely because of the now-stayed contextual requirements. For Certified Anesthesiologist Assistant (CAA), Master of Science in Athletic Training (MAT/MSAT) and Speech-Language Pathology (SLP) and Audiology (AuD) programs, the Department explicitly found that they “meet” the operative test. For graduate-level nursing programs—Master of Science in Nursing (MSN), Doctor of Nursing Practice (DNP) and Doctor of Nurse Anesthesia Practice (DNAP)—the Department found they “may” or “appear to” satisfy the test. In all cases, the Department excluded these programs only because of the “contextual requirements” it had imposed—the very requirements that have now been stayed. These programs therefore have the strongest argument for professional degree status because the Department’s objections were based on the contextual requirements the court has now stayed, not on any failure to satisfy the statutory three-part test itself.
This creates an important ambiguity. The opinion states that whether a PA degree or any other type of graduate degree is a “professional degree” is a “question best reserved for the agency to consider in the first instance, based on application of the proper three-criteria standard set forth in 34 C.F.R. § 668.2.” While this statement came in the context of refusing to order the Department to declare PA degrees professional and does not directly address whether institutions may apply the three-part test themselves, the court’s repeated references to agency action “in the first instance” and its statement that agencies are “entitled to construe [their] own regulations in the first instance” strongly suggest that the Department, not individual institutions, should determine which additional programs qualify.
By contrast, the Department explicitly found in the preamble that certain programs do not meet the three-part test under any standard: Master of Business Administration (MBA); Education degrees (M.Ed.,Ed.D., Ed. S. and MAT); Public health degrees (MPH, DrPH and Master’s in Epidemiology); and Public policy and administration degrees (MPP/MPA). The court’s stay does not change this determination, and these programs will not qualify as professional degrees absent further review by the Department.
A final category of programs remains in an uncertain position, where the Department declined to classify them as professional based on a mix of rationales, some relating to concerns about the statutory test itself (such as multiple entry pathways, degree not required for licensure, or historical evolution of the profession):the now-stayed additional contextual requirements, but others relating to concerns about the statutory test itself: Physical Therapy (PT/DPT); Occupational Therapy (OTD/MSOT); Physician Assistant/Associate (PA); modern health professions (including athletic training, certified anesthesiologist assistant programs, respiratory therapy, medical laboratory science, orthotics and prosthetics, cardiovascular perfusion and similar graduate entry or clinically intensive health pathways); Social work (MSW/DSW); Counseling, marriage and family therapy and related behavioral health pathways; Pilot training; Architecture (M.Arch.); Nutrition and Dietetics (RDN); Acupuncture (AHM); and Naturopathic Medicine (ND). These programs cannot rely on a preamble finding in their favor. The court left the determination of which additional programs qualify as professional degrees to the agency in the first instance, and institutions must await Department action, whether through guidance, rulemaking or case-by-case determinations, before certifying students in these programs at the professional loan limits.
Administering Aid Pending Further Guidance
While this decision is significant, it does not change how aid can currently be awarded. The court stayed the Department’s new restrictive criteria, but it did not expressly hold that the list of 11 enumerated fields is illustrative rather than exhaustive. Until the Department takes further action—whether through guidance, rulemaking, or case-by-case determinations—the 11 enumerated professional degree fields remain the only programs for which institutions can certify students at the higher professional loan limits.
The key question now is what the Department will do next. The Department’s counsel represented at the hearing that determinations as to whether certain degrees satisfy the three-part test could be made “relatively quickly,” but no specific timeline was provided. Nonetheless, the Department remains a party to the ongoing litigation before Judge Howell and can be made subject to requests by the parties in that case for prompt action on determining which degrees are “professional.” The court ordered the parties to submit a joint status report by July 2, 2026, with a proposed schedule for further proceedings. Institutions should monitor for Department guidance but should not take unilateral action in the interim.
Communicating with Students
Institutions should communicate this development to current and prospective students in affected graduate programs. For students in the 11 enumerated professional fields, nothing has changed. They remain eligible for the higher loan limits. For students in other programs such as nursing, therapy or mental health, the path to professional degree status depends on future Department action, and institutions should be clear and transparent that they cannot predict when or how the Department will act. Avoid promising specific outcomes or timelines, advise them to plan to continue with their funding plan as outlined with the financial aid office, and commit to providing updates as developments occur.
Conclusion
The litigation is ongoing, and the Department may seek emergency appellate relief or issue guidance in the coming days, weeks or months. In addition to this case, a state-led suit raising similar challenges is pending in the U.S. District Court for the District of Maryland (Maryland et al. v. Department of Education) and a separate lawsuit filed by the American Nurses Association ( American Nurses Ass’n v. U.S. Dep’t of Education, No. 1:26-cv-12443 (D. Mass.)) has a preliminary injunction hearing scheduled for July 1. Institutions should monitor these developments closely and communicate transparently with students as the situation evolves.
About Duane Morris
Duane Morris’s Higher Education Group regularly advises colleges, universities and other educational institutions on regulatory compliance, federal student aid matters and the full range of legal issues facing the higher education sector. The group has extensive experience counseling institutions on Department of Education regulations, Title IV program participation and the evolving landscape of graduate and professional education.
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