Washington, July 1, 2026, 09:01 EDT
- Two federal judges blocked the Trump administration’s changes to Public Service Loan Forgiveness just before the plan was set to start July 1. The program has already canceled loans for over 1 million Americans.
- A court order also put advanced nursing, physical therapy and other programs into the “professional” category for now, letting federal borrowing go up to $200,000, double the $100,000 cap for graduate programs. AP News
- Private lenders issued over $14.7 billion in private student loans in 2024 at six large firms, a Democratic Senate report said, citing data from lenders. The health-program ruling reduces some of the near-term funding gap for them.
- U.S. regular equity trading was not yet open as of the dateline. Nasdaq’s regular session is 9:30 a.m. to 4 p.m. ET. NYSE is closed July 3 for Independence Day.
WASHINGTON – Federal judges handed President Donald Trump two setbacks on his student-loan plans: public servants can still pursue loan forgiveness claims, and some graduate health students will for now keep access to higher federal loan limits.
The key number is the $100,000 gap. Federal rules now set most grad borrowing at $100,000, but professional degrees can go as high as $200,000. Shifting a program to professional status cuts back the private-loan need after Grad PLUS borrowing ends for new students.
Sofi Technologies Inc NASDAQ:SOFI, SLM Corp NASDAQ:SLM or Sallie Mae, Navient Corp NASDAQ:NAVI, Citizens Financial Group Inc NYSE:CFG, Nelnet Inc NYSE:NNI, and College Ave all have something at stake. According to a February report from Democratic senators relying on lender data, those six together issued more than $14.7 billion in private student loans in 2024.
Under Secretary of Education Nicholas Kent said the department will follow the health-program order for now as it challenges it in court. “We will continue to make the case that the definition is both lawful and appropriate,” Kent told AP. On the loan forgiveness case, Kent said the department stands by its policy that taxpayer money shouldn’t go to illegal activity. AP News
Federal loan limits under the July 1 plan:
| Borrower or program group | Federal cap before latest court shift | Status after latest orders |
|---|---|---|
| Most graduate programs | $20,500 a year; $100,000 aggregate | No broad change |
| Professional programs | $50,000 a year; $200,000 aggregate | No broad change |
| Advanced nursing, nurse anesthesia, physical therapy, speech-language pathology, physician assistant and some allied-health programs | Listed as graduate programs in the disputed definition | Classed temporarily as professional programs |
| Parent PLUS loans | $20,000 a year; $65,000 aggregate per dependent student | No change named in the court order |
The Education Department’s temporary list has 29 professional-degree programs. Schools on the list include Master of Science in Nursing, Doctor of Nursing Practice, Doctor of Nurse Anesthesia Practice, physical therapy, athletic training, speech-language pathology, physician assistant, and anesthesiologist assistant programs. Theology, certain psychology areas, and pharmacy were removed, but the Master of Divinity is still there.
The PSLF decision affected another area of the debt system. U.S. District Judge Myong Joun in Boston threw out a rule that would have allowed the Education Department to deny loan forgiveness if a worker’s employer had a “substantial illegal purpose.” U.S. District Judge Amir Ali in Washington issued a similar decision, according to AP. AP News
A new rule set for July 1 would hit groups the administration links to illegal immigration, terrorism, certain discrimination cases, and gender-affirming care for minors. The PSLF program, started in 2007 by Congress, wipes out federal student debt after 10 years for people in public or nonprofit jobs.
Joun wrote, “The Department cannot create new criminal prohibitions through rulemaking.” He also asked why such a sweeping rule was needed if the department believes no more than 10 employers a year could be breaking the law. Diane Yentel, CEO of the National Council of Nonprofits, said the ruling “a win for the communities that depend on local nonprofits.” AP News
Private lender numbers point to why the cap battle could matter for investors. The February Senate Democrats’ report listed these numbers from lenders:
| Lender | 2022 private student lending | 2024 private student lending | Change |
|---|---|---|---|
| SoFi Technologies Inc NASDAQ:SOFI | $2.2 bln | $3.8 bln | up 73% |
| SLM Corp / Sallie Mae NASDAQ:SLM | $6.0 bln | $7.0 bln | up 17% |
| Navient Corp NASDAQ:NAVI | $2.05 bln | $1.47 bln | down 28% |
| College Ave | $1.45 bln | $2.48 bln | up 71% |
| Nelnet Inc NYSE:NNI | $0.0098 bln | $0.033 bln | up 237% |
The court order doesn’t wipe out demand for private loans. Grad PLUS loans are going away for many new grad and professional students, Parent PLUS loans are getting new caps, and some programs still cost more than what the new federal limits cover. For health programs, a temporary professional tag moves some of that borrowing back to federal loans, where borrowers get more protections.
Sarah Austin, a policy analyst at the National Association of Student Financial Aid Administrators, told Axios students in programs over the new caps could end up with private debt, but said “private loans are riskier” and don’t have the federal protections. Betsy Mayotte, who runs the Institute of Student Loan Advisors, said Parent PLUS borrowers have been reaching out after relying on income-driven repayment plans that are going away. Axios
Schools aren’t required to raise loan caps right away. Federal Student Aid said institutions can move temporarily professional programs to higher annual limits, but also told schools they might want to keep graduate-level caps for now while litigation plays out, to avoid disruption. The department said more changes could come depending on how the case ends.
