Tuesday’s ruling called the state’s attempt to limit classroom discussion "a breathtaking assertion of power to ban unpopular ideas from public discourse."
A panel of three federal judges rejected Florida’s argument that the system unconstitutionally delegates “unchecked authority” to private agencies.
One analysis estimates that the policy could cost the 28-institution system $15 million a year in lost tuition and fee revenue.
The designation comes with an increased federal student loan cap of $200,000 for graduate programs.