Trump administration directs a temporary pause on federal loans and grants

Photo credit: USA Today

President Donald Trump’s administration has enacted a sweeping pause on federal loans and grants, freezing billions of dollars in financial assistance as of Tuesday, January 28, 2025. 

The directive, detailed in a memorandum from the Office of Management and Budget (OMB), mandates that federal agencies temporarily halt the disbursement of funds while conducting a review to align federal spending with the administration’s conservative policy objectives. 

The freeze aims to eliminate what the administration describes as “wasteful” spending on initiatives such as diversity, equity, and inclusion programs, environmental policies, and gender-related ideologies. Notably, direct assistance programs like social security and Medicare are excluded from this pause.

“This temporary pause will provide the Administration time to review agency programs and determine the best uses of the funding for those programs consistent with the law and the President’s priorities,” Matthew J. Vaeth, Acting Director of the Office of Management and Budget said. 

The freeze, effective 5 p.m. ET on January 28, has left students and public institutions scrambling to adapt as legal and political opposition mounts.

The sudden halt is already creating significant disruptions at Historically Black Colleges and Universities, where many students depend heavily on federal aid to cover basic educational expenses. 

According to the Postsecondary National Policy Institute, 60% of HBCU students received Pell Grants in 2020, compared to the national average of 34%. Additionally, more than half of HBCU students take out federal loans to finance their education.

“It’s frustrating because schools like Florida State usually disperse aid before classes even start, but we are still waiting,” said Nicole Francis, a junior at Florida A&M University.

For out-of-state students, the challenges are compounded by additional expenses such as higher tuition rates and the costs of living far from home. This is true for students like Torri Harvey, a sophomore Elementary Education major at North Carolina A&T University.

“I feel that the pause on student loans and grants is a terrible thing. It negatively impacts me personally because I rely on federal funding for school,” Harvey said.

The directive has drawn criticism from Democratic lawmakers. In a letter to Acting Director Vaeth, Representative Roas DeLauro and Senator Patty Murray call the funding freeze “breathtaking and unprecedented, arguing that it violates the Impoundment Control Act and creates chaos for families and communities reliant on federal assistance.

New York Attorney General Letitia James has announced plans to file an injunction against the Trump administration’s funding freeze, calling the move “unconstitutional and reckless.” 

In a statement on social media, James emphasized the urgency of the situation, saying, “My office will be taking imminent legal action against this administration’s unconstitutional pause on federal funding. We won’t sit idly by while this administration harms our families.”

This plan was temporarily blocked by US District Judge Loren L. AliKhan’s preventing the administration from pausing payments for those already granted funding by the federal government – through at least 5 p.m. ET Monday, February 3.

Federal agencies have been instructed to submit reports to the Office of Management and Budget by February 10, 2025, identifying programs and awards affected by the freeze. While the administration has stated that exceptions may be granted on a case-by-case basis.

The coming weeks will determine the fate of billions in federal funding as legal challenges move forward and public institutions and students navigate the fallout. With critical programs stalled and uncertainty looming, the nation waits for a resolution to the crisis triggered by this unprecedented pause.