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Thursday, Jan 30, 2025
Outside the box.
Trump Administration Orders Freeze on Federal Grants and Loans
Federal grants and loans paused as the Trump administration reviews alignment with its priorities, sparking political and nonprofit sector backlash.
The Trump administration has announced a freeze on all federal grants and loans, effective Tuesday at 5 p.m. ET, as part of a broader review to ensure these funds align with the president’s policy priorities.
The directive, issued in a memo by Matthew Vaeth, the acting head of the Office of Management and Budget (OMB), could affect a wide range of programs, including education, healthcare, disaster relief, and housing assistance.
The OMB memo outlined that the freeze would apply to federal financial aid for foreign assistance, nongovernmental organizations, and other unspecified categories.
However, it clarified that Social Security, Medicare payments, and direct assistance to individuals, such as food aid and disability benefits, would remain unaffected.
Federal agencies have until February 10 to submit detailed information on affected programs.
Vaeth emphasized that the administration seeks to prevent taxpayer dollars from funding policies misaligned with the president’s agenda, which includes recent executive orders dismantling diversity, equity, and inclusion (DEI) programs.
According to the OMB, federal spending totaled nearly ten trillion dollars in fiscal year 2024, with over three trillion dollars allocated for grants and loans.
This figure, however, conflicts with the Congressional Budget Office’s estimate of six-point-seven-five trillion dollars in total government spending for the year.
The spending freeze is part of a series of executive actions by the administration aimed at restructuring the federal government.
Other actions include a hiring freeze, a suspension of foreign aid, and efforts to roll back job protections for civil servants.
The announcement has drawn sharp criticism from nonprofit organizations and Democratic lawmakers.
Diane Yentel, president and CEO of the National Council of Nonprofits, warned of severe consequences for vulnerable communities if critical services, such as food assistance, domestic violence shelters, and suicide hotlines, are disrupted.
Democratic leaders, including Senator Patty Murray, Representative Rosa DeLauro, and Senate Democratic Leader Chuck Schumer, have labeled the move unlawful and potentially devastating, citing risks to payrolls, local law enforcement, universities, and state disaster relief efforts.
Republican Representative Tom Emmer defended the decision, stating that it aligns with Trump’s campaign promise to overhaul government operations.
The White House has not commented further on the potential scope of the freeze or how long it may last.
As the review progresses, agencies and affected stakeholders are awaiting additional guidance on the implementation and scope of the suspension.
The directive, issued in a memo by Matthew Vaeth, the acting head of the Office of Management and Budget (OMB), could affect a wide range of programs, including education, healthcare, disaster relief, and housing assistance.
The OMB memo outlined that the freeze would apply to federal financial aid for foreign assistance, nongovernmental organizations, and other unspecified categories.
However, it clarified that Social Security, Medicare payments, and direct assistance to individuals, such as food aid and disability benefits, would remain unaffected.
Federal agencies have until February 10 to submit detailed information on affected programs.
Vaeth emphasized that the administration seeks to prevent taxpayer dollars from funding policies misaligned with the president’s agenda, which includes recent executive orders dismantling diversity, equity, and inclusion (DEI) programs.
According to the OMB, federal spending totaled nearly ten trillion dollars in fiscal year 2024, with over three trillion dollars allocated for grants and loans.
This figure, however, conflicts with the Congressional Budget Office’s estimate of six-point-seven-five trillion dollars in total government spending for the year.
The spending freeze is part of a series of executive actions by the administration aimed at restructuring the federal government.
Other actions include a hiring freeze, a suspension of foreign aid, and efforts to roll back job protections for civil servants.
The announcement has drawn sharp criticism from nonprofit organizations and Democratic lawmakers.
Diane Yentel, president and CEO of the National Council of Nonprofits, warned of severe consequences for vulnerable communities if critical services, such as food assistance, domestic violence shelters, and suicide hotlines, are disrupted.
Democratic leaders, including Senator Patty Murray, Representative Rosa DeLauro, and Senate Democratic Leader Chuck Schumer, have labeled the move unlawful and potentially devastating, citing risks to payrolls, local law enforcement, universities, and state disaster relief efforts.
Republican Representative Tom Emmer defended the decision, stating that it aligns with Trump’s campaign promise to overhaul government operations.
The White House has not commented further on the potential scope of the freeze or how long it may last.
As the review progresses, agencies and affected stakeholders are awaiting additional guidance on the implementation and scope of the suspension.
