On Monday evening, the Trump administration instructed federal agencies to halt the distribution of loans and grants while the government reviews whether these funds align with President Trump’s priorities.
A memo from acting Office of Management and Budget (OMB) director Matthew Vaeth stated that federal agencies should temporarily pause all activities related to federal financial assistance disbursement. The purpose of this pause is to allow the administration time to assess agency programs and determine how best to allocate the funds in accordance with legal requirements and presidential goals. The memo assures that Social Security and Medicare benefits, as well as direct assistance to individuals, will not be affected.
The pause is set to begin at 5 p.m. on Tuesday, with the possibility of exceptions for specific awards on a case-by-case basis.
Federal agencies are expected to review whether Trump’s executive orders, issued during his first week in office, have any impact on federal loan and grant programs. These orders touched on topics like border security, government operations, and military policies.
Senate Minority Leader Chuck Schumer criticized the action, calling it a violation of the law and questioning whether it is truly a temporary hold.
Schumer argued that these investments, approved by Congress, are essential and support communities across both red and blue states. He warned that the freeze could disrupt billions in community grants and vital financial assistance, leading to missed payrolls, rent payments, and widespread chaos for universities and non-profits. Additionally, Trump and his OMB nominee Russ Vought have suggested expanding presidential control over the agency, with Trump expressing interest in challenging the Impoundment Control Act, which governs the withholding of funds appropriated by Congress.
