On January 28, 2025, the Trump Administration, through the Office of Management and Budget, issued a memo ordering a wide freeze on all federal grants and loans, which should be implemented by 5 p.m. that day. This had caused confusion among Americans dependent upon the programs, as well as confusion within the agencies and nonprofits serving the citizens of this country. Because of the ambiguous nature of the wording in the memo, it was not clear how many programs might be affected.
Legal hurdles and immediate policy reversal
Within days of its release, the memo had the funding freeze temporarily halted by a federal judge who was concerned it was too broad and vague. Following the injunction, the Trump administration withdrew the memo on January 29, 2025.
White House Press Secretary Karoline Leavitt issued a statement to say, “In light of the injunction, OMB has rescinded the memo to end any confusion on federal policy created by the court ruling and the dishonest media coverage.” She went on to underscore that executive orders on funding reviews remained and would be vigorously enforced by all agencies and departments.
Exempt programs explained
Before the memo was rescinded, the OMB issued further clarification on which programs were exempt from the freeze in funding. Guidance issued stated, “any program that provides direct benefits to Americans is explicitly excluded from the pause.” For example, this exemption included mandatory programs such as Social Security, Medicare, Medicaid, and the SNAP.
With that clarification, programs such as SNAP and WIC can now be processed smoothly without hitches.
A senior White House official says those programs that bring much-needed food and nutrition education to millions of poor families are exempt from the funding freeze. Ali Hard of the National WIC Association said, although there have been concerns about service disruptions, WIC families were being encouraged to continue seeking out their benefits in the usual fashion.
Concerns for other Federal assistance programs
Although the programs of direct benefit were exempt, the initial memo created significant concern among the other services that were covered under federal funding. This included questioning programs such as the Older Americans Act Nutrition Program, which provides funding for community-based senior nutrition services like Meals on Wheels. That, according to Meals on Wheels, was “creating chaos for Meals on Wheels providers not knowing whether they should be serving meals today.”
Housing assistance programs could also be among the casualties. The National Low Income Housing Coalition warned that the Department of Housing and Urban Development’s programs could fall under the freeze.”Even a brief interruption in funding could cause tremendous damage to low-income families and the communities in which they reside,” said Renee Willis, interim president and CEO.
Student loans and educational programs
The Department of Education said the funding freeze did not impact student loans and Pell grants.
But there was concern about other forms of federal financial aid.
Any kind of across-the-board freeze to federal financial aid is incredibly harmful to working families just trying to pay for college,” said Aissa Canchola Bañez, policy director at the Student Borrower Protection Center. She added that students who depend on the federal government don’t depend exclusively on tuition; they need support with various expenses as well.
Medicaid system disruptions
Despite repeated assurances that Medicaid would not be impacted, state Medicaid programs reported being shut out of the Department of Health and Human Services system used to track and distribute funds. The Payment Management Services web portal displayed this message: “There may be a delay or rejection of payments due to the Executive Orders.” By the evening of January 29, several state Medicaid programs around the country reported access to their systems had been restored after the national lockout.
Expert commentary on the implementation of the policy
The freeze was both ill-conceived and badly executed, according to policy analysts.
Tad DeHaven, a policy analyst at the Cato Institute, had some skeptical questions about such broad and unclear directions: “If this was being undertaken pursuant to the executive orders on [diversity, equity, and inclusion], why would the administration issue such broad, unclear, and confusing directions?”
Wendy Edelberg, director of The Hamilton Project at Brookings, added, “I don’t really understand it, and I think even people who are in positions of power don’t really understand it.”
