In an order dated January 28, 2025, the Donald Trump presidency smacked a blanket order to freeze all federal grants and loans, sending shockwaves across the entire nation. The Office of Management and Budget memorandum temporarily puts on hold billions of dollars in federal financial assistance for a wide array of programs and services. Here is a closer look at what grants and loans are affected and how this measure is now reshaping the lives of organizations and U.S. citizens.
What grants and loans are frozen?
The freeze touches almost all federally funded financial assistance programs, except for direct payments to individuals like Social Security and Medicare benefits. Top programs affected are:
- Research grants: Spending on medical and scientific research, including cancer research and projects relating to climate change, has stopped. The National Science Foundation, for example, cancelled all grant review panels this week.
- Education programs: Federal grants to universities, as well as for early childhood and school meal programs for low-income students have been frozen.
- Nonprofit organizations: Charities and nonprofits that depend on federal funding for such services as homeless shelters, domestic violence prevention, and suicide hotlines are immediately affected.
- Housing and infrastructure: Grants for affordable housing, disaster relief, and infrastructure projects temporarily grind to a halt.
- Foreign aid: With the exception of military aid to Israel and Egypt, programs that support international development and humanitarian activities come to a stand.
Why the freeze?
The Trump administration says the pause is necessary to review whether these programs are aligned with the president’s executive orders, particularly those targeting diversity, equity, and inclusion (DEI) initiatives, transgender rights, and environmental policies like the Green New Deal. OMB Acting Director Matthew Vaeth said federal resources should not be used to advance “Marxist equity, transgenderism, and green new deal social engineering policies”.
But critics say it’s a politically motivated move to dismantle programs that conflict with the administration’s conservative agenda. The vague wording of the memo left many organizations unsure which programs were affected and for how long.
Impact on organizations
The freeze has sent shockwaves of confusion and panic throughout organizations relying on federal funding. Nonprofits, universities, and state governments are working to get a sense of the immediate and long-term impacts:
- Nonprofits: Groups like Meals on Wheels and the National Council of Nonprofits said even a temporary delay could hobble efforts for the most at-risk populations, including the children, and low-income families.
- Universities: Research institutions must halt projects and may lay off employees, threatening scientific progress and economic development.
- State and local governments: Funding for public services such as police and fire departments, disaster assistance, and repairs to roads and bridges is in jeopardy, leaving communities without essential services.
Consequences to U.S. citizens
Affecting millions of Americans who depend on federally funded programs for their basic needs:
- Low-income families: Benefits from programs like SNAP (food stamps) and WIC (nutrition for pregnant women and infants) will be delayed, putting at risk food security for millions.
- Patients and researchers: Grants for medical research, including those for cancer treatments, are frozen pending the passing of appropriations; that may put the discovery of life-saving drugs on hold.
- Students and educators: Federal Pell Grants and school meal programs will also be pending, affecting students’ access to education and proper nutrition.
- Seniors and vulnerable populations: Programs like Meals on Wheels and subsidized housing for the elderly are in jeopardy, leaving thousands without much-needed assistance.
Legal and political challenges
The freeze has been met with instant backlash from Democrats and legal experts, saying it’s illegal under the Impoundment Control Act of 1974, denying the president power to withhold funds appropriated by Congress. New York Attorney General Letitia James announced she will challenge the order in court, calling it “unconstitutional.”
Senate Minority Leader Chuck Schumer and other Democratic leaders slammed the action, calling it “lawless, dangerous, and cruel,” which they say would put billions of dollars in community grants and financial assistance at risk.
What’s next?
The federal agencies have until Feb. 10 to provide detailed information about the programs that are going to be affected by the pause. The OMB may provide case-by-case exceptions, but the larger meaning remains unclear.
Legal challenges are expected to escalate, potentially reaching the Supreme Court. If upheld, the freeze could set a precedent for future administrations to withhold funds based on ideological grounds, fundamentally altering the balance of power between the executive and legislative branches.
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