Chaotic Days of Trump’s Temporary Funding Freeze

In a flurry of activity this week, the Trump Administration announced a temporary freeze on federal funding to allow agencies to provide feedback to the Office of Management and Budget (OMB) as to whether programs complied with the series of new Executive Orders issued by President Trump since he took office. Less than two days later the order was rescinded after a chaotic period that included several clarifications from OMB and various federal agencies and a nationwide injunction against the effort.

The process began late in the day on January 27, when OMB issued a memorandum telling all federal agencies to pause funding for programs so they could be reviewed for “programs, projects, and activities that may be implicated by any of the President’s executive orders.” The short memo noted that the funding pause “does not include assistance provided directly to individuals,” like Social Security checks, but does apply to “Assistance received or administered by recipients or subrecipients of any type except of assistance received directly by individuals.” The lack of detail in the memo sparked widespread uncertainty about what program funding would be paused, including federal student aid.

Adding to the concern, the directive hit as colleges and universities are disbursing federal student aid funds to students for the spring semester. If the funding had been paused, this would have wreaked havoc on students’ ability to continue their higher education.

By late morning on January 28, a Department of Education spokesperson issued a statement indicating that Pell Grants and student loans would be exempt from the funding pause. However, the list of programs to be reviewed and reported on that accompanied the OMB memo includes Pell, Supplemental Educational Opportunity Grants, Federal Work-Study, student loans, and many other higher education programs. That afternoon, OMB issued an official letter stating that the review would not impact student loans or Pell Grants and shortly after that the Department posted an electronic announcement clarifying the review would not apply to any Title IV student aid programs.

Minutes before the rule was to go into effect, a judge in the U.S. District Court of Washington, DC issued a temporary injunction stopping the immediate implementation of the funding freeze. At midday January 29, OMB issued a two-sentence memo rescinding the funding freeze and telling agencies to contact their General Counsel’s office if they have questions about implementing Executive Orders.

The recission of the order does not preclude agencies from reviewing the use of funds per the Executive Orders.

For more information, please contact:
Stephanie Giesecke