Donald Trump's Freeze on Federal Grants and Loans Halted by Judge

A federal judge temporarily blocked a Trump administration order freezing federal grants and loans.

The judge issued a "brief administrative stay" while the matter is litigated.

Why It Matters

President Donald Trump has issued a raft of executive orders and other actions since taking office last week. In addition to rolling back the Biden administration's policies, Trump has pledged to re-evaluate U.S. aid to other countries, increase offshore drilling and crack down on illegal immigration.

What To Know

U.S. District Judge Loren L. AliKhan blocked the federal grants and loans freeze minutes before it was due to take effect, following a lawsuit by nonprofit groups. The stay applies only to existing programs. The stay lasts until Monday afternoon and another court hearing is scheduled that morning to consider the issue.

The funding freeze, outlined in a memo from the White House Office of Management and Budget (OMB), aimed to pause disbursements for federal financial assistance programs while agencies reviewed their compliance with Trump's executive orders. These orders target initiatives related to diversity, equity, inclusion (DEI), gender ideology, and environmental policies like the Green New Deal. Medicare and Social Security benefits were excluded from the freeze.

Trump signed a slew of executive orders on Monday while addressing Republican lawmakers at a retreat at Trump National Doral Miami.

As Reuters reported, one of the executive actions ordered the reinstatement of military service members who were discharged because they refused to comply with COVID-19 vaccine mandates. Another required the development of an American missile defense system akin to the Iron Dome in Israel.

A third eliminated "gender radicalism in the military," while a fourth order eradicated DEI military initiatives. The fifth action was a proclamation commemorating the 80th anniversary of the liberation of the Auschwitz concentration camp.

"We have to have a strong, strong defense," Trump told Republicans at his south Florida resort earlier Monday. "And in a little while, I'll be signing four new executive orders."

Tuesday's announcements came after Trump ordered all federal government Diversity, Equity, Inclusion and Accessibility (DEIA) staff be placed on paid leave as their offices begin closing down.

What People Are Saying

Senate Minority Leader Chuck Schumer, in a statement: "Congress approved these investments and they are not optional; they are the law. These grants help people in red states and blue states, support families, help parents raise kids, and lead to stronger communities."

White House Press Secretary Karoline Leavitt defended the administration's position, saying that the federal grants and loans pause would not impact individual assistance going directly to Americans: "I think this is a very reasonable measure."

New York Attorney General Letitia James, a prominent legal adversary of Trump, on X, formerly Twitter: "This administration's pause on federal funding is reckless and dangerous. Programs in communities across the entire nation depend on this funding to support our families, and this action is only going to hurt them."

What Happens Next

The legal battle is likely to intensify, with a hearing scheduled for February 3 at 11 a.m. where Judge AliKhan will consider a full temporary restraining order against the funding freeze.

Congressional lawmakers are preparing potential legislative actions to protect federal funding, signaling a robust political response to the administration's executive orders. State attorneys general, including James, are preparing additional legal challenges.