Federal judge halts Trump admin. freeze on federal grants, loans
3 Min Read
The plan, outlined in a memo from the Office of Management and Budget late Monday, sparked widespread concern among organizations reliant on federal funding.
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An activist protests against President Donald Trump's plan to stop most federal grants and loans during a rally near the White House on January 28, 2025, in Washington, DC. (Getty Images via AFP)
A federal judge has issued a temporary injunction against the Trump administration's freeze on federal grants and loans, just minutes before the directive was set to take effect, the NBC2 news website reported.
Judge Loren Ali Khan's ruling suspends the measure until Monday. The White House had planned to implement the pause on Tuesday evening as part of a comprehensive review of federal expenditures.
"The reason for this is to ensure that every penny that is going out the door is not conflicting with the executive orders and actions that this President has taken," White House Press Secretary Karoline Leavitt said in her first press briefing on Tuesday.
The plan, outlined in a memo from the Office of Management and Budget late Monday, sparked widespread concern among organizations reliant on federal funding. The White House has emphasized that programs such as Social Security, Medicare, and Medicaid will not be affected by the freeze.
"To individuals at home, who receive direct assistance from the federal government, you will not be impacted by this federal freeze," Leavitt assured.
However, shortly after the announcement, multiple states reported being unable to access federal Medicaid payment portals. In a social media post, Leavitt clarified that state payments would still be processed and that the system was expected to be restored soon.
The White House is aware of the Medicaid website portal outage.
— Karoline Leavitt (@PressSec) January 28, 2025
We have confirmed no payments have been affected — they are still being processed and sent.
We expect the portal will be back online shortly.
Democrats swiftly condemned the decision, warning of its wide-ranging consequences for states and organizations.
"The blast radius of this terrible decision is virtually limitless, and its impact will be felt over and over again — it's not going to hit each American family in one way. It's going to hit them in multiple ways," emphasized Senate Minority Leader Chuck Schumer.
Critics also argued that the move was unlawful, asserting that the funds had already been allocated by Congress.
"What happened last night is the most direct assault on the authority of Congress, I believe, in the history of the United States. It is blatantly unconstitutional," stressed Maine Sen. Angus King.
Legal challenges have already been filed, including a lawsuit by a coalition of state attorneys general and another by a group of nonprofit organizations.
Trump offers federal employees exit package
On Tuesday, Trump offered most federal employees the option to resign in exchange for eight months of severance pay, following an earlier attempt to freeze federal funding.
The severance offer, sent via email, threw the lives of US civil servants into turmoil just hours after disruptions in federal aid led to chaos within the healthcare system, affecting millions of low-income Americans.
A senior administration official told NBC News that the White House anticipates between 5 and 10% of federal employees will accept the offer, potentially saving around $100 billion.
Federal workers who wished to accept the deal on Tuesday were instructed to reply to the email with the word "resign" in the message body.
The directive, signed by Acting Director of the Office of Management and Budget (OMB) Matthew Vaeth, did not specify how the pause on funding disbursements would be implemented or its expected duration.
In the 2024 fiscal year, federal spending included more than $3 trillion in financial assistance, such as grants and loans—all of which had been approved by Congress.
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