Student loans for millions of federal borrowers won't be halted under Trump's funding freeze, the Education Department says

Table of Contents

• The Trump Administration announced a temporary halt to federal grants and loans set to start on Tuesday evening.
• The Education Department stated that student loans and Pell Grants will be unaffected.
• It remains uncertain which federal programs, such as rental assistance and food assistance, will be affected.

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The Department of Education stated in a statement to Business Insider that the funding halt only applies to "discretionary grants" within the department. The department did not initially explain what is considered a discretionary grant. A federal judge temporarily stayed the freeze just before it was set to go into effect at 5 p.m. ET on Tuesday.

The pause in payment processing doesn't affect grants under Title I, IDEA, or other formulas, and it also doesn't apply to Federal Pell Grant and Direct Loan programs under Title IV of the Higher Education Act," said Madi Biedermann, a spokesperson for the Department of Education, in a statement. "The Department is working with the Office of Management and Budget to identify other programs that aren't covered by this memo.

to help them finance their higher education, and those loans will continue to be put out during the time of the funding freeze.

There was confusion caused by the Office of Management and Budget's memo sent to federal agencies on Monday night. The memo caused uncertainty about which programs would be affected by the funding freeze. The memo seemed to focus partly on ensuring that federal spending is aligned with President Trump's agenda. The memo stated that frozen payments must include "financial assistance for foreign aid, nongovernmental organizations, DEI, woke gender ideology, and the green new deal."

This review process will put all review panels, new awards, and further funding disbursements on hold. The Environmental Protection Agency is temporarily halting all operations related to issuing or distributing federal financial aid while they conduct their necessary reviews and assessments.

In the state of Connecticut, "the Head Start reimbursement system is shut down. Preschools are unable to pay their staff, and if the situation doesn't improve, they'll need to start laying off employees in the near future and send the little kids home."

They stated they had no idea how the federal funding freeze would impact their work and were diligently trying to find out.

According to the OMB, any program that directly provides benefits to Americans is explicitly excluded from the pause and exempt from this review process, which includes student loans, SNAP, Social Security, and Medicare.

Are you a federal employee or receive federal assistance? Have assistance from these journalists: asheffey@ and jkaplan@buinessinsider.com .

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