(Updated on 01/28/2025 @ 2:45 p.m.: Trump’s memo will not affect financial aid for college students)
President Donald J. Trump is pulling out all the stops to ensure his White House is running exactly as he wants it. A wave of Trump executive orders last week targeting DEI, immigration, and other pressing concerns, raised eyebrows and drew heavy criticism across the nation. And only in his second week, the president is taking yet another controversial stance.
The White House budget office sent a memo officially pausing all federal grants and loans. The order comes directly from Trump as he aims to “identify and review all Federal financial assistance programs and supporting activities consistent with the President’s policies and requirements,” according to the memo obtained by CBS News.
When Will it Take Effect?
By 5 p.m. today (Jan. 28), all financial assistance will be suspended, according to CBS. With that, billions in government spending is suddenly up in the air and millions of Americans will face the consequences.
Federal aid connected to nonprofits, small business loans, and state and local government grants will be frozen. Additionally, the freeze is expected to disrupt ongoing health care research and other initiatives, according to AP News. Even federal grants that have already been awarded but not spent will now be halted.
Impact on Students
Trump’s memo sent a wave of panic to American students fearing for their FAFSA and other forms of government financial aid, like the Pell Grant. Fortunately, it seems this form of financial assistance will be unaffected by Trump’s memo, according to Fox News.
The president has however, expressed interest in totally abolishing the Department of Education, which would by consequence, upend all federal forms of financial aid.
Before the pandemic, 80.6 percent of Black students received some type of financial aid from the government, according to the Journal of Blacks in Higher Education. And with Black Americans carrying the highest amounts of student loan debt, it’s clear Black folks rely on the government for assistance.
On X, @Getthebagcoach wrote “Millions and millions of Americans will be affected by one person decision to come down on the lower and middle class.”
Although FAFSA is protected for now, K-12 school funding could take a hit with Trump’s pause. School districts rely on access to grant funding, excluding Title I which is protected. According to the memo’s language, aid distributed to public schools for various reasons could be impacted, although it has not been confirmed.
Impact on Small Businesses
The language of the memo is broad, which is why it’s causing so much confusion and panic. But although FAFSA remains protected, small businesses could be at risk. Lendio Research estimates there’s at least 3.7 million Black-owned businesses across the states, thousands of which receive some form of federal assistance.
Since 2023, in fact, the Small Business Administration (SBA) doubled the amount of financial assistance specifically to Black-owned businesses since 2020, according to data from SBA. But with such an abrupt pause from Trump, many small businesses won’t have the resources to remain open.
Additionally, Trump’s memo puts a pause on government programs connected to housing assistance and billions in funding for state and local governments.
The only good news here is that social security, FAFSA, medicare, and other payments from the government directly to individuals will not be affected by the pause, according to the president’s memo. But for Americans relying on the government for education and business, their lives— just like federal funding— is frozen in time.