A January 27, 2025 memorandum from the Office of Management and Budget (OMB) required "Federal agencies to identify and review all Federal financial assistance programs and supporting activities consistent with the President’s policies and requirements," and to suspend distribution of this funding while the review was underway. The funding pause was set to go into effect on January 28, at 5:00 p.m. Eastern. Read:

• OMB Memorandum M-25-13: Temporary Pause of Agency Grant, Loan, and Other Financial Assistance Programs
• A White House Clarification Memo

Updates:

Rescission of the OMB memorandum on January 29. News outlets reported that on Wednesday, January 29, Matthew Vaeth, the acting OMB Director, notified federal agencies that the January 27 Federal financial assistance program funding freeze memo has been rescinded.  See:

• The New York Times
• The Washington Post
• The Hill

Acting Director Vaeth's brief memo to the heads of executive departments and agencies said simply that: "OMB Memorandum M-25-13 is rescinded. If you hae questions about implementing the President's Executive Orders, please contact your agency General Counsel."

Administrative stay in lawsuit. On January 28, 2025, Judge Alikhan issued a temporary stay. "ORDER. For the reasons stated in the attached document, it is hereby ORDERED that an ADMINISTRATIVE STAY is entered until 5:00 p.m. on February 3, 2025 . It is further ORDERED that Defendants shall respond to Plaintiffs' request for a temporary restraining order by 5:00 p.m. on January 30, 2025, and that Plaintiffs shall file a reply, if any, by 5:00 p.m. on January 31, 2025. The parties shall convene for a hearing on Plaintiffs' motion at 11:00 a.m. on February 3, 2025, in Courtroom 21. Signed by Judge Loren L. AliKhan on 1/28/2025. (lclla3) Modified to add event title on 1/29/2025 (znmw)."

Summary analysis

The definition of "Federal financial assistance programs" for purposes of the memorandum are those covered under Title 2 of the Code of Federal Regulations, but does not, for example, include contracts under the Federal Acquisition Regulation (FAR). The OMB memorandum and the White House "clarification" memo also confirm that "any program that provides direct benefits to Americans is explicitly excluded from the pause and exempted from this review process. In addition to Social Security and Medicare, already explicitly excluded in the guidance, mandatory programs like Medicaid and SNAP will continue without pause."

Institutions and organizations that receive federal funding covered under 2 CFR may experience delays and disruption of that funding during this process. The memo does not list such programs but this might include, for example:

• Federal funding streams such as Title VI programs (e.g., Fulbright-Hays or Foreign Language and Area Studies Fellowships), which support study abroad and international engagement, may face temporary suspension or reallocation.
• State Dept ECA-funded programs.
• Federal funding for research and development initiatives is also covered by 2 CFR. This includes grants awarded by agencies such as the National Science Foundation (NSF), the National Institutes of Health (NIH), and the Department of Energy (DOE) to support scientific, medical, or technological research.
• Note, though, that while 2 CFR applies broadly to federal financial assistance, certain types of federal funding are explicitly excluded from its scope. For instance, procurement contracts awarded under the Federal Acquisition Regulation (FAR) are not covered by 2 CFR, as they follow separate rules governing the acquisition of goods and services for the direct benefit or use of the federal government. These contracts emphasize federal agency needs rather than supporting non-federal entities in implementing public programs.

The "President's policies and and requirements" referred to in the OMB memo that will form the standard of review include a series of January 20, 2025 presidential executive orders. The OMB memo specifically names the following executive orders:

• Protecting the American People Against Invasion
• Reevaluating and Realigning United States Foreign Aid
• Putting America First in International Environmental Agreements
• Unleashing American Energy
• Ending Radical and Wasteful Government DEI Programs and Preferencing
• Defending Women from Gender Ideology Extremism and Restoring Biological Truth to the Federal Government
• Enforcing the Hyde Amendment

The OMB memo describes what federal agencies must do:

"To implement these orders, each agency must complete a comprehensive analysis of all of their Federal financial assistance programs to identify programs, projects, and activities that may be implicated by any of the President’s executive orders. In the interim, to the extent permissible under applicable law, Federal agencies must temporarily pause all activities related to obligation or disbursement of all Federal financial assistance, and other relevant agency activities that may be implicated by the executive orders, including, but not limited to, financial assistance for foreign aid, nongovernmental organizations, DEI, woke gender ideology, and the green new deal."

A Roll Call article describes a task sheet that agencies have been asked to complete. See: White House sends aid freeze questionnaire to federal agencies, Roll Call, January 29, 2025.

The broad wording of the memo has created uncertainty. Here are some articles discussing the topic:

• Live Updates: Trump’s Spending Freeze Sows Confusion and Fear, The New York Times
• Trump White House orders freeze on federal grants, loans, Roll Call
• White House pauses all federal grants, sparking confusion, The Washington Post

Government Agency Responses 

Government Agency responses and communications to the directive include:

• Department of Education response: (GENERAL-25-09) Guidance Related to Temporary Pause of Federal Financial Assistance Programs. "The U.S. Department of Education is currently reviewing the full impact of the memo issued by the Office of Management and Budget on Jan. 27, 2025, to temporarily pause federal financial assistance programs. Per the memo, the pause does not impact “assistance received directly by individuals.” This includes Title IV, HEA funds, which are provided to individual students. We will provide additional updates as they become available.

Education Association Statements

Education association statements in response to the topic include:

• AAU statement (Association of American Universities)
• ACE statement (American Council on Education)
• APLU statement (Association of Public & Land-Grant Universities)

Legal Challenges

Legal challenges to the OMB memorandum are expected. Already on January 28, 2025 a group of plaintiffs filed a complaint in federal court against OMB and the Acting Director of OMB, seeking a temporary restraining order (TRO) and preliminary injunction barring OMB from implementing the memo and asking the court to set aside the memo as unlawful. The group filed the complaint in the U.S. District Court for the District of Columbia. Plaintiffs include the National Council of Nonprofits (NCN), the American Public Health Association (APHA), the Main Street Alliance (MSA), and Services and Advocacy for Gay, Lesbian, Bisexual, and Transgender Elders, Inc. (SAGE). Case # 1:25-cv-00239, before Judge Loren Alikhan. Read the complaint.

On January 28, 2025, Judge Alikhan issued a temporary stay. "ORDER. For the reasons stated in the attached document, it is hereby ORDERED that an ADMINISTRATIVE STAY is entered until 5:00 p.m. on February 3, 2025 . It is further ORDERED that Defendants shall respond to Plaintiffs' request for a temporary restraining order by 5:00 p.m. on January 30, 2025, and that Plaintiffs shall file a reply, if any, by 5:00 p.m. on January 31, 2025. The parties shall convene for a hearing on Plaintiffs' motion at 11:00 a.m. on February 3, 2025, in Courtroom 21. Signed by Judge Loren L. AliKhan on 1/28/2025. (lclla3) Modified to add event title on 1/29/2025 (znmw)."