KEY TAKEAWAYS
- The White House sent a memo to all government agencies that ordered a pause on federal grants, loans, and other financial assistance programs starting Tuesday at 5 p.m.
- The Department of Education said that federal student loans and grants that are “received directly by individuals” will not be affected by the White House’s temporary pause for federal grants and loans.
- It is unclear if the pause will affect non-direct loans or campus-based programs such as Perkins Loans.
The White House is temporarily pausing federal grants and loans on Tuesday, but student loan borrowers will likely not be affected by this order.
The memo, obtained by The New York Times and other news outlets, was sent to government agencies on Monday. In it, the White House budget office said agencies are to temporarily pause federal grants, loans, and other financial assistance programs starting Tuesday at 5 p.m.
A spokesperson for the Department of Education told Investopedia Tuesday that this pause does not apply to funds that are “provided directly to students,” such as Federal Pell Grants and Direct Loans. That means students still looking to apply and receive disbursements under these programs should be able to do so.
More Clarity Needed For Other Loan Types
However, the Department of Education has not clarified if this pause will affect non-direct loans such as federal campus-based programs such as Federal Work-Study or Federal Supplemental Educational Grant Program (FSEOG). Under these programs, the government sends the funds to participating schools, which then distribute the money to students.
When asked about these programs, the spokesperson said: “The funding pause directed by the January 27, 2025 OMB memorandum only applies to discretionary grants at the Department of Education. These will be reviewed by Department leadership for alignment with Trump Administration priorities.”
Neither the Federal Work-Study nor Federal Supplemental Educational Grant Programs are discretionary grants, but the spokesperson did not comment directly on either program.