White House freeze on federal aid won't affect student loans, Education Department says

The Department of Education said Tuesday that the pause on federal grants and loans will not affect student loans or financial aid for college.

The freeze, which could affect billions of dollars in aid, noted an exception for Social Security and Medicare. The pause “does not include assistance provided directly to individuals,” according to the White House memo that announced the pause on Monday.

The pause gives the White House time to review government funding for causes that don’t fit with President Donald Trump’s policy agenda, according to Matthew J. Vaeth, acting director of the White House Office of Management and Budget.

The memo specifically cited “financial assistance for foreign aid, non-governmental organizations, DEI, woke gender ideology, and the green new deal.”

What student aid may be affected

The Department of Education said the freeze also has no bearing on the Free Application for Federal Student Aid for the upcoming year.

“The temporary pause does not impact Title I, IDEA, or other formula grants, nor does it apply to Federal Pell Grants and Direct Loans under Title IV [of the Higher Education Act],” Education Department spokesperson Madi Biedermann said in a statement.

In addition to the federal financial aid programs that fall under Title IV, Title I provides financial assistance to school districts with children from low-income families. The Individuals with Disabilities Education Act, or IDEA, provides funding for students with disabilities.

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The funding pause “only applies to discretionary grants at the Department of Education,” Biedermann said. “These will be reviewed by Department leadership for alignment with Trump Administration priorities.”

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The pause could affect federal work-study programs and the Federal Supplemental Educational Opportunity Grant, which are provided in bulk to colleges to provide to students, according to higher education expert Mark Kantrowitz.

However, many colleges have already drawn down their funds for the spring term, so this might not affect even that aid, he said. It may still affect grants to researchers, which often include funding for graduate research assistantships, he added.

Why the freeze caused confusion

“While the memo says the funding pause does not include assistance ‘provided directly to individuals,’ it does not clarify whether that includes money sent first to institutions, states or organizations and then provided to students,” said Karen McCarthy, vice president of public policy and federal relations at the National Association of Student Financial Aid Administrators.

Most federal financial aid programs are considered Title IV funds “labeled for individual students” and so would not be affected by the pause, McCarthy said, but all other aid outside Title IV is unclear. “We are also researching the impact on campus-based aid programs since they are funded differently,” she said.

“When you have programs that are serving 20 million students, there are a lot of questions, understandably,” said Jonathan Riskind, a vice president at the American Council on Education. “It is really, really damaging for students and institutions to have this level of uncertainty.”

Ted Mitchell, president of the American Council on Education, called on the Trump administration to rescind the memo.

“This is bad public policy, and it will have a direct impact on the funds that support students and research,” he said. “The longer this goes on, the greater the damage will be.”