Medicaid, SBA loans, student loans, SNAP: What is and isnt affected by Trumps freeze on federal grants?
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Mondays memo from the White House Office of Management and Budget (OMB) pausing federal grants and loans set off a scramble in Washington and across the nation as administrators and individuals tried to figure out how the order would affect funding, from the SBA to Medicaid to the Pell grant program. (It also drew a flurry of lawsuits.) An addendum issued Tuesday has offered a bit more information, but things are still hardly crystal clear.The original memo, from acting director Matthew J. Vaeth, ordered federal agencies to temporarily pause all activities related to obligations or disbursement of all Federal financial assistance and conduct a comprehensive analysis of their grant and loan programs. Specifically, those analyses were to ensure the programs fell in line with Donald Trumps executive orders banning federal diversity, equity and inclusion (DEI) initiatives, limiting clean energy spending, and more.Slated to go into effect Tuesday at 5 p.m. ET, the new rules have baffled both federal organizations and private companies that work with them. In an attempt to clarify things, the OMB put out another memo Tuesday, saying the pause was not across the board. White House press secretary Karoline Leavitt, in her first briefing, also attempted to explain the freeze, but didnt provide much more clarity other than to reiterate that the ban would not impact individual benefits.Then on Tuesday afternoon, a federal judge temporarily blocked the freeze on federal grants and loans until Monday, February 3. Its still unclear how many programs could potentially be affected by a freeze and for how long, but heres where things stand with some of the largest programs.SBA loansThe Tuesday memo clarified that the freeze is not an across-the-board action and was expressly limited to programs, projects, and activities impacted by the Presidents Executive Orders. Funds for small businesses, it read, will not be paused. (The Small Business Administration did not reply to Fast Companys request for comment about the memo.)Student loansStudent loans, including Pell grants, are also safe, the second memo said. Any program that provides direct benefits to Americans is explicitly excluded from the pause and exempted from this review process.Leavitt echoed this in her press conference, saying, Individuals who receive direct assistance, you will not be impacted by this freeze.MedicaidBut with Medicaid, things have been a little more murky. Tuesdays OMB memo said Medicaid would continue without pause. But Senator Ron Wyden (D-Oregon), on BlueSky Tuesday, said his staff had confirmed reports that Medicaid portals, which tie into the Federal Payment Management System (FMPS), were down in all 50 states after the funding freeze. (A search of select state portals shows them to be operational, but some have reported they are currently locked out of the FMPS.) That followed a report from the Chicago Sun-Times that Illinois had been cut off from the portal used to request and manage Medicaid spending.The FMPS website, Tuesday afternoon, had an alert at the top of its webpage: Due to Executive Orders regarding potentially unallowable grant payments, PMS is taking additional measures to process payments. Reviews of applicable programs and payments will result in delays and/or rejections of payments. (The Head Start preschool program for low-income children also uses FMPS to access funds.)Leavitt later posted on X, referring to the portal problems as an outage. The White House is aware of the Medicaid website portal outage, she posted. We have confirmed no payments have been affectedthey are still being processed and sent. We expect the portal will be back online shortly.SNAP benefitsThe Supplemental Nutrition Assistance Program (formerly known as food stamps), which helps low-income adults purchase food is another mandatory program that OMB said would not be affected by the freeze.Social Security and MedicareOMB, in its original memo, went out of its way to note that Social Security and Medicare payments would not be impacted by the order.Rental assistanceMondays clarifying memo said funds for rental assistance will not be paused.Countless other disbursements, such as health grants distributed by the Centers for Disease Control and Prevention (CDC), developers expecting federal grants, and programs from the Departments of Agriculture, Commerce, Defense, Education, Energy, Health, Justice and Human Services, and more are still in question.Update, January 28, 2025: This article has been updated after a federal judge temporarily blocked the freeze on federal grants and loans.
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