Trump Administration Rescinds Funding Freeze Ahead of Court Battle

WASHINGTON – The Trump administration has reversed its directive to pause federal loans, grants, and financial aid, just hours before a Rhode Island federal court hearing on the policy’s legality.

The decision comes after 22 Democratic-led states and Washington, D.C. challenged the funding freeze, arguing that it could severely impact state budgets and was an unconstitutional overreach of Congress’ authority over federal spending.

Court Challenges & Political Fallout

A D.C. federal judge had already paused the measure until Monday in a separate lawsuit filed by nonprofit organizations. Meanwhile, another judge in Rhode Island was set to rule on a temporary restraining order that could have further delayed or blocked the policy.

Impact & Controversy

The freeze disrupted payments for medical and child-care providers and was part of Trump’s broader effort to restructure the federal government since starting his second term on January 20.

Democrats slammed the move as an illegal power grab, while Republicans defended it as a step toward reducing the $6.75 trillion federal budget.

New York Attorney General Letitia James, one of the officials leading the legal challenge, said:
“The president does not get to decide which laws to enforce and for whom.”

With another court hearing set for Monday, legal battles over the policy are far from over.