Trump Administration Rescinds Federal Funding Freeze Amid Legal Challenges

The Trump administration rescinded a directive to pause federal financial aid, just before a federal judge reviewed a multi-state lawsuit opposing the policy. The measure, criticized by Democrats and defended by Republicans, prompted legal actions citing an unconstitutional overreach on federal budget control.

The Trump administration unexpectedly withdrew a directive to halt federal loans and financial aid, a White House official confirmed on Wednesday. This development came on the eve of a legal hearing over the controversial policy, which faced mounting opposition from states and nonprofits.

This move occurred just before U.S. District Judge John McConnell in Rhode Island was to decide on a temporary restraining order requested by 22 states and the District of Columbia, concerned about potential fiscal impacts. The judge's decision could have imposed a more extended pause than the one ordered by Judge Loren AliKhan in D.C. federal court.

The halted policy, initiated by President Trump, had sparked confusion within the government, affecting disbursements to essential services. Democrats called it an infringement on congressional budget authority, while Republicans supported it as a budgetary reform. The legal opposition emphasized the measure's threat to designated disaster relief efforts.

(With inputs from agencies.)