Sweeping Federal Aid Freeze Sparks Legal Battle Against Trump Administration

Advocacy groups have sued the Trump administration over a directive to freeze federal loans and grants. The lawsuit claims the directive, issued by the U.S. Office of Management and Budget, lacks authority and harms nonprofits. The freeze impacts diverse programs, leading to potential widespread consequences.

Advocacy groups representing nonprofits and small businesses have filed a lawsuit against the Trump administration, challenging a directive aimed at temporarily freezing federal loans, grants, and other forms of financial aid. The lawsuit, lodged in a federal court in Washington, D.C., claims the directive could devastate hundreds of thousands of grant recipients.

The administration, led by acting OMB Director Matthew Vaeth, argues that the freeze allows for a review of funds to align with President Trump's priorities, such as ending diversity and inclusion programs. However, groups including the National Council of Nonprofits and the American Public Health Association, argue the directive infringes on constitutional rights.

The outcome could have sweeping implications, affecting nonprofits and state governments dependent on federal aid for crucial services like infrastructure, education, and childcare. The Justice Department, expected to defend the policy, has yet to comment. Legal experts point to a 1974 law restricting presidential control over congressional appropriations.

(With inputs from agencies.)