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In a move that sparked swift outrage from the higher education sector, the National Institutes of Health announced late Friday that it is dramatically cutting funding for grant recipients’ “indirect costs” of conducting medical research at universities, including hazardous waste disposal, utilities and patient safety.
“It is difficult to overstate what a catastrophe this will be for the US research and education systems, (particularly) in biomedical fields,” Carl Bergstrom, a biology professor at the University of Washington, posted on Bluesky. “It is deliberate and wanton devastation entirely out of scale with any concern about DEI activities on campuses. The goal is destroy US universities.”
Effective Monday, the NIH is planning to cap funding of indirect costs at 15 percent of all grants, down from the average of 27 to 28 percent. The change means that colleges and universities are on the hook for millions of dollars. They’ll likely have to cut their budgets or reduce research activities to make up the difference.
Republicans and President Trump have long sought to limit funding for indirect costs. The latest proposal is similar to a recommendation included in Project 2025, a conservative playbook for the second Trump administration that the president has disavowed. Project 2025 authors said the cap would “reduce federal taxpayer subsidization of leftist agendas.”
Last year, $9B of the $35B that the National Institutes of Health (NIH) granted for research was used for administrative overhead, what is known as “indirect costs.” Today, NIH lowered the maximum indirect cost rate research institutions can charge the government to 15%, above… pic.twitter.com/FSUYpEGKsr
— NIH (@NIH) February 7, 2025
Historically, universities have been able to negotiate reimbursement rates for those indirect costs, with institutional reimbursements averaging nearly 28 percent. Some of the nation’s leading research institutions, including Harvard, Yale and Johns Hopkins Universities, receive reimbursements of more than 60 percent. NIH said in a social media post that it expects to save $4 billion from the change; an Inside Higher Ed analysis of fiscal year 2024 grant data shows that colleges would lose about $4.3 billion in NIH reimbursements if indirect costs were capped at 15 percent.
Previously, if a college or university received a $5 million grant, they could also be reimbursed up to $1.4 million to pay for related costs, such as renting space for a lab. Under this new policy, that will be capped at $750,000.
“The United States should have the best medical research in the world,” the NIH said in its announcement. “It is accordingly vital to ensure that as many funds as possible go towards direct scientific research costs rather than administrative overhead.”
While the NIH said it has the authority to cap indirect costs, Senator Patty Murray, a Democrat from Washington, said on social media Friday that the proposal is illegal.
“It will mean shuttering labs across the country, layoffs in red & blue states, & derailing lifesaving research on everything from cancer to opioid addiction,” Murray wrote.
Cuts to ‘Life-Saving’ Research
While the NIH is casting indirect costs as a burden, Association of American Universities President Barbara R. Snyder said in a statement that they are “real and necessary costs of conducting the groundbreaking research that has led to countless breakthroughs in the past decades.”
A $4 billion cut to reimbursements for NIH grants, she added, “is quite simply a cut to the life-saving medical research that helps countless American families.”
NIH has worked feverishly in recent weeks to comply with President Trump’s executive orders to eliminate all support for diversity, equity and inclusion and “gender ideology.” Grant reviews stopped for two weeks, alarming researchers who rely on federal funding, and some scientists worried about the future of their funding under the agency.
But researchers and their advocates say an abrupt $4 billion cut to NIH funding—which has not been approved by Congress—has dire implications for the future of the United State’s scientific research enterprise and will undermine the NIH’s stated goal of producing superior medical research.
“Cuts to reimbursement of these costs are cuts to medical research and represent the federal government stepping back from commitments it has made to world-leading researchers,” Mark Becker, president of the Association of Public Land Grant Universities, said in a statement. “This action will slow advances for millions of patients who desperately need critical breakthroughs and imperil the U.S.’s position as the world leader in biomedical innovation.”
The NIH is the largest federal funding source for research universities, and has supported breakthroughs in medical technology and treatments for diseases like cancer and Alzheimer’s.
Ted Mitchell, president of the American Council on Education, said the decision was “short-sighted, naive, and dangerous.”
“It will be celebrated wildly by our competitors, who will see this for what it is—a surrender of U.S. supremacy in medical research,” Mitchell said. “It is a self-inflicted wound that, if not reversed, will have dire consequences on U.S. jobs, global competitiveness, and the future growth of a skilled workforce.”
