7 Feb 2025 By David Malakoff
In a Friday night move that quickly drew howls of protest from the U.S. biomedical research community, President Donald Trump’s administration today announced it is immediately reducing by at least half the so-called indirect cost payments that the National Institutes of Health (NIH) makes to universities, hospitals, and research institutes to help cover facilities and administrative costs.
A 15% indirect cost rate will now apply to all new and existing grants, NIH said in a memo from its Director’s office. Typically, about 30% of an average NIH grant to an institution is earmarked for indirect costs, according to NIH, but some universities get much higher rates. In 2023, NIH, the world’s largest funder of biomedical research, spent nearly $9 billion on indirect costs; the change would likely leave research institutions needing to find billions of dollars from other sources to support laboratories, students, and staff.
“It is… vital to ensure that as many funds as possible go towards direct scientific research costs rather than administrative overhead,” NIH wrote in the memo. The new rate brings NIH into line with the maximum indirect costs rates allowed by private foundations, NIH stated, and is higher than the minimum 10% indirect cost payment NIH says it is required to provide. “This rate will allow grant recipients a reasonable and realistic recovery of indirect costs,” the memo stated.
The reaction from university groups and researchers has been swift and overwhelmingly negative, and some are already arguing the NIH action is illegal.
“This is a surefire way to cripple lifesaving research and innovation,” said a statement from the Council on Governmental Relations (COGR), which tracks federal policy for major universities and medical research centers. “America’s competitors will relish this self-inflicted wound. We urge NIH to rescind this dangerous policy before its harms are felt by Americans.”
Alondra Nelson of the Institute for Advanced Study, former head of the White House Office of Science and Technology Policy, lamented on BlueSky what she said would amount to a "generational restructuring of the US research and development ecosystem." She added that "This funding shift will not only reduce US research leadership, it will put working people out of work and reduce healthcare access."
“This would have the most dramatic alteration on research in the United States that one has seen in decades,” says virologist Larry Corey of the Hutchinson Cancer Center, a former leader of the institution who has managed its $2 billion budget. “No one's saying that that research costs are perfect,” he adds, but indirect costs are critical to paying for research infrastructure. Private foundations that pay lower indirect costs can do so only because universities are making up for any shortfall, says Corey.
The abrupt change represents “a nuclear bomb on university budgets,” says Morgan Polikoff, an education researcher at the University of Southern California. “I mean, listen, it doesn't take a rocket scientist to figure this out. They're just trying to hurt universities.”
This is not the first time Trump has taken aim at reducing indirect costs, which the federal government has been adding to research grants since 1947. In 2017, his first administration proposed reducing NIH’s indirect cost rate to 10% in a budget request to Congress, but lawmakers blocked the change. Slashing NIH’s indirect costs rate was also proposed in Project 2025, a blueprint for an incoming Republican administration that Trump once disavowed but has since embraced.
Traditionally, each university negotiated its own overhead rate—including one rate for facilities and one for administration—with the government every few years. Rates vary widely because of geography—costs are higher in urban areas—and because research expenses differ. Biomedical science, for example, often requires animal facilities, ethics review boards, and pricey equipment that aren't needed for social science. But universities have long complained that even the negotiated rates don't cover true research costs.
Both Republican and Democratic policymakers, in contrast, have tried to rein in overhead payments. Most notably, in 1994 the U.S. government capped the administration rate for universities at 26% after several instances in which universities were found to have applied the money for purposes outside the scope of the grant. President Barack Obama's administration also floated setting an unspecified flat rate, which economists said would increase efficiency and reduce paperwork.
Many who advocate for cutting NIH’s indirect cost rate have long argued that universities are willing to accept lower rates from philanthropic foundations. Today’s NIH notice, for example, notes the Gates Foundation limits indirect costs to 10%, while the Packard Foundation sets the ceiling at 15%. But such reasoning is based on “perverse logic,” Corey says, because foundations use their funds to increase the productivity of research infrastructure already paid for by the federal government. And universities say they are often willing to accept foundation grants that carry low overhead rates because those grants amount to a relatively small fraction of their funding.
Some aspects of the new policy aren’t clear. One question, Polikoff says, is whether researchers who can no longer claim certain costs as indirect could roll them into the direct costs of their research. The NIH memo notes that, in 2023, it spent roughly $26 billion on direct research costs, in addition to the $9 billion in indirect costs.
It is not clear whether institutions could persuade a court to block the new rate. The NIH memo cites federal rules, adopted nearly a decade ago, that appear to empower the agency to impose a new rate. But COGR says the move “contradicts current law and policy.”
It also remains to be seen whether the research community could persuade Congress, currently controlled by Republicans, to block NIH’s change.
This is a developing story.
With reporting by Jon Cohen, Jessica Slater, Meredith Wadman, and Jeff Mervis
Original Link
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In a Friday night move that quickly drew howls of protest from the U.S. biomedical research community, President Donald Trump’s administration today announced it is immediately reducing by at least half the so-called indirect cost payments that the National Institutes of Health (NIH) makes to universities, hospitals, and research institutes to help cover facilities and administrative costs.
A 15% indirect cost rate will now apply to all new and existing grants, NIH said in a memo from its Director’s office. Typically, about 30% of an average NIH grant to an institution is earmarked for indirect costs, according to NIH, but some universities get much higher rates. In 2023, NIH, the world’s largest funder of biomedical research, spent nearly $9 billion on indirect costs; the change would likely leave research institutions needing to find billions of dollars from other sources to support laboratories, students, and staff.
“It is… vital to ensure that as many funds as possible go towards direct scientific research costs rather than administrative overhead,” NIH wrote in the memo. The new rate brings NIH into line with the maximum indirect costs rates allowed by private foundations, NIH stated, and is higher than the minimum 10% indirect cost payment NIH says it is required to provide. “This rate will allow grant recipients a reasonable and realistic recovery of indirect costs,” the memo stated.
The reaction from university groups and researchers has been swift and overwhelmingly negative, and some are already arguing the NIH action is illegal.
“This is a surefire way to cripple lifesaving research and innovation,” said a statement from the Council on Governmental Relations (COGR), which tracks federal policy for major universities and medical research centers. “America’s competitors will relish this self-inflicted wound. We urge NIH to rescind this dangerous policy before its harms are felt by Americans.”
Alondra Nelson of the Institute for Advanced Study, former head of the White House Office of Science and Technology Policy, lamented on BlueSky what she said would amount to a "generational restructuring of the US research and development ecosystem." She added that "This funding shift will not only reduce US research leadership, it will put working people out of work and reduce healthcare access."
“This would have the most dramatic alteration on research in the United States that one has seen in decades,” says virologist Larry Corey of the Hutchinson Cancer Center, a former leader of the institution who has managed its $2 billion budget. “No one's saying that that research costs are perfect,” he adds, but indirect costs are critical to paying for research infrastructure. Private foundations that pay lower indirect costs can do so only because universities are making up for any shortfall, says Corey.
The abrupt change represents “a nuclear bomb on university budgets,” says Morgan Polikoff, an education researcher at the University of Southern California. “I mean, listen, it doesn't take a rocket scientist to figure this out. They're just trying to hurt universities.”
This is not the first time Trump has taken aim at reducing indirect costs, which the federal government has been adding to research grants since 1947. In 2017, his first administration proposed reducing NIH’s indirect cost rate to 10% in a budget request to Congress, but lawmakers blocked the change. Slashing NIH’s indirect costs rate was also proposed in Project 2025, a blueprint for an incoming Republican administration that Trump once disavowed but has since embraced.
Traditionally, each university negotiated its own overhead rate—including one rate for facilities and one for administration—with the government every few years. Rates vary widely because of geography—costs are higher in urban areas—and because research expenses differ. Biomedical science, for example, often requires animal facilities, ethics review boards, and pricey equipment that aren't needed for social science. But universities have long complained that even the negotiated rates don't cover true research costs.
Both Republican and Democratic policymakers, in contrast, have tried to rein in overhead payments. Most notably, in 1994 the U.S. government capped the administration rate for universities at 26% after several instances in which universities were found to have applied the money for purposes outside the scope of the grant. President Barack Obama's administration also floated setting an unspecified flat rate, which economists said would increase efficiency and reduce paperwork.
Many who advocate for cutting NIH’s indirect cost rate have long argued that universities are willing to accept lower rates from philanthropic foundations. Today’s NIH notice, for example, notes the Gates Foundation limits indirect costs to 10%, while the Packard Foundation sets the ceiling at 15%. But such reasoning is based on “perverse logic,” Corey says, because foundations use their funds to increase the productivity of research infrastructure already paid for by the federal government. And universities say they are often willing to accept foundation grants that carry low overhead rates because those grants amount to a relatively small fraction of their funding.
Some aspects of the new policy aren’t clear. One question, Polikoff says, is whether researchers who can no longer claim certain costs as indirect could roll them into the direct costs of their research. The NIH memo notes that, in 2023, it spent roughly $26 billion on direct research costs, in addition to the $9 billion in indirect costs.
It is not clear whether institutions could persuade a court to block the new rate. The NIH memo cites federal rules, adopted nearly a decade ago, that appear to empower the agency to impose a new rate. But COGR says the move “contradicts current law and policy.”
It also remains to be seen whether the research community could persuade Congress, currently controlled by Republicans, to block NIH’s change.
This is a developing story.
With reporting by Jon Cohen, Jessica Slater, Meredith Wadman, and Jeff Mervis
Original Link
Archive
