The Trump administration’s drastic change in grantmaking policy on Friday will result in billions of dollars of cuts to the U.S. research enterprise and has already triggered a widespread outcry across higher education.
The National Institutes of Health will now cap indirect funding, which it provides to universities, hospitals, and medical centers to cover the costs of facilities, equipment, and staff, at 15 percent of the value of the grants it issues. The move is expected to wreak instant havoc on universities’ budgets: Currently, the average indirect-cost rate of the NIH’s institutional grants is 27 to 28 percent, and some universities receive allowances of more than 50 percent. The NIH, meanwhile, asserted in a post on X that the cap will save more than $4 billion annually when it goes into effect on Monday.
The move marks a “generational restructuring of the U.S. research and development ecosystem,” Alondra Nelson, former head of the White House Office of Science and Technology Policy, wrote on Bluesky. A statement from the Council on Governmental Relations called the cap “a surefire way to cripple lifesaving research and innovation.”
University leaders are scrambling to gauge the magnitude of the cuts to their research — and, according to several sources The Chronicle spoke to over the weekend, to mount legal challenges. A group of institutions and organizations is expected to seek an injunction early this week.
Friday’s announcement follows weeks of whiplash for the NIH, which is both the largest source of federal funding for research universities and the biggest public funder of biomedical research in the world. After President Trump signed executive orders targeting diversity, equity, and inclusion, the agency temporarily halted its review panels, a required step for approving grants. It also closed more than 20 grant programs for scholars from underrepresented backgrounds.
A Radical Departure
The cuts to indirect costs left many academic institutions reeling over the weekend. John B. King Jr., chancellor of the State University of New York system, said in an interview on Sunday that his staff was still analyzing how much research funding across the system’s 64 institutions was at risk, but that it was “on the order of tens of millions.”
Since the cap applies to existing NIH grants, not just new ones, changes will be immediate, said Ted Mitchell, president of the American Council on Education. “If these indirect costs are limited to 15 percent and that limit goes into effect on Monday, that means on Tuesday, there will be less money flowing through the system,” Mitchell said.
Those budget holes won’t be easy for colleges and universities to fill, he said. “There is no scenario in which they simply move money from some hidden pot to cover this. Those hidden pots don’t exist.”
The across-the-board 15-percent cap represents a radical departure from the NIH’s standard practice of accounting for indirect costs. Typically, colleges have negotiated their indirect-cost rates with the government, resulting in a fairly wide spread across institutions, depending on their locations and research output.
Lawmakers who have sought to curtail indirect funding have noted that colleges often accept much lower rates of overhead reimbursement — sometimes 10 to 15 percent — from philanthropic organizations that support academic research. College officials have said they accept those rates because philanthropic grants often merely supplement federal funding.
It is a dubious reality that a government agency can unilaterally and overnight make this kind of cut for existing grants.
In its X post on Friday, the NIH highlighted the endowments of Harvard, Yale, and the Johns Hopkins Universities alongside each institution’s current indirect-cost rates — 69 percent, 67.5 percent, and 63.7 percent, respectively — insinuating that endowment coffers could be used to cover the gap. But such a comparison is “specious,” Mitchell said. “It really is embarrassing that officials of the federal government would make it. They know very well that endowments don’t work that way.”
Though online reactions to the cap have centered on the nation’s biggest research spenders — Johns Hopkins, the University of California at San Francisco, the University of Pennsylvania, the University of Michigan at Ann Arbor, and the University of Washington at Seattle topped the most recent list — Mitchell said the impact will be felt more broadly. “This cuts through a wide swath of institutions across America, red states and blue states, rural, urban, suburban,” Mitchell said.
H. Holden Thorp, editor in chief of the Science family of journals, said that institutions which receive less research funding may feel the cuts more deeply than their better-resourced peers. “While the amount of money that they would be missing would be lower, the importance of those indirect costs could be even greater, because they don’t have the same economies of scale as these massive places,” said Thorp, a professor of chemistry at George Washington University and former college leader.
“If you’re a school that is R2 or just creeping into R1,” he said, referring to the Carnegie classifications of colleges’ research activity, “this could be a very difficult cut when you’re just starting to make progress in research the way you want to. Those are schools that I worry about a lot in this.”
Legal Challenges
As leaders work to ascertain the effects of the cuts on their campuses, they’re also hoping for a reversal. “It is a dubious reality that a government agency can unilaterally and overnight make this kind of cut for existing grants,” Mitchell said. He and King, the SUNY chancellor, said they were discussing legal action.
“I think the courts are going to step in to ensure that the law is followed, and I hope and expect that Congress will step up to protect research,” King said, adding that he has been in contact with members of the New York congressional delegation about the cuts.
Congressional appropriations bills from as recently as 2024 bar the NIH from changing how indirect funds are determined, according to an analysis of the NIH’s Friday memo by Stuart Buck, executive director of the Good Science Project, a nonprofit group that advocates for improved science-funding practices. “This is about as open-and-shut as it gets. If the NIH announcement is challenged in court, I am 99.9-percent confident that it will immediately be overturned,” wrote Buck, a lawyer who also holds a doctorate in education policy.
Jeremy M. Berg, a former director of the National Institute of General Medical Sciences, agreed with Buck’s assessment. On Bluesky, he questioned the level of involvement NIH officials had in writing and approving the policy, noting that the language and tone was not consistent with the agency’s communications.
Our competitors are loving watching us do this, because we will be effectively cutting the research output of the United States.
“It was just so obviously not written by anybody at NIH,” Berg told The Chronicle. “My guess is that the NIH was basically told to post this. I don’t even know if the acting NIH director was involved in approving that.” (An NIH media-relations official referred an inquiry on Sunday to the Department of Health and Human Services, which oversees the institute.)
Berg, who is also associate senior vice chancellor for science strategy and planning in the health sciences at the University of Pittsburgh, said he has observed an “information vacuum” in the immediate aftermath of the NIH’s announcement. “The universities have been understandably keeping their heads down so they don’t get singled out and just haven’t been in a position to say very much,” Berg said. “They probably can’t or won’t say too much about how they’re going to handle it. They’re going to ideally sort of send out some communications of reassurance that ‘we’re working on it.’ But I’m not sure what else will happen.”
Global Competition
Indirect costs are a familiar target for Trump, whose administration in 2017 proposed a 10-percent cap that was met with derision from both parties. More recently, Project 2025 — a policy blueprint written by Trump’s allies — tied indirect costs to DEI work, saying that a cap would “help reduce federal taxpayer subsidization of leftist agendas.”
In its memo, the NIH emphasized the role of direct research funding, to which it dedicated about $26 billion in the 2023 fiscal year, compared with $9 billion in indirect costs. “The United States should have the best medical research in the world,” the memo read. “It is accordingly vital to ensure that as many funds as possible go towards direct scientific research costs rather than administrative overhead.”
That overhead includes what Mitchell called “the most unsexy and uncontroversial part of a university’s expenditures” — electricity, equipment, and facilities maintenance. “This,” he said, “is not ideologically oriented money.”
Capping indirect funds may prompt leading biomedical researchers to move their work outside of the United States, Mitchell and Thorp said. “Our competitors are loving watching us do this, because we will be effectively cutting the research output of the United States, and at the very time when we’re in a global competition that is determined by technological capability,” Thorp said. “This is certainly not the time when you want to be cutting down on the research acumen of the United States.”
