The Hidden Backbone of Research: How a 15% Cap on Indirect Costs Will Devastate Universities
The White House has just proposed capping indirect costs in NIH grants at 15%—a move that, if implemented, will gut research institutions, throttle innovation, and ultimately make it harder for groundbreaking science to happen. How, you might ask. What does indirect cost even mean? I know this can be super confusing (even for me, and this is literally part of my job). Let’s break this down for those who don’t spend their lives buried in grant applications and institutional budgets.
What Are Indirect Costs, and Why Should You Care?
When you get a grant for a research project, the funding comes in two pieces: direct costs and indirect costs. Direct costs pay for things like equipment and salaries for the research team (for example, graduate students). Indirect costs (sometimes referred to as overhead) are what you don’t see—everything behind the scenes that makes research possible.
Put simply: indirect costs keep the lights on.
Indirect costs cover things like:
- Lab space and maintenance – Keeping the lights on, heating the building, and making sure expensive equipment doesn’t randomly explode.
- Administrative support – The unsung heroes who ensure researchers aren’t drowning in paperwork and that institutions remain in compliance with federal regulations.
- IT infrastructure and cybersecurity – Because research happens in the digital age, and keeping data safe is a critical priority.
- Compliance and safety measures – Ensuring that research adheres to ethical standards, environmental regulations, and safety protocols (so, for example, people handling dangerous pathogens aren’t just winging it).
Every major research institution negotiates an indirect cost rate with the federal government, which typically ranges from 40% to 70%—far higher than the proposed 15% cap. The idea that these essential costs can be covered by a fraction of the funding is laughable if it weren’t so catastrophic.
The 15% Cap: A Disaster in the Making
Let’s be blunt: This cap will not just tighten belts—it will cut academic institutions off at the knees. Here’s why:
1. Universities Can’t Magically Cover the Shortfall
Federal research funding doesn’t exist in a vacuum. Universities and institutions already subsidize research infrastructure because even at current reimbursement rates, indirect costs are not fully covered. Slashing that percentage means universities will be expected to either absorb the loss (they can’t) or shift costs elsewhere (where?). The money isn’t just sitting around in some vault waiting to be used.
For example, at the University of California, Santa Cruz (UCSC), indirect costs currently account for 4% of the core budget—amounting to $36,880,272, according to publicly available budget data. Cutting indirect cost recovery would create a significant financial shortfall, severely impacting research capacity and institutional operations. And this is on top of the budget crisis the institution is already facing from state budget cuts.
2. It Puts Elite Private Institutions at an Unfair Advantage
Wealthy private universities with massive endowments might just be able to cushion the impact. But state universities, minority-serving institutions, and smaller research-focused colleges? They’ll be forced to cut back on research, leaving groundbreaking discoveries and innovation to the highest bidder. Science shouldn’t be a luxury good, but this policy would ensure that only the wealthiest institutions can afford to keep their research programs running at full speed.
3. It Will Drive Talent Out of Academia
Researchers already deal with an unstable funding environment, precarious job security, and the general stress of academia. Now, imagine telling them their institutions won’t be able to support them because the government decided that 15% should somehow cover everything except the actual research. Many talented scientists will be forced to seek private sector jobs, taking their expertise with them. Good luck curing diseases when your best researchers are designing corporate-sponsored AI to sell more ads.
4. It Destroys the U.S. as a Global Leader in Research
American research institutions have historically been at the forefront of medical and technological advancements. This proposal is a fast-track to reversing that. Other countries that actually invest in research will surge ahead while U.S. institutions struggle to keep the lights on.
5. It Will Devastate Local Economies
Universities aren’t just hubs of research and education—they’re often the largest employers in their regions. Cutting research funding means job losses not only for researchers but also for administrative staff, maintenance workers, IT specialists, and countless others who support campus operations. Small businesses that rely on universities, such as cafes, bookstores, and housing rentals, will also take a major hit. In many towns, the university is the economy. Slashing indirect cost funding doesn’t just weaken institutions—it weakens entire communities.
What Can Be Done?
This proposal isn’t set in stone yet, which means there’s still time to push back. Here’s how:
- Spread the word – The general public rarely understands the importance of indirect costs, and policymakers are banking on that ignorance. Share this information widely.
- Advocate for your institutions – Universities, faculty, and students need to make noise. Public outcry can and does make a difference.
- Engage with lawmakers – Contact your representatives and make it clear that gutting research infrastructure is a non-starter.
- Collaborate with other institutions – This isn’t just an issue for one university, it’s an existential threat to research as we know it.
Contact Your Representatives
If you want to take action, here’s how to contact your federal representatives:
- Find Your Representative: Use the House of Representatives Directory to locate your congressional representative.
- Find Your Senators: Visit the U.S. Senate Contact Page for your state’s senators.
- Call the U.S. Capitol Switchboard: Dial (202) 224-3121, and ask to be connected to your senator or representative.
- Use Resistbot: Text "resist" to 50409, and this service will help you write and send messages to your elected officials via text.
Final Thoughts: Invest in Science, Not Just Soundbites
No one likes bureaucracy. But gutting indirect cost funding isn’t cutting waste—it’s cutting the essential support that keeps research viable. The next major medical breakthrough, the next life-saving treatment, or the next innovative technology won’t happen in a vacuum. It requires investment—not just in the science itself, but in the entire ecosystem that makes it possible.
Today, this is hitting the NIH, which will most significantly impact universities with medical schools (you know, those places that train our doctors, conduct medical research, and generally keep society healthy and safe). It’s only a matter of time before equally reckless cuts are proposed across other institutions like the NSF.
So, if we’re serious about keeping research alive, it’s time to push back. Because 15% isn’t just a cut—it’s a death sentence for academic institutions as we know them.
Read more about NSF and the state of research here:
Kate Ringland
Curious how much NIH is funding by state, check out this visualizer: https://www.unitedformedicalresearch.org/nih-in-your-state/
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