Policies & Analysis

This guidance caps the amount of "indirect costs" funding that universities and other research institutions receive at 15% of their "direct costs" amount. Until now, scientific and engineering research institutions might receive 50% or more in indirect costs funding, which is the funding that supports building and laboratory maintenance, equipment upkeep, accounting, and salaries for researchers. The change will severely limit the ability of universities and other grant recipients to carry out vital and cutting edge scientific research. Small institutions, including historically Black colleges and universities, may be especially likely to shutter research initiatives if they cannot access alternate funding in their budgets to cover indirect costs. America will lose its edge as a leader in research procedures and delivering results that positively impact scientific and engineering outcomes globally. This policy is similar to indirect cost rate caps that the Trump administration tried to impose at the National Institutes of Health and the National Science Foundation in 2025.