Potential Financial Consequences of NIH Reducing Indirect Cost Funding for Red State Regions
The ripples from the Trump administration's decision to impose a 15% cap on National Institutes of Health (NIH) payments for indirect costs on university research grants are growing as more people realize the far-reaching implications.
Last week, NIH declared it would cap reimbursement for indirect expenses associated with university research at 15%. These expenses encompass a multitude of overhead costs, including maintenance of equipment, facility upgrades, lab operations, depreciation, utility charges, support staff salaries, accounting, research compliance, legal fees, and key administrator wages. Universities rely on indirect cost reimbursements by grantors to help offset these expenses, with a reduction to 15% inevitably leaving substantial budget gaps to fill.
The alarm bell was immediately rung by the academic community.
American Council on Education President Ted Mitchell labeled the decision as "short-sighted, naive, and dangerous," arguing that it would sabotage the longstanding partnership between the U.S. and global leaders in life-saving medical research. This collaboration has led to numerous innovations boosting the U.S. economy, generating well-paying jobs, and educating generations of researchers and scientists.
Mark Becker, President of the Association of Public and Land-grant Universities, shared a similar sentiment, stating that NIH cutting research costs would slow down medical breakthroughs in treating cancer and chronic diseases like diabetes and heart disease. He urged the administration to reconsider this action, which he called "self-defeating."
Jeffrey Flier, former dean of Harvard Medical School, expressed his concerns on Twitter, lamenting that the abrupt decision to slash indirect cost reimbursement would cause chaos and harm to researchers throughout the country.
Dawn Bonnell, the University of Pennsylvania's vice provost for research, called the 15% cap "absolutely devastating" and stated that it could shut down some research institutions.
University officials and researchers have a personal stake in objecting to the cap. They stand to lose significant funding, potentially forcing layoffs and laboratory closures. Alan Garber, President of Harvard University, predicted that the cap "would slash funding and cut research activity at Harvard and nearly every research university in our nation."
However, concerns about the cap aren't limited to the academic community. Even Trump supporters like Senator Katie Britt (R-Ala.) voice concerns over wasting taxpayer money. Britt supports the administration's goal of efficient and accountable spending but cautions against hindering life-saving research at top-tier institutions.
The ripple effects spread even further. An analysis by James S. Murphy, Deputy Director of Higher Education Policy at Education Reform Now, shows how each state would be impacted economically due to the NIH's funding cap. According to this analysis, the cap would result in significant losses for red states that heavily supported Donald Trump during the 2024 presidential election. Texas, for example, would face a loss of $310 million, while Ohio would lose $171 million. These reductions are likely to result in layoffs and hamper clinical research progress.
In light of these concerns, it remains to be seen how the NIH will adapt or modify its funding policies to ensure that life-saving research continues without jeopardizing research institutions or the financial well-being of states.
The decision by NIH to cap indirect costs at 15% has also drawn the attention of organizations like the National Institutes of Mental Health (NIH). According to the Association of Public and Land-grant Universities, this cap could negatively impact mental health research, as these indirect costs are essential for conducting comprehensive studies.
Senator Katie Britt, a known supporter of Donald Trump, has voiced concerns about the cap's potential impact on red states. Britt, representing Alabama, acknowledges the need for efficiency and accountability in spending but expresses concerns about hindering life-saving research at top-tier institutions.
The American Council on Education, led by President Katie Mitchell, has also criticized the cap, arguing that it would create structural challenges for universities. Mitchell suggested partnerships between the private sector and universities as a potential solution to offset the loss of indirect cost reimbursements.
In addition, the National Institutes of Health (NIH) itself recognized the importance of indirect costs in university research. NIH Director Francis Collins acknowledged the challenging financial situation for many institutions and encouraged exploring alternative funding sources to address the impact of the 15% cap on indirect costs.
