This Monday, the National Institutes of Health will significantly cut funding for indirect research costs. Researchers rely on it to fund critical infrastructure, including laboratory space, research staff, compliance regulations and even utilities.
NIH research grants are accompanied by funding for administrative expenses, known as reimbursements for indirect research costs. The NIH announced that it would reduce the reimbursement rate for indirect research costs to a flat 15 percent, significantly lower than the rates many institutions currently receive, some as high as 60 percent. The move, framed by the NIH as a way to direct more funding toward scientific research rather than administrative costs, has been met with alarm by university leaders, researchers and policymakers.
Critics who spoke to the News argued that the cuts could destabilize the country's research infrastructure, leading to layoffs, fewer opportunities for early-career scientists and a decline in U.S. scientific competitiveness. Institutions such as Yale are actively working to oppose the decision, citing potential repercussions for their research missions and funding stability.
"It seems like it is of a piece with the sort of slash-and-burn philosophy of the current administration," said Dr. Francis P. Wilson, a Yale associate professor of medicine and public health. "It feels indiscriminate and abrupt, executed with little regard for the potential downstream consequences."
A shock to the research ecosystem
The United States Department of Health and Human Services wrote to the News that cutting indirect cost rates will ensure more funding is directed to research rather than overhead.
This goal, however, does not align with the reality of how institutions budget for these expenses, researchers say.
While some researchers argue that universities could be more transparent in how they distribute these funds, indirect costs funding also serves as the financial backbone of research institutions. It keeps labs functional and ensures long-term stability, as it supports everything from building maintenance and IT services to grants administration and compliance with federal regulations.
"Even with current indirect rates, for every dollar that research-intensive schools receive from the NIH, the cost of performing the research has been estimated to be $1.50," wrote Dr. Nancy J. Brown '81, dean of the School of Medicine, in an email to faculty. "We are collaborating with institutions across the country to respond to this guidance."
According to Wilson, without sufficient indirect cost recovery, institutions may struggle to keep research operations running smoothly.
To offset these losses, universities may be forced to divert funds from other areas, such as clinical care revenue, to support their research programs. Some fear this shift could impact patient care at hospitals affiliated with research institutions, like Yale New Haven Hospital, as resources are stretched thin to compensate for the shortfall in federal funding.
Early-career researchers may suffer the most
Postdoctoral researchers and early-career faculty may bear the brunt of the cuts.
Many assistant professors depend on startup funds from universities to establish their labs, and indirect cost funding plays a key role in covering these expenses. Without that support, new faculty members could face a tougher road to securing stable research careers.
Azmi A. Ahmad, a postdoctoral associate at the School of Medicine, warned that these changes could shrink the pipeline of researchers pursuing academic careers and result in "an even larger exodus of postdocs" from academia.
Ahmad added that the reduction in research support staff could force postdocs to take on more administrative roles, reducing the time they can dedicate to actual research.
The strain on research resources is another major concern.
Postdocs like Rafael Lopes, who works in the Department of Epidemiology of Microbial Diseases, worry that the cuts will make it harder to secure future funding and maintain lab operations.
"New grant proposals will have to include money to deal with the reduction of indirect cost rates within the grant money itself," Lopes explained. "This can have the effect of lowering the acceptance rate for grant proposals, which is already very low."
He warned that some universities may even reconsider accepting NIH grants if the indirect reimbursement rates become too low to sustain research infrastructure.
Beyond funding availability, the cuts could have a broader effect on postdoctoral career trajectories.
Jyot Antani, a postdoc in the Department of Ecology and Evolutionary Biology, noted that postdocs are particularly vulnerable to budget constraints, as they depend on NIH-funded projects for their salaries and research opportunities.
"There is a considerable sense of concern and uncertainty among my peers," Antani said. "This decision has caused us to worry about the potential strain on essential services in our labs, as indirect costs often cover critical operational expenses."
Lopes echoed these concerns, pointing out that while salaries for researchers may remain intact, the supporting infrastructure around them, such as office buildings and laboratory infrastructures, could be weakened.
Many postdocs remain uncertain about their future. Antani explained that many postdocs are keen to understand how the university plans to navigate these changes and support its researchers, but they still feel a lot of uncertainty.
Institutional impact
Ahmad emphasized that the sudden implementation of these cuts will create immediate chaos, even if institutions eventually find ways to adjust.
Since the NIH provides a significant portion of research funding in the biological and biomedical fields, the financial blow is expected to heavily hit the School of Medicine.
As one of the top NIH-funded institutions in the country, Yale relies heavily on indirect cost reimbursements to support its research enterprise. The sudden reduction could seriously impact the University's ability to attract and retain top research talent.
Dr. Julius Chapiro, a physician-scientist at Yale, pointed out that faculty recruitment and retention depend on strong institutional support.
"Startup packages for new faculty, retention bonuses, and bridge funding all come from these indirect funds," he said. "If Yale can't provide that, top researchers will look elsewhere."
Additionally, researchers are concerned that the cuts could result in layoffs of administrative and research support staff.
While many scientists are funded through direct grants, the staff members who manage labs, maintain facilities and oversee regulatory compliance are typically financed through indirect cost funding. If those positions are cut, researchers may be forced to take on more administrative work, reducing the time available for actual science.
Yale's substantial endowment -- one of the largest in the world -- may offer some relief. However, the University has historically been cautious about using endowment funds to cover operational shortfalls. Dean Brown has suggested that Yale is considering ways to bridge the gap in the short term, but the long-term sustainability of such an approach remains unclear.
While Yale and other elite institutions may have the resources to weather the initial storm, smaller research universities with fewer financial reserves could face an existential crisis. Without significant institutional support, these schools may be forced to scale back research programs, further shrinking opportunities for early-career scientists.
According to Wilson, NIH funding has long been the backbone of U.S. biomedical research, and critics warn that weakening it could erode the country's scientific leadership.
A political undercurrent
For some, the NIH's decision to cut indirect cost rates is more than just a budgetary move -- it's a political statement.
"You can't understand these cuts without placing them in the context of what's going on in the larger society with political consequences," said professor Daniel Kevles. "This could well be a cover for retaliation against universities and scientists."
The move comes amid broader tensions between academia and the federal government. Some researchers worry that the cuts could serve as a form of political retaliation against universities, which have been frequent targets in broader cultural and policy debates.
Kevles suggested that past reductions in research funding often coincided with ideological clashes, budget cuts or restrictions, such as those during the Vietnam War.
The cuts also ignited discussions about the University's spending. Some argue that while indirect costs support critical infrastructure, inefficiencies and administrative bloat have also grown over time.
"There's no doubt that the administrative side of universities has expanded significantly over the past few decades," Chapiro noted. "That doesn't mean these cuts were well-designed -- but it does mean institutions need to take a hard look at how they allocate resources."
What comes next
As universities scramble to assess the full impact of the cuts, legal and legislative challenges may be on the horizon. Yale and other institutions are exploring whether the policy can be moderated or overturned through congressional intervention or judicial review.
A Yale spokesperson wrote that "Yale is pursuing all avenues -- including working with peers and higher education associations -- to oppose this action" in an email to the News.
Despite the uncertainty, many at Yale believe that the University's leadership is well-equipped to navigate the crisis. Multiple faculty members pointed to Brown's handling of the COVID-19 financial downturn as proof that Yale can adapt.
"Dean Brown has done an amazing job managing financial challenges before, and she will do it again," Chapiro said.
Brown reassured faculty that Yale is actively working with other institutions to oppose the cuts and minimize disruption. Brown wrote that the School of Medicine is developing contingency plans, including supporting early-career researchers and reducing inefficiencies, adding that the university is prepared to implement these strategies if the cuts take effect.
Brown acknowledged that efficiency must be a focus, stating, "We are also developing criteria for bridge funding for individual investigators who might be affected by specific policies."
Still, Yale leadership is urging patience as the situation develops.
Some, including Wilson, remain confident that solutions will emerge to protect the integrity of the U.S. research enterprise.
"Much is in flux," Brown wrote. "It is important that we not react until we have clarity on the implications of any new policies or guidelines. In many cases, this requires interpretation by the courts."