NEW BRUNSWICK, N.J. — The National Institutes of Health (NIH) has announced a sudden policy change capping the indirect cost recovery rate on new and existing grants at 15%, a significant reduction from Rutgers University’s current federally approved 57% rate. The change, effective immediately, is expected to have a major financial impact on the university’s biomedical and scientific research programs.
Under the new directive, the federal government will not cover expenses not directly related to the research team. Typically these costs are about 35-45% of a total grant value.
Colleges have historically used those funds to pay for facility costs, payroll, and external support for actual research activities.
Indirect costs, or F&A (facilities and administration), cover essential expenses such as building maintenance, laboratory operations, regulatory compliance, and administrative support—all critical to sustaining research efforts. Universities typically negotiate their F&A rates with the federal government, but NIH’s unilateral cap overrides those agreements.
Rutgers relies heavily on NIH funding, supporting nearly 1,200 separate grants across various research disciplines. For Fiscal Year 2025, the university has been awarded nearly $250 million in NIH grants, meaning the new cap could result in substantial financial shortfalls.
The abrupt policy shift has raised concerns about the future of federally funded research at Rutgers and other institutions nationwide.
