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4. These F&A costs, colloquially known as "overhead", are typically north of 50%. At the UW, for example, the overhead rate is 55%. That means that if I get federal grant for $1,000,000 of direct research funding, the university receives an additional $550,000 to cover operating expenses and such.
Feb 8, 2025 00:245. Other schools may have even higher overhead rates. Harvard's is around 69%.
This new order slashes that percentage to a maximum of 15%. This means cutting one of the most important sources of university funding nationwide by 75% or more.
Universities cannot function with this scale of cut.
6. The policy does not just affect funding going forward. All existing NIH grants will have their indirect rates cut to 15% as of today, the date of issuance.
For a large university, this creates a sudden and catastrophic shortfall of hundreds of millions of dollars against already budgeted funds.
