In a harsh blow to public health research, the National Institute of Health (NIH) announced a policy on February 7th implementing a sharp reduction in funding for “indirect costs.” These costs are separate from the direct costs commonly associated with research grants, covering facilities and administrative items that support the research process. Experts warn the cuts will have serious economic, employment and healthcare consequences.
The announcement comes amidst a slew of recent executive orders seeking to restructure government spending. NIH grants typically fund individual researchers, with direct costs covering salaries, travel and equipment (NIH). Indirect costs, awarded to institutions as a percentage of the grant, cover supplementary items ranging from office space, electricity, graduate student stipends, supplies for clinical trials and other overhead administrative costs. Funding for these expenses is now being capped at just 15%, down from previous rates as high as 60%.
Elon Musk articulated the Trump administration’s stance, posting on X: “Can you believe universities with tens of billions in endowments were siphoning off 60% of research award money for ‘overhead’? What a ripoff!” The administration argues wealthy institutions should fund these costs themselves through their endowments. Critics counter that this perspective oversimplifies the coverage of indirect costs: this money is not just a drop in the bucket of wealthy institutions; rather, it critically supports employees and patients.
In 2024, NIH awarded $3.46 billion to public health research in Massachusetts, including $277.6 million in Western Massachusetts. The policy aims to cut national indirect funding in half, significantly impacting states like Massachusetts where NIH grants fuel $7.48 billion in economic activity and support nearly 29,000 jobs through direct costs alone.
A range of institutions have released statements opposing these cuts. Because of this policy, “[t]he discovery of new treatments would slow, opportunities to train the next generation of scientific leaders would shrink, and our nation’s science and engineering prowess would be severely compromised,” wrote Harvard President Alan Garber in a recent public statement. According to the Worcester Regional Chamber of Commerce, UMass Chan Medical School, an R2 institution located in Worcester, MA, will lose almost $90 million.
Among Massachusetts’ top employers are healthcare institutions that rely heavily on these grants. UMass Amherst, an R1 institution and a top employer in Western Massachusetts, receives substantial NIH funding (Western Mass Economic Development Council). These drastic cuts threaten not just ivory tower research jobs but also the employment of facilities staff, lab technicians and healthcare workers. Reduced funding for clinical trials could also limit patient access to life-saving treatments.
Given the $277.6 million funded in the region, this policy will have sweeping economic and public health consequences. These funding cuts extend far beyond white coat research labs and raise concerns about local employment and healthcare accessibility.