Agencies Stall Caps on University Research Overhead
Four federal agencies have stalled proposed 15% limits on indirect cost reimbursement for university research grants.
Updated on Nov. 5, 2026 in Higher Education
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The National Institutes of Health, Department of Energy, National Science Foundation and Department of Defense tried to cap reimbursement for higher education indirect research costs at 15%. Court challenges or rescissions have blocked the caps after Congress restricted agencies in an appropriations bill earlier this year.
Why it matters
Some research universities have indirect cost rates above 50%, so a cap at 15% would shift substantial overhead expenses onto institutions across the United States. Congress's restriction in the appropriations bill signals lawmakers' opposition to unilateral changes to how research overhead is reimbursed.
The proposed cap would reduce reimbursement from rates above 50% at some research universities to 15%. Negotiating an indirect cost rate takes six months or longer, and the source does not say how the blocked caps will be resolved.
The players
National Institutes of Health
The NIH is the primary federal agency funding biomedical and health research in the United States.
Office of Management and Budget
The OMB oversees federal budget execution and issues the uniform guidance governing federal grants.
The details
NIH changed its salary cap rules in January, preventing research organizations from drawing funds above the $228,000 Executive Level II limit for direct or indirect costs. The OMB proposed uniform guidance revisions in May that would require political appointees to approve federal grant awards, and its issuance date was pushed back from October 1 to at least December 11.
Timeline
January: NIH changed salary cap rules on awards.
May: OMB proposed uniform guidance revisions.
September: A continuing resolution was signed into law.
October 1: Original uniform guidance issuance date.
December 11: Revised uniform guidance issuance date.
Big Picture
The proposed 15% cap echoes the 2024 OMB uniform guidance that raised the de minimis indirect cost rate to 15% of modified total direct costs. Here the figure is applied as a ceiling on negotiated rates rather than a floor for smaller institutions.
Universities that depend on federal research grants could face shortfalls in overhead recovery if the 15% cap takes effect. Students, faculty and staff at research institutions may see changes to funded projects and institutional budgets depending on how the policy is finalized.
The takeaway
Federal policy on research overhead remains unsettled, so institutions and their communities should watch the December guidance closely. Congressional restrictions suggest that lawmakers may continue to shape how indirect costs are reimbursed.
What happens next
The revised OMB uniform guidance is scheduled for issuance no earlier than December 11, and organizations may face further indirect cost policy changes after that date.
Further reading
Explore more on Higher Education to see how research funding policy shapes campuses nationwide.
Source note: This article includes information reported by CFO Dive.
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