The University of Chicago, along with three academic associations and 12 other institutions of higher education, filed a lawsuit on May 5 seeking to block the National Science Foundation’s (NSF) implementation of a universal 15 percent rate for coverage of indirect costs on all new research awards.
The lawsuit, filed jointly with schools including the University of Illinois, Cornell University, and the University of Pennsylvania, seeks to prevent the NSF from enacting the rate cut and to require the agency to continue approving grants within the currently negotiated indirect cost rate guidelines.
The University currently holds more than 300 NSF grants, cumulatively worth hundreds of millions of dollars. According to the lawsuit, a 15 percent indirect cost rate would amount to an annual loss of $14.5 million to UChicago’s research budget.
Indirect costs are expenses arising from administrative functions and the maintenance of buildings, utilities, and equipment. Generally, grant money supporting direct costs of research cannot be allocated to indirect expenses.
When the NSF awards research grants to a scientist at an institution of higher education, the agency includes additional funding for indirect costs at a rate negotiated between the federal government and the institution.
Prior to the new policy, the NSF covered indirect costs of on-campus organized research at the University at a rate of 64 percent, a number in line with rates at other major research universities. For every dollar of direct funding a researcher was awarded, they received an additional 64 cents to cover indirect costs.
The University negotiated the rate of indirect costs with the federal government for a five-year period ending in June 2026.
NSF’s rate cut follows similar policies implemented by the National Institutes of Health (NIH) in February and the Department of Energy (DOE) in April, both of which are currently subject to federal injunctions. Unlike the NIH rate cut, however, the NSF cap is not retroactive and only applies to awards issued after the guidelines took effect.
NSF has also terminated thousands of grants over the past month, including six awarded to University researchers, per a crowdsourced database of grant terminations.
In her order issuing an injunction against the NIH blocking its rate cut, federal District Court Judge Angel Kelley determined that the plaintiffs were likely to succeed in arguing that the rate cut violated several federal regulations and was “arbitrary and capricious” as defined by the Administrative Procedure Act.
The new lawsuit challenges the NSF’s new rate guidelines on similar grounds, alleging that “NSF has not even attempted to address many of the flaws the district courts found with NIH’s and DOE’s unlawful policies.”
According to the NSF’s policy notice, the new guidelines were created to reduce “administrative burdens” on research institutions, increase the proportion of funds allocated to the direct costs of research, and create more consistent allocations between institutions of higher education.
Vice Provost for Research Erin Adams announced the decision to join the lawsuit in a May 6 email to faculty researchers. A version of Adams’s email was also posted to UChicago News.
“NSF’s proposed cap will harm scientific research at universities and impede technological progress by limiting the federal funding available for the critical buildings, infrastructure, systems, and staff necessary to conduct advanced research, and is contrary to current federal law,” Adams wrote. “This work benefits the American public in countless ways, including by enabling fundamental scientific discoveries and new technologies, training the next generation of leading scientists, and supporting high-tech jobs and businesses.”
In a statement to the Maroon, an NSF spokesperson reiterated the new guidelines but did not answer questions about the potential for detrimental effects, how the agency would support researchers who rely on the currently negotiated rates, or whether the agency would work to reduce the administrative burden of the grant application process.
This is a developing story.
Parker Tran / May 9, 2025 at 11:03 pm
Great article by Nathaniel. $14.5M cut from one of our nation’s premier research universities, but really any university at all, is a sign of worse things to come. Please keep up the good work!
Lucas Wylde, A.B. '18 / May 7, 2025 at 5:16 pm
The University is suing the NSF to preserve its financial privileges. Behind the language of “scientific progress” lies a desperate attempt to maintain a system that funnels public funds into bureaucracy, ideology, and administrative bloat. For years, UChicago and its peers have enjoyed indirect cost reimbursements as high as 64%. These funds were never solely about laboratories or scientific equipment. Indeed, they also sustained sprawling HR departments, layers of middle management, and entire offices dedicated to political messaging (particularly under the banner of DEI). The NSF’s 15% cap threatens this model. Without inflated overhead, universities lose the ability to quietly subsidize their ideological agendas under the cover of academic research. That’s the real crisis! No, not a lack of funding for science, but the loss of a financial instrument used to reward loyalty to a particular worldview.
DEI has transformed academia into a racial spoils system. Universities now function less as centers of inquiry and more as distribution hubs for pigment-based privilege. Admissions and hiring no longer reward intellect or discipline but skin tone and political alignment. The result is an institutional culture where the undeserving are advanced, protected, and celebrated—not in spite of their mediocrity, but because of it. Alas, this lawsuit is not a defense of research; it is a last-ditch effort to preserve the machinery that funds this quiet reordering of merit. Institutions like UChicago depend on indirect federal dollars to bankroll bloated DEI offices, subsidize underqualified hires from the loudest demographic(s), and maintain the illusion that their prestige is still rooted in excellence. It is not. It is now rooted in appeasement, in optics, in the careful curation of failure recast as progress.
Let them file lawsuits. Let them posture. The truth is simple and corrosive: they built a system where race is rewarded and rigor is optional. Now they are terrified that someone might finally close the tab.