Stanford University is set to experience a massive funding cut that will significantly impact its research programs. The National Institute of Health (NIH)—the world’s largest public funder of biomedical research—announced on Friday, February 7, 2025, that it will reduce federal funding for “indirect costs” in research. The decision specifically affects institutions of higher education, including Stanford, as reported by The Stanford Daily.

What are indirect costs?

The indirect costs refer to essential operating expenses that support research infrastructure, including maintenance, personnel wages for support staff, laboratory construction, scientific tools, and research computing. According to The Stanford Daily, NIH funding for indirect costs plays a crucial role in sustaining Stanford’s research facilities and operations.
On average, NIH allocates 26% of its spending to these indirect costs. However, under the new policy, the agency will limit indirect cost funding to 15%, a sharp reduction that will impact universities nationwide.

How will it affect Stanford University

For Stanford, the change is particularly significant. In 2023, 54.4% of Stanford’s NIH funding was allocated to indirect costs. With the new 15% cap, Stanford’s NIH funding will be reduced by approximately $160 million per year, affecting research across multiple departments.
The NIH memo explains that the cut aims to maximize funding for direct scientific research rather than administrative overhead. In 2023, the agency awarded over $35 billion in grants to more than 2,500 research universities, with $9 billion designated for facilities and administration, according to The Stanford Daily.
The policy takes effect starting today, February 10, 2025. However, the NIH has clarified that it will not retract any funding for indirect costs awarded before February 7, 2025.
With this significant shift in funding, Stanford and other research institutions will have to find alternative ways to support their research infrastructure amid a tightening budget.