Penn State has submitted a declaration of support for a joint lawsuit that seeks to halt the Trump administration’s decision to significantly cut payments for costs associated with National Science Foundation-funded research grants and cooperative agreements.
The university, which is not a party to the lawsuit, said in a statement that based on its NSF funding for fiscal year 2023-24, the cut would mean a $20 million loss for Penn State’s research enterprise.
The NSF announced on May 2 that it would cap reimbursements for indirect costs — which include expenses such as specialized research equipment and facilities, operations and maintenance and administrative functions — at 15% for new grant awards made after May 5. The change, according to the NSF, “is intended to streamline funding practices, increase transparency, and ensure that more resources are directed toward direct scientific and engineering research activities.”
A lawsuit filed against the NSF on May 5 in Massachusetts federal district court by 13 research universities, the Association of American Universities, the American Council on Education, and the Association of Public and Land-grant Universities says the unilateral decision was arbitrary and violates federal law governing administrative procedures. In a statement, the coalition called the policy “poorly conceived and short-sighted,” and damaging to the nation.
“These reimbursements help cover the real and necessary costs associated with performing groundbreaking research on behalf of the American people,” the statement reads. “Besides its destructive impact on research and training, this latest effort violates longstanding federal laws and regulations that govern grantmaking.”
Penn State reported $85.8 million in NSF-funded research expenditures from 783 grants, 103 subawards and five cooperative agreements in 2024. It received about $25 million in indirect costs, with a rate of 58.4%, according to the university.
“A 15% indirect cost rate applied to our FY24 NSF portfolio would have resulted in a loss of nearly $20 million,” Andrew Read, Penn State’s senior vice president for research who signed the declaration, said in a statement. “Such a cut applied to future funding from NSF would have devastating consequences for our ability to conduct essential research on behalf of the federal government.”
Read called the value of research conducted by Penn State and peer universities “incalculable.”
NSF-funded research at Penn State ranges from materials development to artificial intelligence to cybersecurity to the study of human health and biological organisms, according to the university. Indirect costs associated with that research includes equipment such as electron microscopes and mass spectrometers, compliance requirements such as radiation safety and hazardous waste disposal and other grant administration.
“Our researchers are some of the best and the brightest in the world, and the work they are doing is not only important here at Penn State but also makes a difference across our commonwealth and the nation and world,” Penn State President Neeli Bendapudi said in a statement. “As we continue to consider the situation with NSF and evaluate next steps, I encourage our faculty, staff and students to remain focused on their mission of conducting impactful research and educating the next generation of researchers.”
The cap on indirect costs is nearly identical to those imposed by the NSF’s medical counterpart, the National Institutes of Health, and the Department of Energy in the first months of the second Trump administration. In both cases, federal judges in Massachusetts issued injunctions that blocked that cuts.
Penn State officials initially said in February that the NIH cap would mean a $35.2 million loss for the university, and later revised that figure to $41.4 million.
The limits on indirect costs have been one part of a sweeping effort by the Trump administration to cut research grants and the federal agencies that support them. Read said at a University Faculty Senate meeting in April that Penn State to that point had 38 research grants totaling about $10 million canceled.
