As expected, the Musk/Trump administration has aimed its guns at the US university system, deciding that universities that get grants from the federal government’s National Institute of Health will have their “overhead” capped at 15%. Overhead is the money that is used to pay for the unsung things that make scientific research at universities and medical schools possible. It pays for staff that keep the university running — administrators and accountants in business offices, machinists who help build experiments, janitorial staff, and so on — as well as the costs for things like building maintenance and development, laboratory support, electricity and heating, computing clusters, and the like.
I have no doubt that the National Science Foundation, NASA, and other scientific funding agencies will soon follow suit.
As special government employee Elon Musk wrote on X this weekend, “Can you believe that universities with tens of billions in endowments were siphoning off 60% of research award money for ‘overhead’? What a ripoff!”
The actual number is 38%. Overhead of 60% is measured against the research part of the award, not the total award, and so the calculation is 60%/(100%+60%) = 37.5%, not 60%/100%=60%. This math error is a little worrying, since the entire national budget is under Musk’s personal control. And never mind that a good chunk of that money often comes back to research indirectly, or that “siphon”, a loaded word implying deceit, is inappropriate — the overhead rate for each university isn’t a secret.
Is overhead at some universities too high? A lot of scientific researchers feel that it is. One could reasonably require a significant but gradual reduction of the overhead rate over several years, which would cause limited damage to the nation’s research program. But dropping the rate to 15%, and doing so over a weekend, will simply crush budgets at every major academic research institution in the country, leaving every single one with a significant deficit. Here is one estimate of the impact on some of the United States leading universities; I can’t quickly verify these details myself, but the numbers look to be at the right scale. They are small by Musk standards, but they come to something very roughly like $10000, more or less, per student, per year.
Also, once the overhead rate is too low, having faculty doing scientific research actually costs a university money. Every new grant won by a scientist at the university makes the school’s budget deficit worse. Once that line is crossed, a university may have to limit research… possibly telling some fraction of its professors not to apply for grants and to stop doing research.
It is very sad that Mr. Musk considers the world’s finest medical/scientific research program, many decades in the making and of such enormous value to the nation, to be deserving of this level of disruption. While is difficult to ruin our world-leading medical and scientific research powerhouse overnight, this decision (along with the funding freeze/not-freeze/kinda-freeze from two weeks ago) is a good start. Even if this cut is partially reversed, the consequences on health care and medicine in this country, and on science and engineering more widely, will be significant and long-lasting — because if you were one of the world’s best young medical or scientific researchers, someone who easily could get a job in any country around the globe, would you want to work in the US right now? The threat of irrational chaos that could upend your career at any moment is hardly appealing.
