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DOD to Implement 15% Indirect Cost Cap on Higher Education Awards
The Department of Defense (DoD) has issued a new memorandum announcing that, effective June 4, 2025, it will cap indirect cost (F&A) rates at 15% or lower for all new grants and cooperative agreements awarded to institutions of higher education. This marks a significant shift in how DoD will reimburse universities for facilities and administrative costs, and applies to all new financial assistance awards issued after the 21-day notice period following the memo’s release on May 14, 2025. Within 30 days following the release of the memo DoD will also be looking to “renegotiate” the terms of existing awards to IHEs, with the possibility of terminating and reissuing current awards under revised terms. The University of Minnesota has not approved the submission of proposals or acceptance of new awards at the 15% rate. PIs should continue to budget normally using our federally negotiated rates.
Updates on NSF Proposals Policy Notice to Implement a 15% F&A Rate
On May 2, the National Science Foundation (NSF) issued a Policy Notice implementing a standard 15% Indirect Cost Rate (or F&A rate) on modified total direct costs (MTDC) for Institutions of Higher Education (IHE). A legal challenge contesting this F&A reduction has been filed, and NSF has voluntarily stayed the requirement to use the 15% pending a court determination next month. PIs should continue to budget normally using our federally negotiated rates.
Updated NSF Priorities Page with new FAQs
The National Science Foundation (NSF) is regularly updating its FAQs to reflect evolving priorities and guidance—please see NSF Updates on Priorities for the latest information.