The U.S. Department of Energy (DOE) announced a significant policy change last week aimed at reducing administrative spending by colleges and universities receiving federal research grants, setting a new cap on indirect cost reimbursements at 15 percent.
In a policy memorandum dated April 11, 2025, the Department outlined its decision to standardize the rate for “indirect costs” – which cover facilities and administrative (F&A) expenses – for all future research grants awarded to Institutions of Higher Education (IHEs). The DOE stated this action is expected to save American taxpayers over $405 million annually.
READ: Florida Senator Rick Scott’s Push To “Lock The Clock” Gains Trump Support
Indirect costs encompass expenses not directly tied to specific research projects but necessary for operations, such as building depreciation, utilities, maintenance, and general administrative functions like accounting and personnel offices.
According to the DOE, universities currently receiving grants claim an average indirect cost rate exceeding 30 percent. The Department noted this is significantly higher than rates associated with grants awarded to for-profit entities, non-profits, and state or local governments.
“The purpose of Department of Energy funding to colleges and universities is to support scientific research – not foot the bill for administrative costs and facility upgrades,” stated U.S. Secretary of Energy Chris Wright. “With President Trump’s leadership, we are ensuring every dollar of taxpayer funding is being used efficiently to support research and innovation – saving millions for the American people.”
READ: CNN Reporter Says Right Has ‘Extremism’ Problem, But Ignores Left’s History Of Violence
The DOE provides over $2.5 billion each year through grant programs to more than 300 colleges and universities. The new policy deviates from the previous practice where indirect cost rates for universities were typically negotiated by either the Department of Health and Human Services (HHS) or the Department of Defense’s Office of Naval Research (DoD), based on which agency provided more funding historically.
Federal regulations nallow agencies to deviate from these negotiated rates for a specific class of awards, like grants to IHEs, provided they establish and publish their criteria, which the DOE has done through this memorandum.
The chosen 15 percent rate is described by the DOE as being at the “high end” of the de minimis rate allowed under government-wide regulations (2 C.F.R. 200.414(f)).
The Department also indicated it will take action to terminate existing grant awards to universities that do not align with the new 15 percent cap. Institutions affected by this will receive separate notification and guidance.
READ: Conservatives Shut Out By ‘Big Law’ Have Little Sympathy As Firms Face Major Upset Under Trump
The policy memorandum shows the Department’s goal is to “better balance the financial needs of grant recipients with the Department’s obligation to responsibly manage federal funds” and ensure taxpayer dollars directly support DOE-sanctioned research and innovation. For now, this policy adjustment applies specifically to grants awarded to colleges and universities.
Please make a small donation to the Tampa Free Press to help sustain independent journalism. Your contribution enables us to continue delivering high-quality, local, and national news coverage.
Connect with us: Follow the Tampa Free Press on Facebook and Twitter for breaking news and updates.
Sign up: Subscribe to our free newsletter for a curated selection of top stories delivered straight to your inbox.
