Update from the Joint Associations Group on Indirect Costs

AASCU has joined several national organizations and renowned experts in the Joint Associations Group (JAG) on Indirect Costs to identify a new, clearer, and transparent process for determining federal indirect cost rates associated with federal grants and programs. The goal of the effort is to find and share with Congress and the Trump Administration a more efficient process for determining facilities and administrative (F&A) cost structure while streamlining federal regulatory burdens.

The federal government uses the F&A structure to fund the indirect expenses that universities and other research organizations incur when conducting federally funded research. The JAG had previously solicited feedback on the provisional models it had developed. Based on this feedback, it has synthesized a final model to present to policymakers.

One of the proposals would set rates for indirect costs based on just two factors: the institution type and the type of research funded by the grant. The other would treat indirect costs as direct, breaking down the indirect costs as line items for each individual grant, with an additional fixed percentage for "general research operations" not easily assigned to a project.

On July 15, 2025, from 3:00 to 4:30 p.m. ET, the JAG will hold a virtual town hall meeting to discuss the Financial Accountability in Research (FAIR) Model. The town hall will feature a presentation and Q&A discussion of the next iteration of the FAIR Model and plans for advancing it with federal policymakers. Participants will have an opportunity to ask questions and share feedback on the model, which was developed based on the community's input and feedback on the two provisional models released in June.

The NIH (National Institutes of Health) had previously implemented a policy that caps indirect cost rates for research grants at 15%. This means that, regardless of an institution's previously negotiated indirect cost rate, NIH grants will now only cover a maximum of 15% of direct costs for facilities and administrative expenses. The agency's one-sided plan would result in a cut of billions of research support dollars for colleges and universities.

This change, already copied by the Department of Energy and the National Science Foundation, has sparked controversy and legal challenges from universities and research institutions concerned about the impact on their research funding and operations. A U.S. District Judge in Massachusetts has ruled that the NIH had violated federal statute in a way that was "arbitrary and capricious" in creating the cap, failed to follow rulemaking procedures when doing so, and violated constitutional prohibitions on applying new rules retroactively.