No Subsidies for Wealthy Universities Act
No Subsidies for Wealthy Universities Act would impose new caps on the portion of federal research awards that can be used to reimburse indirect costs (overhead) for institutions of higher education, with the level of subsidy tied to the institution’s endowment size. Specifically, institutions with the largest endowments would receive no reimbursement for indirect costs, those with substantial endowments would be limited to an 8% indirect cost rate, and all other institutions would be capped at 15%. The bill also requires annual endowment reporting by institutions and annual oversight by the Comptroller General (GAO) to analyze how indirect costs are used and which agencies and fields receive the most funding. The effective date is one year after enactment, applying to federal research awards made on or after that date. In short, the bill targets federal overhead subsidies by wealthier universities and creates new data reporting and oversight requirements to justify and monitor indirect cost reimbursements.
Key Points
- 1Caps on indirect cost reimbursements:
- 2- Institutions with endowments over $5 billion: no indirect cost reimbursement for federal research awards.
- 3- Institutions with endowments between $2 billion and $5 billion: indirect cost rate limited to 8%.
- 4- All other institutions: indirect cost rate limited to 15%.
- 5Endowment data collection and reporting:
- 6- National Center for Education Statistics (NCES) will annually collect endowment data for relevant institutions and identify those above the $5B and $2B–$5B thresholds.
- 7- Office of Management and Budget (OMB) will publish the lists to agency heads, Congress, and the public.
- 8- Institutions must annually report endowment information as part of their program participation agreements.
- 9Oversight and transparency:
- 10- Comptroller General (GAO) must produce an annual report on indirect costs reimbursed under federal research awards, including how much funds admin staff (including DEI-related roles) receive and which fields, agencies, and institutions receive the most funding.
- 11Effective date:
- 12- The act takes effect one year after enactment and applies to federal research awards made on or after that date.