NSF implements 15% indirect cost recovery rate for new grants

May 20 update: This notice is paused until June 13. Additional information is available online.

On May 2, 2025, the U.S. National Science Foundation (NSF) issued a policy notice (NSF 25-034) announcing that it will adopt a standard indirect cost recovery rate of 15% for all new grants and cooperative agreements awarded to Institutions of Higher Education (IHEs), including the University of Maine System, where indirect costs are allowable. This represents a significant shift from previous policy, which permitted the use of institutionally negotiated indirect cost rates, many of which exceeded 15%.

Indirect costs (also known as Facilities and Administrative or F&A costs) support critical research infrastructure and services such as facility operations, equipment depreciation, utilities, administrative support, and compliance.

The new policy takes effect for all NSF awards and subawards issued on or after May 5, 2025, and is designed to streamline funding processes, reduce administrative burden, and prioritize direct research expenditures. It does not apply retroactively to existing awards, and supplements or continuing funding increments for awards issued prior to the effective date will remain under the original terms.

The University of Maine is closely reviewing this policy and its implications for proposal budgets and institutional planning. Additional information will be shared as NSF releases updated guidance and supporting materials.For details, visit the official NSF Indirect Cost Rate Policy Notice page.