NIH slashes overhead payments for research

You are right that it does not "need to be a %" - it could be a la carte, for example.

Our physics group had access to the shared LN2 tank. It was no fee, so if you needed a few liters you could just grab it. That could be replaced with a debit system which goes directly to the account. (Hmm, and who decides how much to charge?)

We got hazmat training, and the environmental safety officer was paid by the university through overhead. That could instead be billed directly to the grant. (Hmm, and who decides how much to charge, and how much training is needed?)

When we installed a projector on the ceiling we were able to get building services to install the mount through the air plenum. That service could instead be billed directly against the grant. (Hmm, and who decides how much to charge?)

We could book time in the sound studio to record voice-overs for one of our projects. That was free, but could be billed directly against the grant. (Hmm, and who decides how much to charge?)

Some relevant materials, believe it or not, are not yet digitized, but are available in the library stacks. I could just walk there and read it, because library support was part of the overhead, but you're right - it doesn't need to be that way. The library could charge per entry and book. (Hmm, and who decides how much to charge?)

I'm sure other departments have their own needs, like maintaining the herds for the ag school, or the instruments for the music department.

I don't know how you could have dealt with this all first hand and not see just how much more the university provides than "space, utilities, and IT."

I haven't seen any luxurious campuses in the US, though I don't have much experience with student housing and services. Some departments are baseline modern office buildings, while others remind me more of Latin America than Europe. And some would be eerily similar to the USSR, if you painted them light blue.

Large part of the cost explosion is simply Baumol effect. In particular, universities employ many professionals, and professional salaries have grown ridiculously high in the US. Median full time income is something like $60k, which means that anything above $120k should be high income by the usual definition. But if you ask a professional, $120k is not a particularly good salary.

Another large part is the growth of mandatory spending. Roughly speaking, many administrators are mandatory, because they exist for external reasons. Universities cannot cut them, unless the external environment changes. The more regulations and expectations there are, the more administrators universities require.

Then there is the issue that American students expect to be taught, which makes education more expensive. I studied in a European university, where the curriculum was structured around exams. Classes were offered when the resources allowed it, but you were expected to pass the exams regardless. Very convenient if you are sufficiently independent. And less so if you are not.

The public research university I'm at recently had something like 15% deficit in core funding. Mostly due to tuition fees and state funding lagging behind inflation. There is simply no money to move around.

It's death by a million regulations.

In some countries, a researcher can write a grant on their own, with minimal support from the university. Not in the US. If you are not a full-time administrator, it's effectively impossible to know what is required from the application. A department-level administrator will often work with the PI to produce an endless pile of documents. And then a higher-tier administrator has to double-check everything, because the department-level administrator is likely to miss some details.

Universities hire a lot of foreign employees. Because the US immigration system is complex, there are usually people helping new hires deal with it. And they only deal with immigration bureaucracy – they rarely have time to help with more practical issues, such as how to open a bank account.

Maybe you are attending a conference. It's often cheaper to pay a membership fee in a professional organization + discounted registration fee than the full registration fee. But you can't pay membership fees from federal grants, so administrators have to pay those from another funding source.

You came back from the conference with a bunch of restaurant receipts in random foreign languages. Now the administrators need to check and double-check that they are not reimbursing any alcohol from federal grants.

Or maybe you are attending two conferences in a row in Europe, with a few days between them. Now you need to provide evidence that it's cheaper to stay in Europe instead of flying back to the US for the weekend. And you also need to justify the use of a European airline for flying between two European cities.

Pretty much everything a university does is in a similar regulatory hell.

Even in this narrow context, the cuts are indiscriminate in their domain. Moreover, they are rolled out aggressively, carelessly, and abruptly -- a lot of "masculine energy." Science takes years and requires long-term planning. This move just pulls the carpet out; there absolutely is no need for this degree of urgency other than political gain.

These organizations can and will adapt. But as I said in my OP, the real, lasting damage is in prestige. In the meantime, scientists all over the world thinking about working in the US will think twice. Young adults thinking about becoming research physicians and doing biomedical research will think twice. Researchers making peanuts working at universities doing this research will go work in pharma on more lucrative projects.

And in the case of massive projects where service providers do the wet work, your lab primarily deals with data analysis, or you don’t even do your research with university space/equipment, they still get 30-60% just because.

This isn’t some conspiracy theory. Look at how much grant money a given university brings in annually and ask yourself if 30-60% of that number is being spent on overhead related to research. It’s not.