Penn joined 16 universities and higher education organizations in a federal lawsuit challenging the National Science Foundation's proposed research funding cuts on Monday.
The May 5 lawsuit — which was filed in the District Court of Massachusetts — claimed that the NSF’s 15% cap on indirect cost reimbursements undermines the financial foundation of university-led research. The "indirect cost expenditures" could cost Penn's research budget over $10 million annually, according to the suit.
The suit alleges that the NSF's policy "inexplicably singles out universities and does not explain why it exempts other recipients." It also states that the funding cap will cause future research to "decline precipitously," resulting in "immediate and irreparable" consequences.
"Vital scientific work will come to a halt, training will be stifled, and the pace of scientific discoveries will slow," the suit reads.
A request for comment was left with a University spokesperson.
In the 2024 fiscal year, Penn reported over $73.3 million in research expenditures on NSF funded projects, according to the suit. These included 132 NSF-supported grants valued at roughly $47.5 million and four cooperative agreements worth over $28.3 million.
Penn’s indirect cost rate — the percentage used to calculate how much of the University’s expenses can be reimbursed based on its direct research spending — is currently set at 62.5% for on-campus research through the 2027 fiscal year. The University stated in the suit that it which plans to seek new and renewed NSF funding in the coming years.
Research institutions including Brown University, the Massachusetts Institute of Technology, Princeton University, and Cornell University also joined the suit as plaintiffs. The higher education institutions alleged that the proposed policy was "unlawful" and overrode longstanding congressional and legislative precedent.
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"[The funding cap] will badly undermine scientific research at America’s universities and erode our Nation’s enviable status as a global leader in scientific research and innovation," the lawsuit read.
The legal action follows a similar lawsuit filed on Feb. 10 against the National Institutes of Health, where Penn and other institutions challenged a 15% cap on indirect cost reimbursement. Senior Associate Vice Provost and Senior Associate Vice President for Research Elizabeth Peloso alleged in the February suit that the funding cuts would result in a loss of $170.9 million for Penn in the 2025 calendar year, jeopardizing research and endangering hundreds of jobs.
A federal judge has since issued a temporary injunction halting the NIH cap. The NSF lawsuit now marks the latest legal effort by Penn and other universities to challenge federal policy changes limited funding for research.
