Today, May 19, 2025, the National Science Foundation (NSF) announced a temporary pause in the implementation of Policy Notice NSF 25-034, which had introduced a standard indirect cost—also known as Facilities and Administrative (F&A)—rate on modified total direct costs (MTDC) for Institutions of Higher Education (IHEs). The policy was originally set to apply to all new NSF awards issued on or after May 5, 2025.
During this pause, NSF will revert to issuing new awards based on each institution’s federally negotiated F&A rate. Awards issued during the pause will include a term stating that the NSF 25-034 policy may be applied retroactively if permitted by the court. A legal challenge contesting the policy’s implementation is currently pending, with a hearing scheduled for June 13, 2025.
NSF has stated that this revised F&A rate, if implemented, would supersede previously negotiated institutional rates in accordance with 2 CFR §200.414(c) for this category of financial assistance to IHEs.
Until further notice, USC researchers should follow the guidance below:
- Current Awards: Continue to expend funds according to the F&A rate and budget approved on your existing NSF awards. The paused policy does not apply retroactively to awards issued before May 5, 2025.
- Pending Proposals: For all NSF proposals, please use USC’s federally negotiated F&A rate(s).
We will continue to monitor the situation and provide updates as additional information becomes available.