HERD 2023: Key Takeaways for Research Universities

In FY 2023, higher education institutions in the U.S. saw a record increase in research and development (R&D) expenditures, reaching $108.8 billion (+11.2%). Federal funding accounted for 55% of these expenditures, totaling almost $60 billion. Institutional funds accounted for 25% of R&D spending, while nonprofit and business contributions also saw significant growth.

Overall, the latest HERD data shows higher education R&D expenditures since 2013 growing at a steady 5.0% average compound annual rate in current dollars. Additionally, federally funded R&D expenditures have grown 43% over the last two Administrations. The increase in FY 2023 (the largest increase in current dollars since FY 2003) is illustrative of continued U.S. commitments to research investments in top priority areas.

Not surprisingly, the largest areas of investment were in science ($84.3 billion) and engineering ($17.5 billion), as the U.S. continues to invest in STEM related fields. Expenditures in science fields increased by 10.7% ($8.2 billion) and engineering fields increased by 11.5% ($1.8 billion). 

Health related research and development remains the top investment priority for the U.S., with health sciences and biological and biomedical sciences showing the largest dollar increases, accounting for 48% of total university R&D growth.

Federally funded expenditures accounted for more than 70% total R&D funding in the following fields:

• atmospheric science and meteorology;
• aerospace, aeronautical, and astronautical engineering;
• electrical, electronic, and communications engineering; and
• physics).

The latest HERD data will also be utilized in the upcoming Spring 2025 release of the newly redesigned Carnegie Classifications to determine R1 and R2 research designation status. The new methodology creates clear criteria for R1 and R2 designation and several institutions are expected to advance from R2 to R1 status.