A recession is a great time to be in school because you’re mostly sheltered from the economic downturn. But basic science labs at most institutions still have significant exposure to the stock market collapse. That’s because the endowments fund a great deal of the research at a University–and only the tip top universities can run a research department at a profit. Usually, the grants cover about 85% of a laboratory’s budget and the university hospital or endowment makes up the difference to complete the budget. Unless a researchers currently has 2 active grants, chances are they are relying on the university to subsidize their research–in excess of private and public grants.
(Aside, a nytimes.com blog by a Stephen Quake of Stanford got me started on this topic; he has an interesting discussion about funding a lab in his recent post)
In the downturn, endowments have suffered. Stanford and Harvard (which have been most prominently covered by the media) lost over 20% of their $15+ billion dollar funds. And university hospitals have seen downturns as well (Oregon Health & Science laid off 500 employees because they used to make a 5% profit on hospital procedures announced they were making a measly 1%). While NIH grants might not cover all the research interests, the basic science activities do provide value to the hospital and university in prestige, recruiting, and other ways that benefit medicine-MD/PhDs realize this.
So, what does this mean for you? It means that PIs who are not fully funded by NIH & private grants will be losing resources. It means that total spending on research will be further contract. It means that MD/PhDs may receive additional pressure to see patients to generate revenue. But in the end, it remains a good time to be in school and to receive training with the hope that he economy will be booming 4 years (MD) + 3 years (PhD) + 4 years (residency) = 11 years in the future.