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I received an offer for five years of guaranteed PhD funding. However, various sources have been prognosticating another recession for sometime soon.

Between a science-hostile administration and a recession; I would be worried about funding to NSF and NIH.

Does a (university) department guaranteeing funds to their students mean that those dollars already exist in their bank account? Even five years of a stipend is not much compared to the greater cost of research in my field. Is there any chance a few years of slow awards could affect graduate student funding?

Large universities that are offering guaranteed funds often don't guarantee where those funds will come from, simply because they cannot: the money doesn't exist yet. In my graduate program, this is what guaranteed funding meant:

1. Your first year was covered on a T32 training grant from NIH. This allowed you to rotate in different laboratories without those labs needing funding for you. The NIH provides these grants specifically for this purpose. If all the training grant slots were filled, some students would be admitted directly to a lab that was able to fund them starting their first year.


2. After rotating, you would join a lab. This lab would basically need to have funding for you, or else you would have to teach. It is important for students and their PIs to talk about funding, since some labs have new grants or several grants and can pretty much slot out a PhD student's entire time in the lab; others have funding expiring soon and the student and advisor need to have plans if that funding falls through.


3. At any point, most students would apply for outside funding, and some would get it. Even though funding was guaranteed, applying for and receiving grants looks good for your resume.


4. Students were required to TA at least one semester; many would TA more if they were interested in teaching or to cover breaks in funding in their labs. Usually these would be negotiated with the students and students could time their TAship to coincide with a low funding period in their lab if necessary.


5. In rare cases, students in labs that failed to secure funds continued their research with funds from another lab, perhaps changing their research project. The program would consider these hardships when granting the PhD degree, and it might result in a thesis that's less cohesive - that's just part of life.

Note that most of these steps didn't really involve the guarantee, it just involved there already being money around the labs that make up the program to fund students. Guaranteed meant that the program would be your advocate and would find you funding of some sort if other sorts fell through. They would find a way to get you a TAship if you couldn't get an RA. They would ask someone else to give up their TAship for you if they could get funding from their lab. They would find a way to stretch funds from one part of the budget to another to make sure you graduate. They would use training grant money for you to finish your final semester. The money wasn't in a pot set aside for you at the outset, but in the fungible world of money, the university was committing to support you. Guaranteed did not mean you could work in any lab of your choice and work towards any research project of your choosing, but it meant that lack of funding would not be an absolute reason for you to be unable to continue in the program over your first 5 years.

Every program will differ in terms of what types of support are available: TAships, RAships, PAships, fellowships and other funds. Funding guarantees are important, but so are the sources of those funds, and this should be an open conversation throughout the application process.

As raised in the comments, there are situations where even 'guaranteed' funding can be revoked, since the guarantee almost certainly comes with basic strings attached such as continued progress in the program, not violating a code of conduct, etc. That said, this sort of guarantee from a reputable university program is putting their reputation on the line to get you funded. They will only break this promise if necessary or justified. No employer is likely to ever provide you a stronger guarantee.

I started graduate school around the last recession; ultimately, the recession and associated funding cuts meant in some of the years after me the program admitted fewer students than typical over a couple years, but no one went unsupported.

I'm pretty sure that no US agency would be permitted to reserve funds for five years. Appropriations are for one year only. A serious recession (a la 1929) would disrupt more than the funding, of course.

On the other hand, the agencies are normally pretty conservative when they make such commitments. But there may be a different president and will be a different congress by the end of that period.

And if a grant is made as a lump sum it will be paid out in one year to the university who will then administer the grant and guarantee its terms are met. Most US government grants are, in fact, administered this way, as are many private grants. The university charges the grant a fee (overhead) to cover administration costs. At that point the university holds the funds. But I have no information on how prevalent lump-sum grants are.

You can find more information here for the NSF.

If they wind up "short" on funds they will most likely just not award new grants, rather than cut off older ones. So it is pretty secure, but not absolutely secure. They will almost certainly have some money, but note the "hedge" words.

But my advice is to live your life making the best decisions based on current evidence rather than trying to forecast economic events too far out. If you refuse an award, thinking that it might end before your needs do then you are unlikely to come out ahead.

I will also note that in the worst case, universities will also most likely try to fill in gaps in funding as best they can, but, again, with no absolute guarantees.

As I am an administrator, I will offer a more specific view on the pressures of how to fund a student within the context of a portfolio.

Your funding will most likely be classified as one or more of the following funding sources, subject to change at any time:

• Sponsored
  
  
  • Federal
  
  
  • Non-Federal (industry or foundation)
  
  


• Gift


• Non-sponsored ("hard money" or university funds)
  
  
  • Endowment
  
  
  • Operating budget
  
  

Institutions typically have a way of paying students such that there is a pattern. E.g., the expectation may be that the operating budget will pay for first and second years in addition to anyone who is a teaching fellow (teaching fellows are often doing research as well, and may end up "split-coded", i.e., two funding sources). Then the PI is responsible for years 3 and beyond. How the PI pays for the student is their own responsibility. This may entail startup funds (which may be provided by the endowment) or sponsored funding. They may push you to get a fellowship (GRFP or F-series for NIH)

These funds are subject to different funding issues. If you are on federal sponsored funds, it is possible for a project to be terminated. It's not common, but it is a possibility. If you are on DOD funding, this can be because the sponsor doesn't want to continue the work. DOD tends to obligate funding in small increments so that they have this option at the moment they want. NIH obligates funding annually pending progress on the project. NSF is harder to predict. It ranges from one year to the entire project (usually maxed at 5 years).

NIH funding tends to be awarded but cut in certain ways. E.g., NIH has stopped funding inflation since 2012. The salary caps for PIs has not been increased as expected, because they are actually part of the Executive Schedule, and tied to the United States Code that sets federal salaries for the executive branch. You can see how political it will be to increase an NIH PI's salary--many other political roles would be increased as well. This is not the case at other agencies.

In terms of the size of budgets, NIH tends to have larger budgets because of their focus on healthcare. Meanwhile, NSF is frequently cut because they focus on basic research, which does not sell as well to the general public. Think of it this way-- everyone may support the development of lasers (applied research), but few people understand and support the funding of work pertaining to the physics of molecules (basic research). This happens to be the crucial work that results in the possibility of laser development, but such research is harder for the public to understand and support. Politicians run on researching the cure for cancer not describing string theory.

Unfortunately for basic research scientists, there is rarely a major payoff (program income or royalties) from such discoveries. Even when the basic research enables applied research, the profits are made from the applied research and those folks keep a lot of the profit from the endeavor. Furthermore, academia tends to avoid applied research in general as a matter of course. This is one of the reasons that PIs may provide basic research for an industry sponsor who works with DOD on an applied research project. This structure is becoming much more common, particularly for PIs who are otherwise locked into NSF.

If you end up on endowment funds, be advised that the existence of those funds are more volatile. The PIs who were obligated funding by the institution will be first in line to receive remaining funds and new programs will be the first to be shut off.

There is no such thing as a "guaranteed" funding source really, it's more that the university is diverse enough that they feel comfortable guaranteeing your support. Unless you are worried about the overall financial health of the institution, you should focus on your PI's ability to procure funding. You can actually look them up in NIH or NSF's systems to see what they have received.

From a practical standpoint, the key thing is to figure out how stable the funding is at a given university department and lab group. Some universities are plush enough with Federal funding and implicit undergrad subsidy of research that they can/will take care of you regardless of if your prof runs out of money. A few won't or will expect you to teach for the money.

Note, this has always been the case, regardless of overall government outlays. In other words the variability of paramater X, of how much science funding there is in the nation is a lot less important than the more granular variability of funding at your advisor/department level.

Talk to students in specific groups and departments and ask them about funding, how precarious it is, etc. (Yes, current stability may not mean it is always that way, but if you already hear occasional issues or the lack of them, that's helpful to know.) By and large, I find the hard sciences much more stable and well funded than the soft sciences or liberal arts. If you are at a top 25 R1 department school in a hard science, the likelihood of funding issues is low. But you will find some differences from school to school (or advisor to advisor) on how plush they are.

Every 4 years there is a Presidential election. Every 2 years House and 1/3 Senate. And every year a new budget bill. And about every 5 years (plus or minus quite a bit) we have a recession. So it's really impossible to predict what the situation will be in the future. All that said, overall government funding of R&D is much more stable than what you are implying in the predicate of your question. (Now...selling bulletproof vests and Humvee armor...that is a very boom and bust business, pun sadly noted.)

Finally an important financial question which you should push for, that affects you much more than grant stability: ask and find out typical times to finish the Ph.D. My advice is to prioritize advisors and departments with a reputations for getting people done in less than 5 years. 4 years used to be nominal in the US, but now is considered fast. You don't want to be a grad student for 7 years. You're not really "studying" after your first year or two. You're just a poorly paid employee with none of the rights of an employee (albeit with more ability to goof off or spent long times on projects that interest you).