Protecting American Students Act

The "Protecting American Students Act" proposes amendments to the Internal Revenue Code of 1986, primarily targeting the excise tax on the net investment income of private colleges and universities. Its central aim is to modify the calculation used to determine if an educational institution is subject to this tax by adjusting the student count. Specifically, the bill mandates that students who do not meet the eligibility requirements for federal student aid , as outlined in section 484(a)(5) of the Higher Education Act of 1965, shall not be included in the student count for the excise tax threshold. This change could potentially reduce the number of private colleges and universities that meet the criteria for being subject to the endowment tax. Furthermore, the legislation requires affected institutions to report both the total number of students and the number of students counted after applying this new exclusion, providing transparency on its impact. These amendments are slated to take effect for taxable years beginning after December 31, 2025.