Protecting American Students Act

H.R. 1905, the Protecting American Students Act, would modify how private colleges and universities calculate their liability under the 1.4% excise tax on net investment income (NII tax) and add a new reporting requirement. Specifically, it would exclude certain students from being counted in the calculation that determines whether an institution is subject to the NII tax. Only students who meet federal student aid eligibility requirements under the Higher Education Act (HEA) section 484(a)(5) would be counted. The bill also requires affected institutions to disclose, on their tax return, both the number of students counted before applying the exclusion and the number counted after, effectively increasing transparency about how the student-count is determined. The changes would apply to tax years beginning after December 31, 2025. In short, the bill changes which students are considered when determining if an institution owes the NII tax and adds a new reporting requirement to show how the counts shift with this exclusion.