H.R. 1905 — Protecting American Students Act

This section excludes students who do not meet citizenship or eligible non-citizen requirements under the Higher Education Act (i.e., U.S. citizens or nationals, permanent residents, or non-citizens in the United States for other than a temporary purpose with intent to become citizens or permanent residents) from the student count used to determine the per-student endowment asset threshold under the excise tax on net investment income for certain private colleges and universities (IRC §4968(b)(1)(D)). (Thus, the threshold—$500,000 multiplied by the number of countable students—is calculated using a smaller denominator, increasing such institutions' average endowment per student and likelihood of being subject to the 1.4% tax.) The amendment applies to taxable years beginning after December 31, 2025.

This section requires each applicable educational institution subject to the excise tax on net investment income under section 4968 (i.e., certain private colleges and universities with at least 500 students and endowment assets of at least $500,000 per student) to include on its annual information return required under section 6033(a) (1) the number of students taken into account under section 4968(b)(1)(D) before applying paragraph (3) of that section, and (2) that number after applying paragraph (3). (Thus, the reporting distinguishes total students from those counted after excluding certain non-U.S. citizen or permanent resident students not carrying at least a half-time course load.) The requirement applies to taxable years beginning after December 31, 2025.