H.R. 1905 modifies the federal excise tax on private college and university endowments by changing how student enrollment is counted. Currently, private institutions with endowments exceeding a certain threshold are subject to a 1.4% excise tax on net investment income. This bill excludes certain students from the enrollment calculations used to determine whether schools owe this tax—specifically, it counts only students who meet eligibility requirements under federal financial aid rules. The changes take effect for tax years beginning after December 31, 2025, which means private colleges will likely benefit by reporting lower student enrollment figures when calculating their endowment tax obligation. Schools will also be required to report both the original student count and the adjusted count on their tax returns so regulators can track the impact of the change.
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