Higher Education Accountability Tax Act

This bill would raise the federal tax on investment earnings from wealthy private colleges and universities. The rate would jump from 1.4% to 10%. It would also add an extra tax increase for schools whose “net price” (what students pay after aid) grows faster than inflation over the prior three years. The bill broadens who pays by lowering the asset-per-student threshold from $500,000 to $50,000, so many more private colleges could be covered. These changes would start for tax years after December 31, 2024.

Key points

• Who is affected: Private colleges and universities with large endowments; more schools become subject to the tax because the asset-per-student threshold drops to $50,000.
• What changes: The tax on investment income rises to 10%, with an additional increase for schools whose net price grows faster than the Consumer Price Index. Net price is measured for all first-time, full-time undergrads, not just those getting aid.
• When: Applies to tax years beginning after December 31, 2024.