House Tax Committee Approves Bills Targeting Antisemitism on Campus and Expanding 529s

The House Ways and Means Committee passed several bills this week that, if enacted, would affect private, nonprofit higher education.

Two of the bills are intended to hold colleges accountable for antisemitic incidents on campuses amid the ongoing crisis in Gaza. These bills would change the formula for assessing the endowment tax to penalize additional private colleges and impose financial penalties on both public and private institutions found by a court to have violated Title VI of the Civil Rights Act. 

The Protecting American Students Act (H.R. 8913) removes foreign students from the calculation of the endowment tax. The current formula assesses a 1.4% excise tax on private, nonprofit colleges and universities with at least $500,000 in assets per FTE. The bill would no longer consider any non-citizen students in the FTE count, so certain institutions with substantial international student populations would fall under the tax. This would likely affect approximately 10 private colleges and universities. Supporters of the legislation claim that institutions could avoid the tax by admitting U.S. students over foreign students and this would subsequently reduce antisemitic campus protests.

The University Accountability Act (H.R. 8914) would assess a penalty equal to the greater of $100,000 or five percent of the aggregate administrative compensation paid by an institution when a federal court rules the institution violated any provision of Title VI of the Civil Rights Act. Both public and private colleges and universities would be subject to the penalty. However, given that Title VI disputes are almost always resolved with consent agreements between institutions and the Department of Education, and very rarely reach the courts, it appears that the bill would be unlikely to have much of an impact.

These bills highlight that a growing number of congressional committees are interested in addressing campus protests via punitive legislation.

The committee also passed the Education and Workforce Freedom Act (H.R. 8915) that would expand Sec. 529 college savings plans to allow funds to be used for K-12 education expenses, as well as expenses to pursue technical and trade training expenses. Currently, Sec. 529 plans limit the use of tax-favored savings for college and university expenses.

While all three bills passed along party-line votes, there is no clear path forward for consideration in the Senate. The bills assessing penalties for antisemitic incidents at colleges and universities does reflect that a growing number of congressional committees are interested in addressing campus protests via punitive legislation.