# Plain Language Summary: Higher Education Accountability Tax Act

This bill significantly increases taxes on the investment income of private colleges and universities. Currently, private schools with large endowments (investment funds) pay a 1.4 percent tax on their investment earnings. This bill would raise that tax to 10 percent for most private colleges, and to 20 percent for schools that have been raising their tuition faster than inflation over the past three years.

The bill also expands which schools have to pay this tax by lowering the threshold from $500,000 in net assets to $250,000. This means smaller private colleges and universities would now be subject to the tax for the first time. The changes would take effect starting in 2025.

The practical effect is that private schools would have significantly less money from their endowments to spend on operations, financial aid, and campus improvements. Schools that have been aggressively raising tuition prices would face the steepest penalty with the 20 percent tax rate. Supporters of the bill argue this creates accountability by discouraging tuition increases and encouraging schools to use their wealth to make education more affordable. Critics worry it could force schools to cut programs, reduce financial aid to students, or raise tuition even higher to make up for the lost investment income.