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139 STAT. 221 PUBLIC LAW 119–21—JULY 4, 2025 (c) EFFECTIVE DATE.—The amendments made by this section shall apply to distributions made after the date of the enactment of this Act. SEC. 70415. MODIFICATION OF EXCISE TAX ON INVESTMENT INCOME OF CERTAIN PRIVATE COLLEGES AND UNIVERSITIES. (a) IN GENERAL.—Section 4968 is amended to read as follows: ‘‘SEC. 4968. EXCISE TAX BASED ON INVESTMENT INCOME OF PRIVATE COLLEGES AND UNIVERSITIES. ‘‘(a) TAX IMPOSED.—There is hereby imposed on each applicable educational institution for the taxable year a tax equal to the applicable percentage of the net investment income of such institu- tion for the taxable year. ‘‘(b) APPLICABLE PERCENTAGE.—For purposes of this section, the term ‘applicable percentage’ means— ‘‘(1) 1.4 percent in the case of an institution with a student adjusted endowment of at least $500,000, and not in excess of $750,000, ‘‘(2) 4 percent in the case of an institution with a student adjusted endowment in excess of $750,000, and not in excess of $2,000,000, and ‘‘(3) 8 percent in the case of an institution with a student adjusted endowment in excess of $2,000,000. ‘‘(c) APPLICABLE EDUCATIONAL INSTITUTION.—For purposes of this subchapter, the term ‘applicable educational institution’ means an eligible educational institution (as defined in section 25A(f)(2))— ‘‘(1) which had at least 3,000 tuition-paying students during the preceding taxable year, ‘‘(2) more than 50 percent of the tuition-paying students of which are located in the United States, ‘‘(3) the student adjusted endowment of which is at least $500,000, and ‘‘(4) which is not described in the first sentence of section 511(a)(2)(B) (relating to State colleges and universities). ‘‘(d) STUDENT ADJUSTED ENDOWMENT.—For purposes of this section, the term ‘student adjusted endowment’ means, with respect to any institution for any taxable year— ‘‘(1) the aggregate fair market value of the assets of such institution (determined as of the end of the preceding taxable year), other than those assets which are used directly in car- rying out the institution’s exempt purpose, divided by ‘‘(2) the number of students of such institution. ‘‘(e) DETERMINATION OF NUMBER OF STUDENTS.—For purposes of subsections (c) and (d), the number of students of an institution (including for purposes of determining the number of students at a particular location) shall be based on the daily average number of full-time students attending such institution (with part-time stu- dents taken into account on a full-time student equivalent basis). ‘‘(f) NET INVESTMENT INCOME.—For purposes of this section— ‘‘(1) IN GENERAL.—Net investment income shall be deter- mined under rules similar to the rules of section 4940(c). ‘‘(2) OVERRIDE OF CERTAIN REGULATORY EXCEPTIONS.— ‘‘(A) STUDENT LOAN INTEREST.—Net investment income shall be determined by taking into account any interest income from a student loan made by the applicable edu- cational institution (or any related organization) as gross investment income. Applicability. Definitions. 26 USC 529 note.