The move prompted thousands to protest outside the university's campus in Budapest, and drew swift criticism from the top diplomat at the US Embassy in Budapest.
The bill modifies rules regulating the 28 foreign universities in Hungary. Central European University said parts of the bill directly target it, and could force it to close.
The bill requires the governments of the U.S. And Hungary to agree on new terms for the university's operations within the next few months. If a deal doesn't materialize, CEU would be banned from enrolling new students after Jan. 1, 2018 and would have to conclude its educational activities by 2021.
CEU rector Michael Ignatieff said the institution would appeal to President Janos Ader to review the legislation, which it considers to be a violation of Hungary's constitution, the Basic Law.
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Ignatieff has said that the bill aimed to "send a chill through Hungarian higher education and eliminate one of the few remaining institutions in Hungary that can stand up to the government."
Orban, a former Soros scholarship recipient, has been increasingly critical of the Hungarian-born philanthropist, accusing him of wanting to influence Hungarian politics.
He said last week that CEU was "cheating" because it did not have a campus in its country of origin and because it issued diplomas recognized both in Hungary and the United States, giving it an undue advantage over local institutions. The CEU is accredited in New York state but does not have a US campus.
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