Tables of Contents
- Why are college athletes not getting paid by their schools?
- How do student athlete scholarships work?
- What are the pros and cons of compensation for college athletes?
- Keeping education at the center of college sports
Since its inception in 1906, the National Collegiate Athletic Association (NCAA) has governed intercollegiate sports and enforced a rule prohibiting college athletes to be paid. Football, basketball, and a handful of other college sports began to generate tremendous revenue for many schools in the mid-20th century, yet the NCAA continued to prohibit payments to athletes. The NCAA justified the restriction by claiming it was necessary to protect amateurism and distinguish “student athletes” from professionals.
The question of whether college athletes should be paid was answered in part by the Supreme Court’s June 21, 2021, ruling in National Collegiate Athletic Association v. Alston, et. al. The decision affirmed a lower court’s ruling that blocked the NCAA from enforcing its rules restricting the compensation that college athletes may receive.
- As a result of the NCAA v. Alston ruling, college athletes now have the right to profit from their name, image, and likeness (NIL) while retaining the right to participate in their sport at the college level. (The prohibition against schools paying athletes directly remains in effect.)
- Several states have passed laws that allow such compensation. Colleges and universities in those states must abide by these new laws when devising and implementing their own policies toward NIL compensation for college athletes.
Participating in sports benefits students in many ways: It helps them focus, provides motivation, builds resilience, and develops other skills that serve students in their careers and in their lives. The vast majority of college athletes will never become professional athletes and are happy to receive a full or partial scholarship that covers tuition and education expenses as their only compensation for playing sports.
Athletes playing Division I football, basketball, baseball, and other sports generate revenue for their schools and for third parties such as video game manufacturers and media companies. Many of these athletes believe it’s unfair for schools and businesses to profit from their hard work and talent without sharing the profits with them. They also point out that playing sports entails physical risk in addition to a considerable investment in time and effort.
This guide considers the reasons for and against paying college athletes, and the implications of recent court rulings and legislation on college athletes, their schools, their sports, and the role of the NCAA in the modern sports environment.
Why are college athletes not getting paid by their schools?
The reasons why college athletes aren’t paid go back to the first organized sports competitions between colleges and universities in the late 19th century. Amateurism in college sports reflects the “aristocratic amateurism” of sports played in Europe at the time, even though most of the athletes at U.S. colleges had working-class backgrounds.
By the early 20th century, college football had gained a reputation for rowdiness and violence, much of which was attributed to the teams’ use of professional athletes. This led to the creation of the NCAA, which prohibited professionalism in college sports and enforced rules restricting compensation for college athletes. The rules are intended to preserve the amateurism of student participants. The NCAA justified the rules on two grounds:
- Fans would lose interest in the games if the players were professional athletes.
- Limiting compensation to capped scholarships ensures that college athletes remain part of the college community.
NCAA rules also prohibited college athletes from receiving payment to “advertise, recommend, or promote” any commercial product or service. Athletes were barred from participating in sports if they signed a contract to be represented by an agent as well. As a result of the NIL court decision, the NCAA will no longer enforce its rule relating to compensation for NIL activities and will allow athletes to sign contracts with agents.
Major college sports now generate billions in revenue for their schools each year
For decades, colleges and universities have operated under the assumption that scholarships are sufficient compensation for college athletes. Nearly all college sports cost more for the schools to operate than they generate in revenue for the institution, and scholarships are all that participants expect.
But while most sports don’t generate revenue, a handful, notably football and men’s and women’s basketball, stand out as significant exceptions to the rule:
- Many schools that field teams in the NCAA’s Division I football tier regularly earn tens of millions of dollars each year from the sport.
- The NCAA tournaments for men’s and women’s Division I basketball championships generated more than $1 billion in 2019.
Many major colleges and universities generate a considerable amount of money from their athletic teams:
- The Power Five college sports conferences — the Atlantic Coast Conference (ACC), Big Ten, Big 12, Pac 12, and Southeastern Conference (SEC) — generated more than $2.9 billion in revenue from sports in fiscal 2020, according to federal tax records reported by USA Today.
- This figure represents an increase of $11 million from 2019, a total that was reduced because of restrictions related to the COVID-19 pandemic.
- In the six years prior to 2020, the conferences recorded collective annual revenue increases averaging about $252 million.
What are name, image, likeness agreements for student athletes?
In recent years some college athletes at schools that field teams in the NCAA’s highest divisions have protested the restrictions placed on their ability to be compensated for third parties’ use of their name, image, and likeness. During the 2021 NCAA Division I basketball tournament known familiarly as March Madness, several players wore shirts bearing the hashtag “#NotNCAAProperty” to call attention to their objections.
Following the decision in NCAA v. Alston, the NCAA enacted a temporary policy allowing college athletes to enter into NIL agreements and other endorsements. The interim policy will be in place until federal legislation is enacted or new NCAA rules are created governing NIL contracts for college athletes.
- Student athletes are now able to sign endorsement deals, profit from their use of social media, and receive compensation for personal appearances and signing autographs.
- If they attend a school located in a state that has enacted NIL legislation, they are subject to any restrictions present in those state laws. As of mid-August 2021, 40 states had enacted laws governing NIL contracts for college athletes.
- If their school is in a state without such a law, the college or university will determine its own NIL policies, although the NCAA prohibits pay-for-play and improper recruiting inducements.
- Student athletes are allowed to sign with sports agents and enter into agreements with school boosters so long as the deals abide by state laws and school policies.
Within weeks of the NCAA policy change, premier college athletes began signing NIL agreements with the potential to earn them hundreds of thousands of dollars.
- Bryce Young, a sophomore quarterback for the University of Alabama, has nearly $1 million in endorsement deals.
- Quarterback Quinn Ewers decided to skip his last year of high school and enroll early at Ohio State University so he could make money from endorsements.
- A booster for the University of Miami pledged to pay each member of the school’s football team $500 for endorsing his business.
How will the change affect college athletes and their schools?
The repercussions of court decisions and state laws that allow college athletes to sign NIL agreements continue to be felt at campuses across the country, even though schools and athletes have received little guidance on how to manage the process.
- The top high school athletes in football, basketball, and other revenue-generating college sports will consider their potential for endorsement earnings while being recruited by various schools.
- The first NIL agreements highlight the disparity between what elite college athletes can expect to earn and what other athletes may realize. On one NIL platform, the average amount earned by Division I athletes was $471, yet one athlete made $210,000 in July alone.
- Most NIL deals at present are for small amounts, typically about $100 in free apparel, in exchange for endorsing a product on social media.
The presidents and other leaders of colleges and universities that field Division I sports have not yet responded to the changes in college athlete compensation other than to reiterate that they do not operate for-profit sports franchises. However, the NCAA requires that Division I sports programs be self-supporting, in contrast to sports programs at Division II and III institutions, which receive funding directly from their schools.
Many members of the Power 5 sports conferences have reported shortfalls in their operations, leading analysts to anticipate major structural reforms in the governing of college sports in the near future. The recent changes have also caused some people to believe the NCAA is no longer relevant or necessary.
How do student athlete scholarships work?
The primary financial compensation student athletes receive is a scholarship that pays all or part of their tuition and other college-related expenses. Other forms of financial assistance available to student athletes include grants, loans, and merit aid.
- Grants are also called “gift aid,” because students are not expected to pay them back (with some exceptions, such as failing to complete the course of study for which the grant was awarded).
Grants are awarded based on a student’s financial need. The four types of grants awarded by the U.S. Department of Education are Federal Pell Grants, Federal Supplemental Educational Opportunity Grants, Iraq and Afghanistan Service Grants, and Teacher Education Assistance for College or Higher Education (TEACH) Grants.
- Loans are available to cover education expenses from government agencies and private banks. Students must pay the loans back over a specified period after graduating from or leaving school, including interest charges. EducationData.org estimates that as of 2020, the average amount of school-related debt owed by college graduates was $37,693.
- Merit aid is awarded based on the student’s academic, athletic, artistic, and other achievements. Athletic scholarships are a form of merit aid that typically cover one academic year at a time and are renewable each year, although some are awarded for up to four years.
Full athletic scholarships vs. partial scholarships
When most people think of a student athlete scholarship, they have in mind a full-ride scholarship that covers nearly all college-related expenses. However, most student athletes receive partial scholarships that may pay tuition but not college fees and living expenses, for example.
A student athlete scholarship is a nonguaranteed financial agreement between the school and the student. The NCAA refers to full-ride scholarships awarded to student athletes entering certain Division I sports programs as head count scholarships because they are awarded per athlete. Conversely, equivalency sports divide scholarships among multiple athletes, some of whom may receive a full scholarship and some a partial scholarship. Equivalency awards are divided among a team’s athletes at the discretion of the coaches, as long as they do not exceed the allowed scholarships for their sport.
These Division I sports distribute scholarships per head count:
- Men’s football
- Men’s basketball
- Women’s basketball
- Women’s volleyball
- Women’s gymnastics
- Women’s tennis
These are among the Division I equivalency sports for men:
- Track and field
- Water polo
- Ice hockey
These are the Division I equivalency sports for women:
- Field hockey
- Ice hockey
- Track and field
- Water polo
All Division II and National Association of Intercollegiate Athletics (NAIA) sports programs distribute scholarships on an equivalency basis. Division III sports programs do not award sports scholarships, although other forms of financial aid are available to student athletes at these schools.
How college athletic scholarships are awarded
In most cases, the coaching staff of a team determines which students will receive scholarships after spending time scouting and recruiting. The NCAA imposes strict rules for recruiting student athletes and provides a guide to help students determine their eligibility to play college sports.
Once a student has received a scholarship offer from a college or university, the person may sign a national letter of intent (NLI), which is a voluntary, legally binding contract between an athlete and the school committing the student to enroll and play the designated sport for that school only. The school agrees to provide financial aid for one academic year as long as the student is admitted and eligible to receive the aid.
After the student signs an NLI, other schools are prohibited from recruiting them. Students who have signed an NLI may ask the school to release them from the commitment; if a student attends a school other than the one with which they have an NLI agreement, they lose one full year of eligibility and must complete a full academic year at the new school before they can compete in their sport.
Very few student athletes are awarded a full scholarship, and even a “full” scholarship may not pay for all of a student’s college and living expenses. The average Division I sports scholarship in the 2019-20 fiscal year was about $18,000, according to figures compiled by ScholarshipStats.com, although some private universities had average scholarship awards that were more than twice that amount. However, EducationData.org estimates that the average cost of one year of college in the U.S. is $35,720. They estimate the following costs by type of school.
- The average annual cost for an in-state student attending a public four-year college or university is $25,615.
- Average in-state tuition for one year is $9,580, and out-of-state tuition costs an average of $27,437.
- The average cost at a private university is $53,949 per academic year, about $37,200 of which is tuition and fees.
Student athlete scholarship resources
- College Finance, “Full-Ride vs. Partial-Ride Athletic Scholarships” — The college expenses covered by full athletic scholarships, how to qualify for partial athletic scholarships, and alternatives to scholarships for paying college expenses
- Student First Educational Consulting, “Athletic Scholarship Issues for 2021-2022 and Beyond” — A discussion of the decline in the number of college athletic scholarships as schools drop athletic programs, and changes to the rules for college athletes transferring to new schools
What are the pros and cons of compensation for college athletes?
There are many reasons why student athletes should be paid, but there are also valid reasons why student athletes should not be paid in certain circumstances. The lifting of NCAA restrictions on NIL agreements for college athletes has altered the landscape of major college sports but will likely have little or no impact on the majority of student athletes, who will continue to compete as true amateurs.
Reasons why student athletes should be paid
The argument raised most often in favor of allowing college athletes to receive compensation is that colleges and universities profit from the sports they play but do not share the proceeds with the athletes who are the ultimate source of that profit.
- In 2017 (the most recent year for which figures are available), the NCAA recorded $1.07 billion in revenue. The organization’s president earned $2.7 million in 2018, and nine other NCAA executives had salaries greater than $500,000 that year.
- Elite college coaches earn millions of dollars a year in salary, topped by University of Alabama football coach Nick Saban’s $9.3 million annual salary.
- Many of the athletes at leading football and basketball programs are from low-income families, and the majority will not become professional athletes.
- College athletes take great physical risks to play their sports and put their future earning potential at risk. In school they may be directed toward nonchallenging courses, which denies them the education their fellow students receive.
Reasons why student athletes should not be paid
Opponents to paying college athletes rebut these arguments by pointing to the primary role of colleges and universities: to provide students with a rewarding educational experience that prepares them for their professional careers. These are among the reasons they give for not paying student athletes.
- Scholarships are the fairest form of compensation for student athletes considering the financial strain that college athletic departments are under. Most schools in Division I, II, and III spend more money on athletics than they receive in revenue from the sports.
- College athletes who receive scholarships are presented with an opportunity to earn a valuable education that will increase their earning power throughout their career outside of sports. A Gallup survey of NCAA athletes found that 70% graduate in four years or fewer, compared to 65% of all undergraduate students.
- Paying college athletes will “diminish the spirit of amateurism” that distinguishes college sports from their professional counterparts. Limiting compensation for playing a sport to the cost of attending school avoids creating a separate class of students who are profiting from their time in school.
How do college athlete endorsements work?
Soon after the Supreme Court released its decision in NCAA v. Alston, the NCAA issued guidelines for schools that allow college athletes to make money from product endorsements, social media accounts, autographs, and other uses of their name, image, or likeness. This counters the NCAA’s longstanding opposition to student athletes profiting from endorsements. At present, implementation of the guidelines varies from school to school and state to state, which means athletes at some institutions may benefit more from NIL agreements than those attending other schools.
Several NIL consultancy firms are actively soliciting endorsements from college athletes in the aftermath of the rule change.
- Highly touted 19-year-old basketball recruit Hercy Miller, who joined the Tennessee State University basketball team in 2021, signed a $2 million endorsement deal with Web Apps America.
- University of Michigan quarterback Cade McNamara has entered into an endorsement deal with cryptocurrency company More Management that will pay him in cryptocurrency.
- Twin sisters Haley and Hanna Cavinder of the Fresno State University basketball team have marketing agreements to promote Boost Mobile and Six Star Pro Nutrition to the 3.3 million followers of their TikTok account.
- Gable Steveson, a wrestler for the University of Minnesota, entered into an endorsement deal with the delivery service Gopuff; Steveson has 245,000 followers on Instagram and 30,000 on Twitter.
Despite the rush of high-profile college athletes signing endorsement deals, some educators and analysts express concern about the impact of the endorsements on schools, athletes, and college sports.
- Schools with more favorable endorsement rules may entice student athletes away from the schools they are currently attending.
- Likewise, states that have enacted endorsement laws that provide more earning potential for college athletes may see more top recruits choosing to attend schools in those states.
- The time college athletes spend meeting the requirements of their endorsement contracts could detract from study and practice time. This can have an adverse effect on their education and athletic careers — if they are unable to maintain grade requirements, for example, they may be disqualified from playing.
- If a college athlete’s performance in the sport declines, they may be less likely to attract and retain endorsement deals. While the NCAA has banned NIL agreements based on the athlete meeting specific performance criteria, the group acknowledges that a student’s athletic performance may enhance their NIL value.
- Because of complicated contracts and tax laws, student athletes will have to rely on agents, advisers, and managers, which may leave them vulnerable to exploitation.
Keeping education at the center of college sports
From the onset of intercollegiate sports, students have benefited from their participation by learning dedication to their sport, building relationships, and being part of a team. Sports allow students to acquire many important values, such as fair competition and physical and mental health. Education should remain at the forefront of all aspects of college, including sports, whether or not collegiate athletes are paid.