Table of Contents
- Why do college athletes not receive payment from their schools?
- How do scholarships for student athletes work?
- The pros and cons of compensating college athletes
- Emphasizing education in college sports
Since its establishment in 1906, the National Collegiate Athletic Association (NCAA) has governed intercollegiate sports and maintained a rule prohibiting the payment of college athletes. Despite the significant revenue generated by sports like football and basketball in the mid-20th century, the NCAA remained steadfast in its prohibition. The organization argued that this restriction was necessary to preserve amateurism and differentiate “student athletes” from professionals.
The question of whether college athletes should be compensated was partially answered by the Supreme Court’s ruling on June 21, 2021, in the case of National Collegiate Athletic Association v. Alston, et al. The decision upheld a lower court ruling that prevented the NCAA from enforcing rules limiting the compensation that college athletes can 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 still participating in college-level sports (direct payment from schools is still prohibited).
- Several states have passed laws allowing such compensation. Colleges and universities in these states must adhere to these new laws when developing and implementing their own policies regarding NIL compensation for college athletes.
Participating in sports offers students numerous benefits. It helps them focus, provides motivation, builds resilience, and develops various skills that serve them in their careers and lives. The majority of college athletes recognize that they will never become professional athletes and are content with receiving a full or partial scholarship that covers their educational expenses as their only form of compensation for playing sports.
However, athletes in Division I football, basketball, baseball, and other sports generate significant revenue for their schools and external entities such as video game manufacturers and media companies. Many of these athletes believe it is unfair for schools and businesses to profit from their hard work and talent without sharing the profits. They also highlight the physical risks involved in playing sports and the substantial investment of time and effort required.
This guide examines the arguments for and against compensating college athletes, as well as the implications of recent court rulings and legislation on college athletes, their schools, their sports, and the role of the NCAA in today’s sports landscape.
Why are college athletes not receiving payment from their schools?
The reasons behind the lack of payment for college athletes can be traced back to the early organized sports competitions between colleges and universities in the late 19th century. The concept of amateurism in college sports was influenced by the “aristocratic amateurism” prevalent in European sports at that time, despite the majority of U.S. college athletes coming from working-class backgrounds.
By the early 20th century, college football had gained a reputation for rowdy and violent behavior, much of which was attributed to the involvement of professional athletes on teams. This led to the creation of the NCAA, which aimed to eliminate professionalism in college sports and enforce rules limiting compensation for college athletes. The rules were intended to maintain the amateur status of student participants. The NCAA justified these rules based on two main arguments:
- Fans would lose interest in games if the players were professional athletes.
- Limiting compensation to scholarships ensured that college athletes remained integrated within the college community.
NCAA regulations also prohibited college athletes from receiving payment for endorsing or promoting commercial products or services. Athletes were also forbidden from participating in sports if they signed contracts to be represented by agents. As a result of the recent NIL court decision, the NCAA will no longer enforce its rule regarding compensation for NIL activities and will allow athletes to enter into contracts with agents.
Major college sports generate billions in revenue for schools
While most college sports do not generate revenue, a few, such as football and men’s and women’s basketball, are exceptions:
- Many schools that field teams in Division I football consistently earn tens of millions of dollars annually from the sport.
- The NCAA tournaments for men’s and women’s Division I basketball championships generated over $1 billion in 2019.
Several major colleges and universities receive substantial income from their athletic programs:
- The Power Five conferences (ACC, Big Ten, Big 12, Pac 12, and SEC) generated over $2.9 billion in sports revenue in fiscal year 2020, according to federal tax records reported by USA Today.
- This marked an increase of $11 million from 2019, with the total slightly reduced due to COVID-19-related restrictions.
- In the six years leading up to 2020, these conferences experienced average annual revenue increases of around $252 million.
How do student athlete scholarships work?
The primary form of financial compensation for student athletes comes in the form of scholarships, which cover some or all of their tuition and other college-related expenses. Other types of financial aid available to student athletes include grants, loans, and merit-based aid.
- Grants are awarded based on financial need and do not require repayment (with a few exceptions). The U.S. Department of Education provides 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 from government agencies and private banks are available to cover education expenses. Students must repay these loans, with interest, after leaving or graduating from school. The average school-related debt for college graduates in 2020 was $37,693.
- Merit-based aid is awarded based on academic, athletic, artistic, and other achievements. Athletic scholarships fall under this category and generally cover one academic year at a time, often renewing annually for up to four years.
Full athletic scholarships vs. partial scholarships
When people think of student athlete scholarships, they often envision full-ride scholarships that cover nearly all college-related expenses. However, most student athletes receive partial scholarships that typically cover their tuition while excluding fees and living expenses.
A student athlete scholarship is a non-guaranteed financial agreement between the school and the student. The NCAA refers to full-ride scholarships awarded to student athletes in certain Division I sports programs as “head count” scholarships since they are awarded on a per-athlete basis. Conversely, “equivalency” sports distribute scholarships among multiple athletes, with some receiving full scholarships while others receive partial scholarships. Coaches have discretion in dividing equivalency awards among team athletes, as long as they do not exceed the permitted number of scholarships for their sport.
The following Division I sports distribute scholarships on a per-athlete basis:
- Men’s football
- Men’s basketball
- Women’s basketball
- Women’s volleyball
- Women’s gymnastics
- Women’s tennis
The following are Division I equivalency sports for men:
- Track and field
- Water polo
- Ice hockey
The following are 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 grant scholarships on an equivalency basis, while Division III programs do not offer sports scholarships, although other forms of financial aid are available to student athletes at these institutions.
How are college athletic scholarships awarded?
In most cases, scholarships are determined by the coaching staff, who spend time scouting and recruiting prospective student athletes. The NCAA has strict rules in place regarding the recruitment of college athletes, and it provides a guide to help students determine their eligibility to play college sports.
Once a student athlete receives a scholarship offer from a college or university, they can sign a voluntary, legally binding contract known as a national letter of intent (NLI). By signing this letter, the student commits to enrolling and playing their designated sport exclusively for the specific school. In turn, the school agrees to provide financial aid for one academic year, provided the student is admitted and eligible to receive aid.
Once an NLI is signed, other schools are prohibited from recruiting that student. However, students can request to be released from their commitment. If a student attends a different school than the one they have an NLI agreement with, they will lose one year of eligibility and must complete a full academic year at the new school before being eligible to compete in their sport.
While only a small number of student athletes receive full scholarships, even a “full” scholarship may not cover all the student’s college and living expenses. According to ScholarshipStats.com, the average Division I sports scholarship in the 2019-2020 fiscal year was approximately $18,000, with some private universities offering average scholarship awards more than twice that amount. However, the average cost of one year of college in the U.S. is estimated to be $35,720. Here are the approximate costs broken down by type of school:
- The average annual cost for in-state students attending a public four-year college or university is $25,615.
- In-state tuition averages $9,580 per year, while out-of-state tuition averages $27,437 per year.
- The average cost at a private university is $53,949 per academic year, with approximately $37,200 allocated to tuition and fees.
Resources for student athlete scholarships
- College Finance, “Full-Ride vs. Partial-Ride Athletic Scholarships” – Examines the expenses covered by full athletic scholarships, eligibility for partial athletic scholarships, and alternative methods of financing college expenses
- Student First Educational Consulting, “Athletic Scholarship Issues for 2021-2022 and Beyond” – A discussion on the decline in the number of athletic scholarships due to program cuts and changes in transfer rules for college athletes
What are the pros and cons of compensating college athletes?
There are valid arguments both for and against compensating college athletes in certain circumstances. The recent lifting of NCAA restrictions on NIL agreements has transformed the landscape of major college sports, but its impact on the majority of student athletes, who will continue to compete as genuine amateurs, is likely to be minimal.
Reasons supporting compensation for student athletes
The most frequently cited argument for allowing college athletes to receive compensation is that colleges and universities profit from their sports programs while not sharing the proceeds with the athletes who are the ultimate source of that profit.
- In 2017, the NCAA reported $1.07 billion in revenue. The organization’s president earned $2.7 million in 2018, and nine other executives received salaries exceeding $500,000.
- Elite college coaches earn millions of dollars annually, with University of Alabama football coach Nick Saban topping the list at $9.3 million per year.
- Many athletes at prominent football and basketball programs come from low-income backgrounds and the majority will not become professional athletes.
- College athletes expose themselves to significant physical risks while participating in their sports, jeopardizing their future earning potential. In some cases, they may be directed towards less challenging academic courses, diminishing the quality of their education compared to their peers.
Reasons against compensating student athletes
Opponents argue that colleges and universities primarily exist to provide students with a valuable educational experience that prepares them for their professional careers. They provide the following reasons for not compensating student athletes:
- Scholarships offer fair compensation for student athletes in light of the financial strain experienced by college athletic departments. Most Division I, II, and III schools spend more on athletics than they generate in sports revenue.
- College athletes who receive scholarships are presented with an opportunity to obtain a valuable education that will enhance their earning potential throughout their careers outside of sports. A Gallup survey of NCAA athletes found that 70% graduated in four years or less, compared to 65% of all undergraduate students.
- Allowing compensation for college athletes may undermine the spirit of amateurism that distinguishes college sports from their professional counterparts. Limiting compensation to the cost of attending school prevents the creation of a separate class of students who profit from their time in college.
How do student athlete endorsements work?
Shortly after the Supreme Court’s decision in NCAA v. Alston, the NCAA issued guidelines for schools that permit college athletes to earn money through product endorsements, use of social media, autographs, and other forms of name, image, or likeness (NIL) exploitation. This represents a significant shift in the NCAA’s longstanding opposition to student athletes profiting from endorsements. The implementation of these guidelines currently varies between schools and states, resulting in differences in the earning potential of athletes at different institutions.
Several NIL consulting firms are actively soliciting endorsement agreements with college athletes in the wake of the rule change.
- Nineteen-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 entered into an endorsement deal with cryptocurrency company More Management, which will pay him in cryptocurrency.
- Twin sisters Haley and Hanna Cavinder from the Fresno State University basketball team have secured marketing agreements with Boost Mobile and Six Star Pro Nutrition to promote their products to the 3.3 million followers on their TikTok account.
- Gable Steveson, a wrestler for the University of Minnesota, signed an endorsement deal with delivery service Gopuff. Steveson boasts 245,000 followers on Instagram and 30,000 on Twitter.
Despite high-profile college athletes signing endorsement deals, some educators and analysts express concerns about the impact these agreements could have on schools, athletes, and college sports:
- Schools with more favorable endorsement rules may attract student athletes away from other institutions.
- States with endorsement laws providing greater earning potential for college athletes may see more top recruits choosing to attend schools in those states.
- The time spent fulfilling the requirements of endorsement contracts may detract from study and practice time, potentially compromising education and athletic careers. Failure to meet academic requirements, for example, could result in disqualification from playing.
- Declining athletic performance could reduce the likelihood of attracting and retaining endorsement deals. While the NCAA prohibits NIL agreements based on specific performance criteria, the student athlete’s athletic performance may still enhance their NIL value.
- Complicated contracts and tax laws may leave student athletes vulnerable to exploitation as they rely on agents, advisers, and managers.
Emphasizing education in college sports
From the beginning of intercollegiate sports, students have benefited from their participation by learning dedication, building relationships, and being part of a team. Sports offer students the opportunity to acquire important values such as fair competition, as well as physical and mental well-being. Education should always remain at the forefront of all aspects of college, including sports, whether or not collegiate athletes are compensated.
- Best Colleges, “Should College Athletes Be Paid?”
- College Strategic, “Why College Athletes Should Be Paid”
- CollegeVine, “Should College Athletes Be Paid? Pros and Cons”
- Fansided, “64 Reasons College Athletes Need to Be Paid”
- Future of Working, “17 Advantages and Disadvantages of Paying College Athletes”
- NCAA, “Scholarships”
- Next College Student Athlete, “What Are the Different Types of Offers I Could Get?”
- Salarship, “Should College Athletes Be Paid: Pros and Cons”