Why College Athletes Are Being Paid

In 2024 the NCAA signed off on a proposal to pay student athletes, but challenges remain

Fact checked by Suzanne Kvilhaug
Reviewed by David Kindness

Should college athletes be able to make money from their sport? When the National Collegiate Athletic Association (NCAA) was founded in 1906, the organization’s answer was a firm “no,” as it sought to “ensure amateurism in college sports.”

Despite the NCAA’s official stance, the question has long been debated among college athletes, coaches, sports fans, and the American public. The case for financial compensation saw major developments in June 2021, when the U.S. Supreme Court ruled that the NCAA cannot limit colleges from offering student-athletes “education-related benefits.”

In response, the NCAA issued an interim policy stating that its student-athletes were permitted to profit off their name, image, and likeness (NIL), but not to earn a salary. This policy will remain in place until a more “permanent solution” can be found in conjunction with Congress.

Meanwhile, the landscape continues to shift, with new cases, decisions, and state legislation being brought forward. In 2024, the NCAA signed off on a proposed settlement in response to a class-action anti-trust lawsuit. If finalized in spring 2025, the deal would see the NCAA pay out nearly $2.8 billion to 14,000 current and former student-athletes over the next decade, starting as soon as fall 2025. However, the proposed deal would allow schools to pay out athletes in the future, but would not require it.

College athletes are currently permitted to receive “cost of attendance” stipends (up to approximately $6,000), unlimited education-related benefits, awards, and payments for their name, image, and likeness from third parties. A 2023 Sportico/Harris poll found that 67% of U.S. adults favor paying college athletes with direct compensation.

Key Takeaways

• Despite the NCAA reporting nearly $1.3 billion in revenue in 2023, student-athletes are restricted to limited means of compensation.
• Although college sports regularly generate valuable publicity and billions of dollars in revenue for schools, even the highest-grossing college athletes tend to see only a small fraction of this.
• One argument for paying college athletes is the significant time commitment that their sport requires, which can impact their ability to earn income and divert time and energy away from academic work.
• Student-athletes may face limited prospects after college for a variety of reasons, including a high risk of injury, fierce competition to enter professional leagues, and lower-than-average graduation rates.
• A settlement proposed in 2024 between the NCAA and the five biggest conferences (the Big Ten, Big 12, ACC, SEC, and Pac-12) would allow schools to pay athletes, but wouldn’t require it.

The Case for Paying College Athletes

There are numerous arguments in support of paying college athletes, many of which focus on ameliorating the athletes’ potential risks and negative impacts. Here are some of the typical arguments in favor of more compensation.

Financial Disparity

College sports generate billions of dollars in revenue for networks, sponsors, and institutions (namely schools and the NCAA). There is considerable money to be made from advertising and publicity, historically, most of which has not benefited those whose names, images, and likenesses are featured within it.

Of the 2023 NCAA Division I revenues ($19 billion in total), only 16% was returned to athletes through scholarships and medical treatment. Additionally, any other money that goes back to college athletes is not distributed equally. An analysis of players by the National Bureau of Economic Research found major disparities between sports and players.

Nearly 50% of men’s football and basketball teams, the two highest revenue-generating college sports, are made up of Black players. However, these sports subsidize a range of other sports (such as men’s golf and baseball, and women’s basketball, soccer, and tennis) where only 11% of players are Black and which also tend to feature players from higher-income neighborhoods. In the end, financial redistribution between sports effectively funnels resources away from students who are more likely to be Black and come from lower-income neighborhoods toward those who are more likely to be White and come from higher-income neighborhoods.

Exposure and Marketing Value

Colleges’ finances can benefit both directly and indirectly from their athletic programs. The “Flutie Effect,” named after Boston College quarterback Doug Flutie, is an observed phenomenon whereby college applications and enrollments seem to increase after an unexpected upset victory or national football championship win by that college’s team. Researchers have also suggested that colleges that spend more on athletics may attract greater allocations of state funding and boost private donations to institutions.

Meanwhile, the marketing of college athletics is valued in the millions to billions of dollars. In its 2023 fiscal year, the NCAA generated nearly $1.3 billion in revenue, $945.1 million of which came from media rights fees. In 2023, earnings from March Madness represented more than 80% of the NCAA’s total revenue. Through this, athletes give schools major exposure and allow them to rack up huge revenues, which argues for making sure the players benefit, too.

Opportunity Cost, Financial Needs, and Risk of Injury

Because participation in college athletics represents a considerable commitment of time and energy, it necessarily takes away from academic and other pursuits, such as part-time employment. In addition to putting extra financial pressure on student-athletes, this can impact athletes’ studies and career outlook after graduation, particularly for those who can’t continue playing after college, whether due to injury or the immense competition to be accepted into a professional league.

Earning an income from sports and their significant time investment could be a way to diminish the opportunity cost of participating in them. This is particularly true in case of an injury that can have a long-term effect on an athlete’s future earning potential.

The Case Against Paying College Athletes

Arguments against paying college athletes tend to focus on the challenges and implications of a paid-athlete system. Here are some of the most common objections to paying college athletes.

Existing Scholarships

Opponents of a paid-athlete system tend to point to the fact that some college athletes already receive scholarships, some of which cover the cost of their tuition and other academic expenses in full. These are already intended to compensate athletes for their work and achievements.

Financial Implications for Schools

One of the main arguments against paying college athletes is the potential financial strain on colleges and universities. The majority of Division I college athletics departments’ expenditures actually surpass their revenues, with schools competing for players by hiring high-profile coaches, constructing state-of-the-art athletics facilities, and offering scholarships and awards.

With the degree of competition to attract talented athletes so high, some have pointed out that if college athletes were to be paid a salary on top of existing scholarships, it might unfairly burden those schools that recruit based on the offer of a scholarship.

‘Amateurism’ and the Challenges of a Paid-Athlete System

Historically, the NCAA has sought to promote and preserve a spirit of “amateurism” in college sports, on the basis that fans would be less interested in watching professional athletes compete in college sports, and that players would be less engaged in their academic studies and communities if they were compensated with anything other than scholarships.

The complexity of determining levels and administration of compensation across an already uneven playing field also poses a practical challenge. What would be the implications concerning Title IX legislation, for example, since there is already a disparity between male and female athletes and sports when it comes to funding, resources, opportunities, compensation, and viewership?

Another challenge is addressing the earnings potential of different sports (as many do not raise revenues comparable to high-profile sports like men’s football and basketball) or of individual athletes on a team. Salary disparities would almost certainly affect team morale and drive further competition between schools to bid for the best athletes.

NIL

NIL refers to the rights of college and high school athletes to monetize their name, image, and likeness through product endorsements and other activities.

The Era of Name, Image, and Likeness (NIL) Profiting

In 2021, the U.S. Supreme Court ruled that the NCAA violated antitrust laws with its rules around compensation, holding that the NCAA’s current rules were “more restrictive than necessary” and that the NCAA could no longer “limit education-related compensation or benefits” for Division I football and basketball players.

In response, the NCAA released an interim policy allowing college athletes to benefit from their name, image, and likeness (NIL), essentially providing the opportunity for players to profit off their personal brand through social media and endorsement deals. States then introduced their own rules around NIL, as did individual schools, whose coaches or compliance departments maintain oversight of NIL deals and the right to object to them in case of conflict with existing agreements.

Other court cases against the NCAA have resulted in legislative changes that now allow students to receive “cost of attendance” stipends up to a maximum of around $6,000 as well as unlimited education-related benefits and awards.

As for the future of NIL rules and student-athlete compensation, the NCAA’s intention is to “develop a national law that will help colleges and universities, student-athletes, and their families better navigate the name, image, and likeness landscape.” Although legislation has been introduced in Congress, none of them have yet become law.

Legal Action Against the NCAA

In 2020, former Arizona State swimmer Grant House and former TCU/Oregon basketball player Sedona Prince filed an antitrust lawsuit against the NCAA for refusing to allow NIL payments for athletes prior to 2021. They claimed that the five biggest conferences (the ACC, the Big 10, the Big 12, the Pac-12, and the SEC) work in tandem with the NCAA to exploit the labor of student-athletes and limit the compensation that they can receive, and that the NCAA’s limitations on NIL and their control over TV markets obstruct athletes from receiving their fair share of market value.

The NCAA was also involved in two other antitrust cases, Hubbard vs. the NCAA and Carter vs. the NCAA, seeking damages on behalf of athletes.

In July 2024, formal settlement documents were filed with the Northern District Court of California to resolve all three cases. If finalized, the deal would see the NCAA direct nearly $2.8 billion to 14,000 current and former student-athletes over the next 10 years, with payments beginning as soon as fall 2025. However, while the proposed deal would allow schools to pay out athletes in the future, it would not require it. A final approval hearing on the settlement is scheduled for April 7, 2025.

Other important details are yet to be determined as well, such as whether the new compensation model would be subject to Title IX laws. In the Biden administration ‘s final days, the Department of Education’s Office for Civil Rights released a memo stating that payments would have to be shared equitably between a school’s male and female athletes in order to comply with Title IX. But less than a month later, under the new Trump administration, the memo was rescinded.

In their official statement on the settlement, the A5 conference commissioners and NCAA president expressed the following: “This is another important step in the ongoing effort to provide increased benefits to student-athletes while creating a stable and sustainable model for the future of college sports. While there is still much work to be done in the settlement approval process, this is a significant step toward establishing clarity for the future of all of Division I athletics while maintaining a lasting education-based model for college sports, ensuring the opportunity for student-athletes to earn a degree and the tools necessary to be successful in life after sports.”

However, they also noted that the settlement “does not resolve the patchwork of state laws, many of which may conflict with the settlement,” and that “these laws will need to be preempted by federal legislation in order for the settlement to be effective.”

Why Should College Athletes Be Paid?

Common arguments in support of paying college athletes tend to focus on players’ financial needs, their high risk of injury, and the opportunity cost they face (especially in terms of academic achievement, part-time work, and their long-term financial and career outlook). Proponents of paying college athletes also point to the extreme disparity between the billion-dollar revenues of schools and the NCAA and current player compensation.

Is It Illegal for College Athletes to Get Paid?

Although the NCAA once barred student-athletes from earning money from their sport, the rules around compensating college athletes are changing. In 2021, the NCAA released an interim policy permitting college athletes to profit off their name, image, and likeness (NIL) through social media and endorsement and sponsorship deals.

In 2024, the NCAA reached a settlement on a series of anti-trust lawsuits that, if approved, would pay out nearly $2.8 billion in damages to current and former athletes and allow them to be paid in the future. However, current regulations and laws vary by state.

What Percentage of Americans Support Paying College Athletes?

In 2023, a nationally representative sample of U.S. adults found that 67% of respondents were in favor of paying college athletes with direct compensation. Sixty-four percent said they supported athletes’ rights to obtain employee status, and 59% supported their right to collectively bargain as a labor union.

The Bottom Line

The NCAA is under growing pressure to share its billion-dollar revenues with the athletes it profits from. In 2024, they reached a proposed settlement to address three different anti-trust lawsuits, which, if approved, would have them pay out nearly $2.8 billion in damages to current and former student-athletes, and would change the guidelines around how, and how much college athletes should be paid. A final hearing on the settlement is scheduled for April 7, 2025.

Many of the implications of these changing policies are still unclear, but future rules and legislation will need to take into account the financial impact on schools and athletes, the value of exposure and marketing, pay equity and employment rights, pay administration, and the nature of the relationship between college athletes and the institutions they represent.