NCAA SCHOOLS CAN NOW PAY ATHLETES DIRECTLY
Ajay Allen - June 13, 2025
After more than a century of strict amateurism rules, the NCAA is finally entering a new era—one where colleges and universities can directly compensate their athletes. This shift, finalized through a landmark antitrust settlement in June 2025, is poised to redefine the business model of college sports across the United States.
This groundbreaking transformation stems from House v. NCAA, a federal antitrust lawsuit that challenged the NCAA’s longstanding restrictions on athlete compensation. The case was spearheaded by former Arizona State swimmer Grant House and former Oregon basketball player Sedona Prince, and targeted the NCAA’s limits on both name, image, and likeness (NIL) earnings and revenue sharing from broadcast rights.
On June 6, 2025, a federal judge approved a $2.8 billion settlement. This agreement did two major things: first, it allocated back pay to former athletes who competed between 2016 and 2024 and second, it granted NCAA Division I schools the ability to directly pay current athletes starting in July 2025.
The most significant change is that schools can now allocate up to $20.5 million per year toward athlete compensation. This figure will increase over time by roughly four percent annually, reaching an estimated $33 million per school by 2035.
Importantly, this new compensation is not a replacement for scholarships or NIL deals. Student-athletes can still earn money through third-party endorsements, appearances, or social media promotions. The direct pay structure is a new layer of income, distributed directly from the schools’ athletic department budgets.
Each school has the autonomy to decide how to distribute the funds across sports. While most are expected to allocate the majority of payments to revenue driving programs like football and men’s basketball, non-revenue sports such as track and field, softball, or gymnastics are also eligible to receive funding.
To prevent abuse and ensure fairness, an independent oversight body called the College Sports Commission will monitor direct payments. Additionally, a third-party system known as NIL Go, managed by Deloitte, will act as a clearinghouse for all NIL deals over $600. This system ensures athletes are not receiving inflated or unethical deals that could be construed as indirect recruiting incentives.
New scholarship and roster policies are part of the agreement. Sports like baseball, which previously had rosters exceeding 35 players, will now be capped at 34. The changes also allow schools to offer unlimited scholarships within team specific financial limits, meaning walk-on athletes may become less common, while scholarship opportunities increase.
Participation in the new revenue sharing model is optional, but nearly all Power Five schools, some of which including Texas, Alabama, USC, and Ohio State have already opted in. In Texas, for instance, the University of Texas plans to allocate 75 percent of its athlete compensation to football, 15 percent to men’s basketball, and 10 percent to other sports. Other universities, like Rice, have brought on NIL specialists to help manage the complexities of the new model.
However, not everyone is on board. The Ivy League has opted out entirely, choosing to retain its traditional amateur model. While Ivy athletes can still benefit from NIL earnings, they will not receive direct payments from their schools. While this is a major victory for athlete rights, it brings significant logistical and legal challenges.
Title IX compliance remains a major question. Though schools have more flexibility in how they distribute funds, they must still ensure that opportunities and resources are equitably provided across men’s and women’s sports.
Employment status is another gray area. Although athletes are still technically students and not employees under this agreement, legal experts say future lawsuits or unionization efforts could push the NCAA closer to full employment recognition, particularly if athlete groups begin to collectively bargain for better terms.
Mid-major and smaller schools also face tough decisions. Many do not generate enough revenue to afford the full $20.5 million in payments. These schools must choose between investing heavily in a few sports or spreading resources thinly across all programs.
The federal government has taken notice of these changes. Several members of Congress have proposed legislation to provide nationwide guidelines for college sports. Some bills aim to ban NCAA schools from classifying athletes as employees, while others seek to protect schools from antitrust lawsuits or create a federal NIL policy that overrides conflicting state laws.
As of now, there is no unified federal law governing athlete compensation, leaving much of the regulation to individual states and the NCAA’s new frameworks. This moment marks a monumental shift in college sports. For the first time, athletes are being treated as stakeholders in the billions of dollars their performances help generate. The direct pay model ensures that more of that money flows to the people who make the games possible.
College athletics may never return to the traditional amateur model again. Recruiting dynamics will shift, program budgets will grow more complex, and the competitive landscape will evolve as athletes consider not just coaching and playing time, but also compensation plans when choosing schools.
It is the dawn of a new era. One where college sports more closely resemble professional leagues, and where student-athletes long denied a share of the profits, finally begin to receive what many view as fair compensation for their contributions.
