Talented athletes understand the importance of staying alert to changes in their surroundings. Today, it is critical that competitors at the college level extend that awareness to their financial lives.
The environment of college athletics is currently dynamic, to put it mildly. Last year, I wrote about the state of “pay-for-play” on American campuses. In the 12 months since, a few major developments have occurred, but student-athletes have not yet arrived at a stable destination.
In June 2025, U.S. District Judge Claudia Wilken approved a deal that ended three federal antitrust lawsuits, all of which claimed the NCAA illegally limited student-athletes’ earning power. The settlement in House v. NCAA has two major components: one that looks backward and the other that looks forward.
The backward-looking component is the more straightforward of the two. The NCAA has agreed to pay nearly $2.8 billion over the course of the next decade to athletes who competed at the college level from 2016 to the present.
As for the future, the outlook is more complex. Schools subject to the settlement, as well as other schools that opt in, may now pay student-athletes outright. These payments are capped at $20.5 million per school, per academic year. The cap will increase every year for the next 10 years. Schools may decide where to direct these funds. Observers expect power-conference schools to earmark most of it for football, but certain schools may tilt toward basketball, for example.
In addition, scholarship limits will give way to roster limits. Participating schools may grant as many scholarships as they like, but their overall team sizes will be limited.
Student-athletes may still enter into name, image and likeness deals (frequently abbreviated NIL). However, any new endorsement deal must be vetted to ensure it is for a “valid business purpose,” rather than essentially acting as a recruitment incentive. The Power Four conferences recently created a new organization called the College Sports Commission, or CSC. The CSC, in coordination with auditing firm Deloitte, will vet new NIL deals to ensure they follow the settlement’s rules. Schools that decline to participate in the CSC risk expulsion from their conferences.
In all, about half of the NCAA’s Division I schools are expected to adopt the framework outlined in the House v. NCAA settlement. The Southeastern, Atlantic Coast, Big Ten, Big 12 and Pacific-12 conferences were named as defendants and are thus bound by the settlement’s terms. Other significant Division I schools are likely to voluntarily opt in to remain competitive in recruiting talent. Schools with smaller, less lucrative athletic programs, however, may choose to stick to the existing scholarship model rather than paying students outright.
Even for schools participating in the new framework, questions remain. In addition to the specifics of NIL deal vetting, observers have pointed out that it is unclear how directly paying athletes will comply with existing Title IX law. The House v. NCAA settlement also does not answer the question of whether student-athletes may be recognized as employees of their schools, a point with major repercussions for taxes, unionization eligibility and more.
Other Developments
While direct payments to players have grabbed headlines this summer, the House v. NCAA settlement is not the only pertinent update since I wrote about the topic a year ago. In July, President Donald Trump issued an executive order regarding college athletics.
This order asserted that third-party “pay-for-play” arrangements should not be allowed. Such a prohibition would not cover the newly permitted direct payments from schools, or NIL deals such as brand endorsements. It would, however, stop payments from the NIL collectives that arose as a recruiting tool in the period when NIL deals were permitted but direct payments were not yet on the table.
The executive order also sought to protect nonrevenue sports and encouraged the National Labor Relations Board to clarify the status of collegiate athletes. The order’s language suggested that the White House would prefer the NLRB find that student-athletes are not university employees, though it does not state this outright. As more than one commentator has observed, the president’s order closely mirrors the wishlist the NCAA has provided for potential congressional action.
Such congressional action is brewing, in the form of the Student Compensation and Opportunity through Rights and Endorsements, or SCORE, Act. The NCAA has endorsed the bill. At this writing, the legislation has not yet reached the floor of the House of Representatives. Assuming House passage, it would then need to attract at least 60 votes to get through the Senate before this Congress adjourns next year.
While lawmakers continue to work on the bill, its contents will likely mirror the recent executive order, as well as the NCAA’s talking points. Among other provisions, the SCORE Act would protect the NCAA from antitrust challenges regarding compensation, transfer and eligibility rules for athletes. It would also directly prohibit schools from categorizing student-athletes as employees.
Should the SCORE Act make it to the president’s desk, it seems probable that he will sign it into law. However, even at that point, the SCORE Act will likely face challenges. A group of five state attorneys general have already released a statement criticizing potential antitrust protections included in the SCORE Act.
Fights about the NCAA’s antitrust vulnerabilities, the employment status of student-athletes, and fairness for nonrevenue sports are all ahead. This is not to mention questions of how the CSC will determine “valid business purposes” or fair market value for NIL deals. If two players have similar performance on the field or the court, but one has a larger social media following, how much more value does that following add to the player’s name, image and likeness? Players and their families will navigate a new framework while it is effectively under construction over the next few seasons.
What Student-Athletes Should Do
College athletics has changed rapidly over the past decade or so. As the section above suggests, those changes are not complete. So how should players protect themselves in the meantime?
First, it is important to stay mindful that situations can change, sometimes with little notice. The settlement in House v. NCAA took effect June 6, with schools readying to pay athletes less than one month later. Litigation and legislation move slowly — until they don’t.
Employees vs. Independent Contractors
The NCAA is working hard to secure legislation, regulation or both making it clear that student-athletes are not employees, even if they receive direct payments from their schools. No one has a crystal ball to see how this effort will play out. However, athletes should make sure they understand the existing differences between employees and independent contractors.
As my colleague Ben Sullivan noted a few years ago in this space, the question of whether someone is an independent contractor is not up to the employer, or even the worker. Instead, the terms describe distinct ways of doing work on an employer or client’s behalf.
This distinction came up recently in sports at the professional level. When the Chicago Bears drafted Caleb Williams last year, Williams asked to be paid as an independent contractor, receiving his earnings through a limited liability company instead of directly as an employee. The Bears denied this request; the NFL makes clear that contracted players are employees. This makes sense, given that a team controls when, where and how its players work. Similarly, an NFL player cannot subcontract his responsibilities out to someone else. Employees are also subject to, and benefit from, union negotiations. (Note that, while contractors can legally unionize, they have fewer legal protections when doing so.)
You may immediately see the problem for college athletes who receive direct payments from their schools. If lawmakers or regulators attempt to prohibit recognizing student-athletes as employees, they may run up against the existing reality of how the law defines independent contractors. Athletes who are required to show up for practices, training and games fundamentally lack the latitude the current definition requires. Whether lawmakers create some sort of new category, change the existing categories, or carve out an exception (and face potential legal challenges in the process) remains to be seen.
While Caleb Williams receives his team salary directly, he may still find use for an LLC. Like many professional athletes, Williams profits from endorsement deals. In a relationship with a company paying for his name, image or likeness, Williams very likely does function as a contractor.
NIL Deals
As I mentioned earlier, the CSC is likely to restrict or eliminate many college-level NIL deals with collectives now that many schools will pay their student-athletes directly. Critics have suggested that some collectives offered contracts so restrictive that they effectively rise to the level of employment agreements. Such deals will likely go away, or at least face serious challenges.
That said, more classic endorsement deals — for example, with athletic apparel brands — are apt to continue. As is the case now, it is critical for a player considering such an arrangement to fully read and understand the contract a company offers. To avoid any doubt, I strongly recommend consulting an agent or attorney who is familiar with such agreements. This may represent an upfront cost or a percentage of the contract revenue, but involving a trustworthy professional can protect players against abusive or punitive contracts. Further, the agent or attorney can help a player negotiate for more money than the brand initially offers.
While the top endorsement deals will go to only a few players, in some cases NIL deals can involve life-changing amounts of money. For players considering significant NIL contracts, I recommend my colleague Eric Meermann’s article “Name, Image And Likeness Tips For Student-Athletes.” (Much of Eric’s advice also applies to students receiving large payouts directly from their schools.)
Insurance Coverage
If student-athletes eventually become employees, we may see schools offering benefits including insurance coverage. Similarly, if the SCORE Act were to pass in its current form, it would require programs that pay coaches more than $250,000 annually to provide certain medical benefits to players.
For now, it is important that student-athletes protect themselves. If students are under age 26, they will generally be eligible to continue receiving health insurance from their parents or guardians. College athletes hoping to go pro may also want to consider some form of disability insurance or, in some specific cases, loss-of-value insurance to protect against the possibility of career-ending injuries. As I’ve written before, for any insurance product, the details are critical. Before purchasing a policy, be sure to perform careful due diligence and read all plan documents in full before signing up.
If student-athletes do secure employee status, the same advice will apply to any benefits offered by colleges and universities: Read all documents closely. Be sure you understand the details. And ask for help, potentially from a professional, if you aren’t sure you have a firm grip on what you are being offered.
Tax Compliance
Student-athletes receiving payments from their schools, NIL deals or both should take care to make sure they are meeting their tax obligations. Athletes who earn $400 or more a year from any source must be sure to file income tax returns, and they may need to make estimated income tax payments throughout the year. For now, student-athletes should assume they will need to cover self-employment taxes, as well as federal and state income taxes when they apply. It may make sense for players, especially first-year athletes, to consult a tax planner to ensure they don’t miss any requirements.
What if student-athletes do become recognized as employees of their schools? Such a change would be another good reason to consult a professional. Some details may get easier, such as the school withholding taxes so that estimated tax payments are no longer necessary. On the other hand, athletes who were formerly contractors might lose the ability to deduct certain expenses. And, as I mentioned when discussing Caleb Williams, high-level players may be both employees (of their schools) and independent contractors (for companies offering endorsement deals). While paying a tax professional is an expense, it is usually simpler — and more economical — to set up good tax habits from the beginning, rather than trying to clean up a mess after the fact.
Student-athletes work hard to provide entertainment for the millions of Americans who count themselves fans of college sports. While the landscape around them changes, we can all hope we are moving toward a fairer final result. In the meantime, players should stay aware of their surroundings and be prepared for more changes to arrive.
