NCAA to compensate current and former athletes in transformative agreement

In a groundbreaking development that occurred on June 6, 2025, a federal judge greenlit a settlement between the NCAA and former college athletes. This agreement marks a pivotal moment in the landscape of college sports, signaling a notable shift in how current and former athletes will be compensated moving forward.

The collegiate sports scene was rocked by this development, as the NCAA agreed to disburse a substantial sum of $2.8 billion in back pay to thousands of athletes who have competed since 2016. This momentous decision also extends to allowing schools to compensate athletes directly, marking a significant departure from the past practices within college sports.

Scholar Joshua Lens, who specializes in sports, business, and legal matters, details the narrative behind this agreement and its implications within the rapidly evolving realm of collegiate athletics. The implications of this settlement are vast, impacting players and institutions alike in several key ways.

Under the terms of the settlement, it was outlined that the NCAA and its conferences would distribute approximately $2.8 billion in media rights revenue back pay to numerous athletes. Moreover, universities are now afforded the opportunity to engage in name, image, and likeness (NIL) agreements with student-athletes. This landmark shift allows schools to compensate players for various opportunities, including appearances in advertisements or public events.

In a groundbreaking move, universities can now allocate up to $20.5 million to student-athletes for the 2025-26 academic year, with this figure likely to increase in subsequent years. Notably, under the settlement, NIL agreements will be subject to an assessment to ensure that compensation falls within an acceptable range based on perceived market value.

Furthermore, a significant change pertains to the replacement of the NCAA’s maximum sport program scholarship limits with maximum team roster size limits for schools opting into the settlement. This shift in strategy reflects a broader effort to recalibrate how collegiate athletes are compensated and to overhaul traditional notions of amateurism within college sports.

The impetus for this settlement stemmed from the 2020 class action lawsuit filed by 14,000 current and former college athletes, challenging past limitations on their earning potential. Historically, the NCAA focused on providing scholarships for educational expenses exclusively, reinforcing the notion of amateurism among collegiate athletes. However, the ruling in Alston v. NCAA compelled the NCAA to reevaluate its stance on athlete compensation.

Following the Supreme Court’s decision in Alston v. NCAA in 2021, the NCAA was prompted to revise its policies regarding athlete compensation. States like California introduced laws requiring universities to allow their athletes to receive NIL compensation, leading to a subsequent shift in the NCAA’s position on the matter.

While this settlement represents a significant win for current and former athletes, universities and athletic departments will need to navigate financial challenges. With some athletes poised to receive substantial sums, institutions are compelled to reevaluate their spending priorities, potentially scaling back in certain areas to accommodate these newfound financial obligations.

Moving forward, the hope is that this settlement fosters stability within the collegiate sports industry. Nevertheless, potential conflicts may arise, particularly concerning matters such as Title IX and ongoing debates surrounding gender equity in college athletics. As the landscape of college sports continues to evolve, this landmark settlement sets a new precedent for how athletes are compensated and underscores the ongoing transformation of collegiate athletics.