Charles EstherSchools Are Now Allowed to Pay College Athletes Directly in Historic NCAA Settlement
A new era has begun in college sports as schools are now free to start paying their athletes directly, following approval of a multibillion-dollar legal settlement on June 6, 2025.
Judge Claudia Wilken formally approved the settlement between the NCAA, its leading conferences, and lawyers representing all Division I athletes.
The deal ends three federal antitrust lawsuits that challenged the NCAA’s limits on athletes’ earning potential.
The decision comes just weeks before schools plan to begin direct payments to athletes starting July 1.
Both parties argued for approval during a hearing in early April.
While college sports leaders have made tentative plans for this major change, the short timeline means schools must quickly build the infrastructure to enforce the new rules.
Multibillion-Dollar Settlement to Compensate Athletes
Under the settlement, the NCAA will pay nearly $2.8 billion in back damages over the next 10 years to athletes who competed since 2016.
Going forward, each school can pay its athletes up to an annual cap expected to start around $20.5 million per school in the 2025-26 academic year.
These payments are in addition to existing scholarships and benefits.
End of Outdated Amateurism Rules
This ruling marks a significant milestone in efforts to remove outdated amateurism rules from major college sports.
Since 2021, athletes have been able to earn money from name, image, and likeness (NIL) deals with third parties.
However, boosters and collectives quickly began paying athletes millions, mostly to top football and basketball players.
Now, those payments will come directly from athletic departments.
Support from Athletes and Legal Background
Former college basketball star Sedona Prince, co-lead plaintiff in one lawsuit, called the decision “historic” and said it would change millions of lives for the better.
The ruling follows a 2021 U.S. Supreme Court decision that rejected the NCAA’s view of college sports as primarily educational, instead recognizing it as a lucrative entertainment business.
Remaining Legal Questions and Industry Impact
Though this settlement will not end all legal disputes—such as questions about athlete employment status and playing eligibility limits—it aims to give schools more control over athlete pay and reduce unregulated third-party payments.
NCAA President Charlie Baker hopes the deal will encourage federal lawmakers to create legislation preventing athletes from becoming employees and grant the NCAA an antitrust exemption.
Such a law would allow the NCAA to set pay caps and regulate transfers, similar to collective bargaining agreements in professional sports.
New Rules on Booster Payments
The settlement also empowers schools to limit booster influence by requiring endorsement deals to serve a “valid business purpose” rather than as recruitment incentives.
Despite these rules, some insiders doubt whether booster spending limits will effectively contain the rapid growth of athlete payments at wealthier schools and expect further lawsuits.
Important Dates for Implementation
Key dates for settlement implementation include the June 11 launch of the NIL Go portal and July 1 as the first day schools can make direct revenue-sharing payments to athletes.
New Enforcement Organization Established
To enforce these new rules, power conferences have created the College Sports Commission.
The commission recently appointed former MLB executive Bryan Seeley as CEO to build enforcement teams and oversee rules around revenue sharing, NIL deals, and roster limits.
Transition Challenges and Amendments to the Settlement
NCAA and conference leaders acknowledge this transition will be challenging but stress the importance of seizing this transformative opportunity.
Judge Wilken initially rejected the settlement in April due to concerns about roster limits that could have forced many athletes off teams.
However, the deal was amended so no athlete loses their team spot directly because of roster limits.
This historic settlement marks the start of a new chapter where college athletes are finally compensated fairly, reflecting the evolving landscape of college sports.
