Everything You Need to Know About the Approval of Direct Pay for College Athletes

OAKLAND, Calif. - June 6, 2025, will be a day to remember for college athletics. After months of anticipation and many pauses in The House v. NCAA lawsuit, U.S. District Judge Claudia Wilken, approved schools to begin paying their players directly, starting July 1.

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Wilken finalized a revenue-back pay settlement case that challenged long-standing NCAA rules on player compensation. The decision will not only change how college athletes are paid moving forward, but will also provide $2.8 billion in back pay to those who missed out on earning opportunities between 2016 and September 15, 2024, before NIL rights were fully recognized.

With this new era, a few things are expected to change starting next month. So, what does it mean for schools being able to pay their players directly? Athletes will be paid for things like jersey sales, video game appearances, social media promotions, and more. Yes, athletes have been paid for these things, but through partnerships, sponsors, and NIL deals, not directly through their respective school due to them banning athletes from earning money this way.

Additionally, each school can pay up to $20.5 million per year to its athletes. That figure is capped at 22% of certain sports revenue and is expected to increase annually over the time of the 10-year agreement.

Even though a yearly pay will be given to schools to distribute among their athletes, this does not mean athletes will no longer be able to make money from their name, image, and likeness through third parties. Should athletes choose to make additional earnings from a third-party entity, like a business, brand, booster or collective, they must submit to the new Deloitte-run NIL clearinghouse for legitimacy.

With this revenue-sharing plan, scholarships will also change. Under the newly approved NCAA settlement, schools will now be allowed to directly pay athletes, but within a set financial framework. Each school will operate under a salary cap starting at $20.5 million for all athlete compensation across all sports. Alongside this change, the NCAA will eliminate traditional scholarship limits for each sport and instead introduce roster caps. This means schools can offer as many full or partial scholarships as they choose, as long as they stay within the maximum number of players allowed on each team.

"For schools that opt in to paying their athletes, the NCAA’s current system of sport-by-sport athletic scholarship limits will be scrapped in favor of sport-by-sport roster limits. However, after U.S. District Judge Claudia Wilken initially refused to approve the settlement because implementation of the limits starting with the 2025-26 school year would have resulted in thousands of athletes losing their spots on Division I teams, the deal was revised in a fashion that effectively could delay full implementation of the limits for several years. The elimination of the scholarship limit will result in new athletic scholarships being awarded," said Steve Berkowitz of USA TODAY.

To help ease the transition, the settlement allows schools to protect certain athletes already on the roster or those who were promised a spot. These athletes are called "Designated Student-Athletes," and schools have the option to exempt them from the new limits - though it's not mandatory.

To ensure this new system is under control, the Power Five conferences announced the creation of the College Sports Commission, a new organization responsible for making sure schools follow the rules. The commission will investigate violations, mange penalties, and handle disputes. Bryan Seeley, has been named the commission's first CEO. Seeley was previously a Major League Baseball executive and federal prosecutor.

For now, all decisions have been made final, but there is major pushback, and some groups who objected to the ruling could file appeals, but they only have 30 days to do so.

*This story has been updated.*

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