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Schools, Athletes Figuring Out Financial Details of NIL

Brock Fritz

College athletes are making money. Now it’s up to the athletes, the NCAA, universities, athletic departments and compliance officers to ensure that the money being made clears all laws and policies.

“We want to support them,” Davidson athletic Chris Clunie said, according to The Associated Press. “We want to make sure kids don’t make bad decisions and get trapped into opportunities that don’t make sense.

“The bottom line here is student-athletes have to take it upon themselves to step into this phase and educate themselves and think through this and do the right thing, while understanding the implications and all of the things that come with this new opportunity. For (schools), the work is less about helping them get opportunities but more about making sure if they’re going about the opportunities in the right way.”

The NCAA’s temporary policy went into effect July 1, allowing college athletes to “engage in NIL activities that are consistent with the law of the state where the school is located.”

Related: NCAA Officially Adopts Interim NIL Policy

The Associated Press reported that options are available in the early days of athletes being allowed to profit off their name, image and likeness. The University of North Carolina at Charlotte started a “Greenlight” initiative to help athletes pursue NIL opportunities, partnering with COMPASS and INFLCR to provide help with education, monitoring and disclosure.

While athletes can find their own endorsement opportunities, some universities and school officials, including UConn women’s basketball coach Geno Auriemma, are asking players to run all endorsement opportunities by coaches or compliance officers. Agents are allowed to assist athletes with NIL deals, but are not permitted to give advice on professional athletic opportunities.

Yahoo Sports posted an article about the impact athletes’ NIL profits may have on already-in-place systems like financial aid.

“Everyone is talking about taxes; no one is talking about how this will impact grants and aid,” a Power Five athletic director told Yahoo. “Kids can figure out taxes—18-year-old TikTokers are having to do that — but they’re probably not [figuring] out how to calculate what kind of income puts your [aid] at risk.”

Related: Athletes Ink First Endorsement Deals in NCAA History

According to Yahoo, money made from NIL is considered additional taxable income and has to be reported on any need-based financial aid application. Therefore, if an athlete’s adjusted gross income increases, it could potentially reduce eligibility for need-based aid.

Free Application for Federal Student Aid forms use two-years-prior income information, so athletes could make significant NIL profits before their financial aid profile changes.

“There are rules [that apply] if the institution has conflicting information about a student’s level of income,” National Association of Student Financial Aid Administrators director of policy analysis Karen McCarthy said. “It’s a really gray area as to what is considered conflicting information, but if people have very public financial situations that the school knows about, is that something that needs to be taken into account for right now? We’re not really sure how that will all play out.”

Data from the National Postsecondary Student Aid Study shows that 48.5% of students on athletic scholarships also received need-based aid in 2015-16. Furthermore, 31.3% of scholarship athletes received a Federal Pell Grant.

“The hardest part is that they’re going to ask us, ‘Well how much can I make to not lose my Pell?’ and I have to tell them, I don’t know,” FSU senior associate AD Jim Curry said. “And I certainly don’t want to tell you, because if we do one thing wrong in the calculations, or if another element of your tax calculation changes and you’re leaning on that…”

 “The taxes that they’re going to pay and the reduction in financial aid is going to be less than the increase in their total income from these licensing fees in a lot of cases,” financial aid expert Mark Kantrowitz said. “But they still need to pay attention to it. The first thing [an athlete] should do is talk to the financial aid office to ask how this extra money will affect their need-based aid.”

Related: Texas QB Thompson Donating Some NIL Profits to Charity

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