In recent years, there have been deafening calls from journalists, authors, student-athletes, and advocacy groups to increase full grant-in-aid to cost of attendance.  Cost of attendance is a figure that is calculated based on federal financial aid guidelines that allows for receipt of additional funds above tuition, fees, room and board, and required text books.  Five years ago, a class action antitrust lawsuit was filed addressing this very proposition, White v. NCAA.  The case ultimately settled and created various funds for student-athletes in the class to continue educational opportunities and receive additional funds through the student-athlete opportunity fund.  Although the NCAA is taking a step in the right direction, what is the necessity of the $2,000.00 cap?  Isn’t that another antitrust violation?

Antitrust laws were created to protect competition in the marketplace, not competitors.  The membership will likely assert that schools on the West Coast and major cities will be able to show student-athletes that they would receive larger scholarships because the cost of attendance figure is higher where it is more expensive to live (i.e., Hawaii, San Francisco, New York, Los Angeles).  However, these figures are calculated in accordance with federal guidelines and are really a wash.  The numbers are adjusted based on the cost of living and each student-athlete would be provided the amount necessary to cover the extras allowed by the cost of attendance model.  Why not have an open market?  Allowing the schools to offer full athletic scholarships, up to cost of attendance, in an open market seems sensible.

On the other hand, smaller locales may have cost of attendance figures that are less than $2,000.00.  If an institution provides scholarship funds in excess of the amount of cost of attendance, the student-athletes will receive taxable income and, therefore, would be paid for their athletic pursuits.  Although there are few institutions in Division I that have cost of attendance less than $2,000.00, it may create unnecessary and unwanted implications (i.e., employee status and worker’s compensation insurance).  In turn, these schools would have to offer less than the $2,000.00 cap.

It is a step in the right direction and I am sure student-athletes are happy to accept the extra funds, but it seems to create additional issues to discuss and debate.  Why not let the market be the guide?

For any questions, feel free to contact Christian Dennie at cdennie@bgsfirm.com.