The NCAA has reached an agreement with plaintiffs in a federal antitrust lawsuit that would benefit current and former student-athletes through a restructuring of assistance funds. The settlement, which was preliminarily approved February 4 by the U.S. District Court in Los Angeles, could end a case in which plaintiffs argued that caps on student-athlete grants-in-aid to tuition, room and board and books amounted to a restriction of trade.

Foremost among settlement terms in Jason White et al vs. the NCAA is a reorganization of funds that allow conferences and institutions to distribute $218 million in existing allocations through 2012-13. Those dollars originally were designated for the Special Assistance Fund and the Academic Enhancement Fund – existing funds earmarked for specific uses – but will now be more widely accessible under the flexible guidelines of the Student-Athlete Opportunity Fund (SAOF).

The SAOF, established as part of the NCAA’s latest broadcast-rights agreement with CBS Sports and ESPN, is intended to provide "direct benefits" to student-athletes by meeting financial needs that arise in conjunction with participation in intercollegiate athletics, helping finance enrollment in an academic curriculum or recognizing academic achievement. Its access guidelines are more liberal than the other two student-athlete assistance funds, but under terms of the settlement, the more flexible access will apply to the entirety of the funds.

Other settlement terms include:

• The creation of a $10 million fund to which former student-athletes who are members of the class involved in the lawsuit can apply for reimbursement of education expenses.
• A new NCAA rule allowing Division I institutions to provide year-round, comprehensive health insurance to student-athletes.
• A commitment from the NCAA membership to examine whether colleges and universities should provide multi-year scholarships.

The former student-athletes must apply over the next three years for grants from the new fund to pay for educational expenses and career development costs. Payouts can occur as a $500 one-time payment or a maximum of $2,500 per year for three years for undergraduate, graduate or professional certificate education.

The details of the benefits and an application process will be available on an NCAA-created Web site.

Class members have an opportunity to  review the settlement terms, with final court approval scheduled for June 30.

The NCAA issued a statement, saying the settlement allows the Association to resolve the litigation and enhance the benefits potentially available to former, current and future Division I student-athletes.

“The NCAA is pleased the court has granted preliminary approval to the settlement agreement in the White case, and we hope it leads to final approval on June 30. The settlement allows us to resolve the litigation and enhance the benefits potentially available to former, current and future student-athletes.

“As the NCAA worked to reach agreement, it was important to construct a settlement that supports our emphasis on education and degree completion. The NCAA also wants to help former student-athletes who are part of the class members in this settlement gain career development skills to put that education to use.

“The NCAA believes the full-ride scholarship currently offered is appropriate for the majority of student-athletes, but we recognize there may be some student-athletes whose needs are still not met, despite access to Pell Grants and other need-based aid. By adjusting the rules regarding access to the hundreds of millions of dollars in aid scheduled to be made available for student-athletes over the next several years, it is the NCAA’s intention to help meet any true additional needs of its student-athletes.”

Information about the funds

The Student-Athlete Opportunity Fund (SAOF) was created as part of the most recent bundled-rights agreement with CBS and ESPN. The first academic year funds were distributed was 2003-04. In 2006-07, the SAOF provided nearly $27.7 million for items including computer equipment, summer school, insurance, medical expenses and educational programs and expenses.

The Special Assistance Fund (originally called the Needy Student-Athlete Fund) and the Academic Enhancement Fund were both created in the early 1990s from the television contract with CBS.

Conferences can use Special Assistance Fund money to assist Pell-Grant eligible student-athletes with such emergencies as medical, travel and education expenses and clothing needs. In 2006-07, the fund allocated $12.3 million, including nearly $7 million on clothing, $2.6 million on medical expenses and more than $159,000 on emergency travel.

The Academic Enhancement Fund, which doles out set amounts (about $60,000 annually) to Division I institutions, supports academic programs for student-athletes. No specific guidelines for these funds exist, but the money may not be spent on scholarships for fifth-year students with exhausted eligibility, summer school tuition or books. This fund is also distributed through the conferences, and in 2006-07, $19.8 million was allocated for this program.