The National Collegiate Athletic Association (NCAA) has agreed to settle claims that it violated antitrust laws when it adopted a cap on the amount of financial aid its member institutions could award to student athletes. The settlement, which must be approved by the court, requires the NCAA to make US$10 million available to qualifying student athletes on a claims made basis, and to pay an additional US$8.9 million to the plaintiffs’ lawyers to cover fees and court costs. In addition, the NCAA has agreed to free up another US$218 million, currently earmarked for student emergencies and certain academic programs, for educational and medical expenses for student athletes through the 2012-13 academic year.
A class action complaint was filed in February 2006 by four graduated college athletes on behalf of “all persons who received athletic-based grants-in-aid” from colleges and universities that participated in the NCAA’s division one football and basketball programs. According to the complaint, the NCAA and its member institutions participated in a horizontal agreement to restrict the amount of aid college athletes could receive under a “full scholarship.” The plaintiffs alleged that such scholarships did not cover additional expenses of attending college – including supplies, travel expenses, and health insurance – and that schools would compete with one another and cover these expenses were it not for the restrictive NCAA rule. The settlement does not require the NCAA to admit any wrongdoing, and in a recent statement the NCAA noted: “The NCAA believes the full-ride scholarship currently offered is appropriate for the majority of studentathletes, 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.”