Schools can now directly pay college athletes in landmark $2.8 billion settlement

College athletes will undergo yet another historic change.

U.S. District Judge Claudia Wilken approved the $2.8 billion settlement in the House v. NCAA case on Friday, which allows schools to directly compensate student-athletes.

Under the new agreement, each participating Division I school can distribute up to $20.5 million annually to athletes, with that cap increasing over the next decade.

The NCAA logo at the Division I Men’s Golf Championships in 2025. NCAA Photos via Getty Images

Moreover, it will provide $2.8 billion in payback to former athletes dating back to 2016, addressing past restrictions on NIL, to some extent.

Judge Wilken’s approval in court also addressed concerns regarding roster limits that would’ve likely impacted walk-on athletes.

The settlement introduces the “Designated Student-Athletes” tag, which is intended to allow those impacted by roster changes to return or transfer without worrying about being penalized.

NCAA President Charlie Baker discussed the settlement in a lengthy open letter.

“Many looked to April’s hearing about the House settlement as a culmination of sorts, but the court’s final approval of the settlement in fact marks a new beginning for Division I student-athletes and for the NCAA,” Baker wrote. “For several years, Division I members crafted well-intentioned rules and systems to govern financial benefits from schools and name, image and likeness opportunities, but the NCAA could not easily enforce these for several reasons.

“The result was a sense of chaos: instability for schools, confusion for student-athletes and too often litigation. Sometimes member schools even supported that litigation — some of which spurred hastily imposed court orders upending the rules,” he continued.

The NCAA logo is shown on signage before the Division III Men’s Ice Hockey Championship held at University Nexus Center on March 30, 2025 in Utica, New York. NCAA Photos via Getty Images

Baker additionally acknowledged the challenges ahead involving more change, noting:

“Going forward, the defendant conferences will be responsible for implementing several elements of the settlement, including the design and enforcement of the annual 22.5 percent cap (approximately $20.5 million in year one) for financial benefits a Division I school may direct to student-athletes,” he outlined. “In addition, the court maintains jurisdiction over the implementation of the settlement, and the plaintiffs will continue to track progress.”

Baker hailed this as positive, adding, “The defendant conferences are also responsible for launching and enforcing a series of rules regarding the third-party NIL contracts student-athletes may enter into. With these reforms, along with scholarships and other benefits, student-athletes at many schools will be able to receive nearly 50 percent of all athletics department revenue. That is a tremendously positive change and one that was long overdue.”

Baker concluded by pointing out that “change at this scale is never easy.”

Changes are set to take effect beginning on July 1.