How Does NIL Work in College? Pay, Rules, and Taxes

Name, image, and likeness rules let college athletes in every NCAA division earn money from endorsements, social media, appearances, merchandise, group licensing deals, and, since July 2025, direct payments from their schools, all while keeping their scholarship and eligibility. So how does NIL work in college in practice? You sign contracts with brands or your school for specific commercial activity, you disclose those deals to your compliance office (and, for Division I, to a national clearinghouse when they exceed $600), you follow a short list of category and recruiting restrictions, and you pay self-employment tax on what you earn. The framework took shape after the Supreme Court’s 2021 decision in NCAA v. Alston, hardened into permanent NCAA bylaws in August 2024, and expanded again through the House v. NCAA settlement in 2025.

What NIL Actually Covers

NIL bundles three pieces of your personal identity that carry commercial value. Your name includes your legal name and any nickname the public connects with you. Your image covers photographs, video clips, and any other visual depiction of you. Your likeness reaches beyond a literal photo to your voice, a distinctive physical feature, or a digital avatar modeled after you in a video game. You license these elements to companies through contracts, and the underlying legal concept is the right of publicity, which prevents anyone from using your identity commercially without your permission or payment.

Ways College Athletes Earn NIL Money

Social media is where most NIL money flows for the average athlete. Sponsored posts on Instagram, TikTok, or YouTube let brands reach a specific audience through your following. Compensation scales with engagement. A niche-sport athlete with a few thousand followers might earn a few hundred dollars per post, while a high-profile quarterback or basketball star with a massive platform can command tens of thousands. Some of these relationships grow into longer-term brand ambassador deals where you serve as the ongoing face of a product line.

Off-screen opportunities are just as varied. Autograph signings, speaking engagements at youth clinics, and paid personal appearances generate income through flat fees or hourly rates. Athletes also sell branded merchandise like custom apparel through third-party fulfillment platforms, appear in local TV or radio ads, and offer personalized video shout-outs to fans.

Group Licensing

Not every NIL deal is negotiated one-on-one. In group licensing, athletes pool their NIL rights so a company can use many players at once in a single product. The most visible example is the EA Sports College Football video game, which returned in 2024 after a decade-long hiatus. Trading cards and similar collectibles follow the same model. Group licensing gives athletes who might not land individual endorsements a way to earn something from their collective visibility.

NIL Collectives

Collectives are donor-funded organizations, often created by boosters, that pool money and distribute it to athletes through NIL deals. They became a dominant force in college athletics almost immediately after the 2021 policy change, especially in football and basketball. As of late 2025, the NCAA requires every collective-funded deal to include a specific deliverable from the athlete. Simply paying someone for being on the roster no longer passes muster.

Direct Pay From Schools Under the House Settlement

The House v. NCAA settlement, which received court approval and began implementation in July 2025, allowed schools to pay athletes directly for the first time. Under the settlement, participating Division I institutions can distribute up to 22% of the average revenue generated by Power Five conference schools from media rights, ticket sales, and sponsorships. For the 2025–26 academic year, that cap works out to roughly $20.5 million per institution.¹

Schools that opt in can enter licensing or endorsement agreements with their own athletes, and every dollar a school pays counts against the benefits cap. Even schools that do not participate in revenue sharing are bound by the settlement’s reporting and oversight rules for third-party NIL deals. All Division I athletes must report third-party NIL deals exceeding $600 through a centralized clearinghouse called NIL Go, which the NCAA launched in partnership with Deloitte to evaluate whether deals reflect fair market value.²

The settlement also eliminated institutional financial aid limits for participating schools, meaning athletes in any sport can receive full or partial athletics aid without the previous sport-by-sport scholarship caps. The injunctive terms run for ten academic years from final approval, and the settlement includes $2.78 billion in back damages paid to current and former athletes whose NIL rights were restricted under the old system.¹

Rules You Have to Follow

The earning opportunities are broad, but the guardrails still matter. Getting these wrong can cost your eligibility.

No Pay-for-Play

Compensation tied to athletic performance or achievement is prohibited. You cannot receive a bonus for scoring a certain number of points, winning a conference title, or making a bowl game. NIL deals must compensate you for a specific commercial activity, not for what you do on the field or court.³ Under the latest rules, every NIL deal must include what the NCAA calls “direct activation,” meaning the contract must name a specific deliverable you will provide in exchange for payment.²

NIL and Recruiting

Under the original interim policy, schools and boosters were flatly prohibited from offering specific NIL deals to recruits before enrollment.⁴ The House settlement loosened this. Participating institutions may now provide a written offer regarding NIL payments or other benefits to high school recruits starting August 1 of the recruit’s senior year, though the offer cannot be signed until the applicable signing date. Transfer portal athletes may receive written offers on the permissible contact date.²

Schools still cannot guarantee a third-party collective’s payments. If a collective promises an athlete $500,000 and falls short, the university cannot cover the difference. That kind of backstop arrangement counts against the institution’s spending cap.

Prohibited Categories

Most schools maintain a list of industries you cannot partner with through NIL. The specifics vary, but nearly every institution prohibits deals involving gambling and sports wagering, alcohol, tobacco and nicotine products, marijuana, adult entertainment, banned supplements, and anything that violates the law. Athletes who sign a deal in a prohibited category risk eligibility consequences and potential breach of their scholarship agreement. Your compliance office publishes the full list for your school. Review it before you sign anything.

What Schools Can and Cannot Do

Under the original interim policy, athletic department staff could not help athletes negotiate or secure NIL deals. That changed with the 2024 bylaw update. Schools may now identify NIL opportunities and help facilitate deals between athletes and third parties, as long as the school is not directly compensating the athlete outside the revenue-sharing framework. Coaches and support staff can point you toward opportunities without violating NCAA rules.

Contracts and Disclosure

A solid NIL contract should include the names and contact information of all parties, a detailed description of what you will deliver (the number of social media posts, the length of an appearance, the specific content to be created), and the compensation amount with a payment schedule.⁵ Compensation can take the form of cash, a percentage of sales revenue, product trades, or a combination. The contract should also spell out the duration of the relationship, any exclusivity clauses that prevent you from working with competing brands, and what happens if either side wants to end the deal early.

If the deal involves using your school’s logo, jersey number, or other university trademarks, you will likely need separate approval from the university’s licensing office. Most schools require prior written permission before any institutional marks appear in commercial promotions, and photos implying a university endorsement of a product are generally not allowed.

Once the contract is signed, you must disclose the deal to your school’s compliance office. Many institutions use platforms like INFLCR or Opendorse for electronic submissions. For Division I athletes, third-party deals exceeding $600 also need to be reported through the NCAA’s NIL Go clearinghouse, where compliance staff evaluate whether the deal reflects fair market value.² Submit your disclosures before you start performing under the contract. Reporting after the fact invites scrutiny you do not want.

Taxes on NIL Income

The IRS treats NIL income as self-employment income, which means you owe more than just regular income tax on what you earn.⁶

You must file a federal tax return if you earn at least $400 in NIL income from self-employment activities, regardless of whether your total income exceeds the standard deduction. That $400 threshold triggers self-employment tax obligations covering Social Security and Medicare. The self-employment tax rate is 15.3%, broken into 12.4% for Social Security and 2.9% for Medicare.⁷ That 15.3% sits on top of whatever income tax bracket your earnings fall into. An athlete who earns $20,000 in NIL income and did not plan for taxes could easily owe $5,000 or more at filing time.

You report NIL income and related expenses on Schedule C (Profit or Loss from Business), which files alongside your Form 1040.⁸ Legitimate business expenses reduce your taxable profit. Agent commissions go on Line 10, travel costs for appearances on Line 24a, and equipment or supplies used for content creation can be expensed or depreciated. Keep receipts and records throughout the year.

Companies that pay you $2,000 or more in a tax year must send you a Form 1099-NEC reporting that income. For tax years beginning after 2025, this reporting threshold increased from $600 to $2,000.⁹ Even if you do not receive a 1099-NEC because your payment from a single company fell below $2,000, you still owe taxes on every dollar earned. Non-cash compensation like merchandise or gift cards counts as taxable income too. Because no employer is withholding taxes from your NIL payments, the IRS expects you to make quarterly estimated payments if you expect to owe $1,000 or more for the year. Missing these quarterly deadlines triggers penalties. For 2026, the standard deduction for a single filer is $16,100, so if NIL income is your only income and it falls below that amount, you will not owe federal income tax, but you will still owe self-employment tax on anything over $400.¹⁰

How NIL Income Affects Financial Aid

NIL income can reduce your eligibility for need-based financial aid, and many athletes do not realize this until it is too late. The FAFSA uses your adjusted gross income to calculate your Student Aid Index, which determines how much need-based aid you qualify for, including Pell Grants. Because NIL income flows through Schedule C, the net profit from your NIL activities (revenue minus business expenses) gets folded into the income figures the FAFSA pulls from your tax return.¹¹

A strong year of NIL earnings could push your income high enough to reduce or eliminate a Pell Grant you previously received. The FAFSA uses prior-prior year tax data, so there is a two-year lag: income you earn in 2026 affects your 2028–29 financial aid package. Track your business expenses carefully and deduct everything you are entitled to, since the FAFSA uses the net profit figure from Schedule C, not your gross NIL revenue.

Special Warning for International Student-Athletes

If you are competing on an F-1 student visa, NIL is legally treacherous. F-1 visa holders are authorized to be in the United States to study, and federal regulations heavily restrict any work outside narrow categories like on-campus employment (limited to 20 hours per week while school is in session).¹²

Any NIL activity where you perform a task in exchange for payment, such as creating social media content, appearing at an event, or filming a commercial, likely qualifies as active income and constitutes unauthorized employment under immigration law. The penalties are severe: termination of your visa status, deportation, and potential inability to obtain future visas, including the P-1 visa used by professional athletes. The Department of Homeland Security has not issued definitive guidance on NIL for international students and has acknowledged it is still assessing the issue. Until that guidance arrives, most universities advise international student-athletes to avoid NIL deals involving any active participation. Truly passive arrangements, like licensing your likeness for a video game without performing additional work, occupy a legal gray area. Consult both your school’s international student office and an immigration attorney before signing anything.

When to Hire an Agent

You do not need an agent to do NIL deals, but as the dollars grow, professional representation becomes worth considering. Agents who represent student-athletes are regulated under the Sports Agent Responsibility and Trust Act, a federal law that requires agents to provide specific written disclosures before entering into a contract with you.¹³ The agent must also notify your school within 72 hours of signing a representation agreement, or before your next competition, whichever comes first.¹⁴

Agents are prohibited from recruiting you with false promises or providing anything of value before you sign a contract. Most states also require agents to register and pay a fee, though the specific requirements vary by jurisdiction. Agent commissions typically come as a percentage of your deal value, so understand the fee structure before you commit. Many schools list vetted agents or agencies through their compliance office, which can be a useful starting point if you are not sure where to look.

1
NCAA. House v. NCAA Settlement Agreement
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NCAA. Question and Answer – Implementation of the House Settlement
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NCAA. New Interim Policy Key Takeaways
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NCAA. Interim NIL Policy
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NCAA NIL Assist. Contracts Best Practices
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Internal Revenue Service. Name, Image and Likeness (NIL) Income
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Internal Revenue Service. Self-Employment Tax (Social Security and Medicare Taxes)
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Internal Revenue Service. Instructions for Schedule C (Form 1040)
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Internal Revenue Service. Publication 1099 General Instructions for Certain Information Returns – 2026 Returns
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Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026
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Federal Student Aid. 2025-26 FAFSA Form
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eCFR. 8 CFR 214.2 – Special Requirements for Admission, Extension, and Maintenance of Status
13
Office of the Law Revision Counsel. 15 U.S. Code Chapter 104 – Sports Agent Responsibility and Trust
14
Federal Trade Commission. FTC is Seeking Information from 20 Universities on Sports Agents Compliance with Law Aimed at Protecting Student Athletes