Texas is on the verge of making history in college athletics. A new law, expected to be signed by Governor Greg Abbott, would allow colleges and universities in the state to pay student athletes directly for the first time. This significant shift in policy comes as part of a broader response to legal challenges against the NCAA and the rapidly evolving landscape of college sports compensation.
Here’s a closer look at what this means, why it matters, and how it could reshape college athletics in Texas—and beyond.
What’s the Big Deal?
Until now, college athletes could profit from their name, image, and likeness (NIL)—but only through deals with third parties like national advertisers, local businesses, or donors. Universities themselves were strictly prohibited from paying athletes directly. That’s about to change.
Thanks to a bill passed unanimously by the Texas Senate and overwhelmingly by the House, Texas colleges will soon be able to enter NIL agreements directly with student athletes. The legislation is designed to align state law with an anticipated $2.8 billion settlement between the NCAA and former Division I athletes, expected to be approved this fall.
In other words, colleges are preparing for a future where they’re not just offering scholarships and exposure—but actual paychecks.
Why Now?
There are two key pressures driving this change:
Legal Pressure: Lawsuits have been chipping away at the NCAA’s amateurism model for years. A pending court settlement would force the NCAA to distribute billions of dollars in back pay to athletes who played between 2016 and 2021. That case alone is expected to reshape how athlete compensation is handled going forward.
Recruitment Pressure: Major Texas university systems—like Texas Tech and Texas A&M—warned lawmakers that without this bill, they risked losing top-tier talent to other states that adapt faster to these changes.
As Lt. Gov. Dan Patrick put it (somewhat jokingly), “The Senate saved college sports in Texas.”
Key Details of the Bill
Eligibility: Only athletes age 17 and older can enter these deals.
Timing: Payments will begin only after students are officially enrolled and participating in their college sport.
Limitations: Deals with sexually-oriented businesses, tobacco, and alcohol companies are prohibited.
Education Requirement: Athletes must complete a financial literacy course.
Cap on Payments: The NCAA is expected to cap total school payouts at $20.5 million annually.
Small School Considerations: Smaller colleges can spend strategically below the cap to remain competitive.
These guardrails aim to balance the new compensation opportunities with protection for student-athletes, many of whom are still teenagers navigating the complexities of money, fame, and performance pressure.
Who Benefits—and Who’s Concerned?
Winners:
Athletes get a direct path to earning money from their skills, which is especially important for the 98% who won’t go pro.
Universities gain more control over the recruiting process and how money is used to retain talent.
Families of athletes may finally see financial support after years of unpaid contribution to billion-dollar college programs.
Concerns:
Student welfare: Some senators, especially Democrats like Royce West and José Menéndez, pushed to ensure young athletes aren't exploited.
Financial disparity: Wealthier schools may widen the gap between themselves and smaller programs—even under a cap.
Employment gray area: If federal law doesn’t step in, courts may eventually require schools to treat athletes like employees, opening up a new wave of legal and financial implications.
What’s Next?
With the bill expected to be signed into law soon, Texas universities are preparing for a September 1 start date. This could set off a domino effect nationwide. If Texas can offer competitive NIL packages directly, other states may rush to match it—or risk losing top recruits.
The broader question remains: Is this the beginning of the end for amateurism in college sports?
Possibly. What’s clear is that student athletes are no longer just part of the system—they’re beginning to own a piece of it.
Final Thoughts
The move to allow direct NIL compensation is more than a financial shift—it's a cultural and legal turning point. For years, student athletes have generated millions for their schools without seeing a dime beyond scholarships and stipends. Now, Texas is poised to be one of the first states to change that.
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