Paying for College: How NIL Impacts Financial Aid
Name, Image, and Likeness opportunities have created new ways for student-athletes to earn income while competing in college. There’s no question that these opportunities provide financial benefits, build experience, and expand access, but with that, they also introduce new questions, especially when it comes to financial aid.
As part of our Paying for College series, this post focuses on how NIL income interacts with financial aid and what student-athletes and families should understand before assuming NIL earnings are purely additive.
NIL and Athletic Scholarships
NIL income does not impact athletic scholarships.
Student-athletes are permitted to earn NIL income without affecting their eligibility or their athletic aid. Colleges and athletic departments cannot reduce or replace athletic scholarships because a student-athlete earns money through NIL.
Athletic aid and NIL operate independently, and earning NIL income does not change a coach’s scholarship commitment.
NIL and Need-Based Financial Aid
NIL can impact need-based financial aid.
Most need-based aid is determined through the FAFSA, which uses income and asset information to calculate eligibility. NIL income is generally considered taxable income, which means it may be included in future FAFSA filings.
Because the FAFSA uses prior income data, NIL earnings often affect financial aid eligibility later rather than immediately. This delayed impact can surprise families who are not planning ahead.
For some student-athletes, increased income may reduce eligibility for need-based grants in future years. Understanding this connection allows families to evaluate NIL opportunities in context rather than in isolation.
NIL and Merit or Institutional Aid
Merit scholarships and most institutional grants are typically not affected by NIL income. These awards are usually based on academic performance, leadership, or institutional priorities rather than financial need.
However, some colleges review institutional aid annually. Student-athletes should understand each school’s renewal policies and whether changes in income are considered as part of that review process.
For our student-athletes navigating the recruiting process, a good question to ask during your visit(s) is whether or not the school(s) review their institutional aid annually and if an increase in income impacts that award.
Taxes, Timing, and Planning Matter
NIL income often comes with additional responsibilities.
Many student-athletes are treated as independent contractors, which means they are responsible for tracking income, setting aside money for taxes, and reporting earnings accurately. Poor recordkeeping or lack of awareness can create complications that extend beyond financial aid.
Timing also matters. NIL income earned today may influence financial aid eligibility in future years, making early planning and guidance especially important.
Access Comes From Understanding
NIL has added a new layer to paying for college. When student-athletes understand how NIL fits into financial aid, they are better positioned to protect their financial interests, manage resources responsibly, and make decisions that support long-term success.
With the right information and guidance, NIL can complement a student-athlete’s college experience without creating unintended barriers.