What Colleges Need to Know About the New Incremental Scholarship Rules Under the House Settlement
The post-House settlement era continues to reshape the financial and compliance landscape of college athletics. One of the most important — and misunderstood — changes involves how incremental athletic scholarships are treated under the new benefits and revenue-sharing caps.
The College Sports Commission (CSC) has now issued formal guidance clarifying how these scholarships will be counted and enforced, particularly during the early implementation years. Below is what schools, athletic departments, and advisors need to understand — and why this matters strategically.
The Big Picture: Incremental Scholarships and the Cap
Under the House settlement:
Schools may expand athletic scholarships beyond prior NCAA limits.
However, the first $2.5 million in incremental scholarship value (measured by published cost of attendance) counts against the institution’s revenue-sharing/benefits cap.
Any incremental scholarship spending above $2.5M does not count against the cap and is not subject to penalties.
This framework was intentionally designed to encourage scholarship expansion, especially in non-revenue sports, while still placing guardrails around institutional spending.
The 2025–26 Transition Year: A Lenient but Real Enforcement Window
For the 2025–26 academic year, the CSC has adopted a transitional enforcement approach:
If a school exceeds the benefits cap due to incremental scholarships, it will face a $1 fine for every $1 over the cap, up to $2.5M.
Importantly, the CSC retains discretion to adjust penalties based on context:
Administrative or good-faith errors may be treated differently than willful violations.
Under current NCAA rules, any cap overage in 2025–26 will carry forward and count against the school’s 2026–27 cap.
Key takeaway: Schools should not view 2025–26 as a “free year.” Overages still have real downstream consequences.
Starting in 2026–27: A More Flexible Long-Term Model
Beginning with the 2026–27 academic year, the enforcement framework becomes significantly more forgiving:
The fine drops to $0.20 for every $1 over the cap attributable to incremental scholarships (up to $2.5M).
NCAA Bylaw 16.13.1.8 is expected to be modified so that:
Incremental scholarship overages will NOT count against the following year’s cap.
This signals a clear policy shift:
👉 Incremental scholarships are being treated as encouraged investments, not structural violations.
Why This Matters for Athletic Departments and Families
This policy has several important implications:
Roster expansion is safer: Schools can add scholarships with more confidence, particularly in Olympic and non-revenue sports.
Compliance risk is now more predictable: Financial exposure is capped and quantified.
Strategic planning matters more than ever: Timing, scholarship allocation, and budgeting decisions must be coordinated with NIL strategy and revenue sharing models.
Families and athletes benefit: Expanded scholarship opportunities reduce reliance on NIL just to fund basic participation.
The Legal Reality: This Is Not “Set It and Forget It”
While the CSC’s framework provides clarity, it also underscores the need for careful legal and financial planning:
Scholarship increases must be modeled against benefits caps.
Carryover risk still exists in transition years.
NCAA bylaw amendments are pending and subject to approval.
Enforcement discretion means documentation and intent matter.
Schools that proactively structure scholarship growth — rather than reactively exceeding caps — will be far better positioned.
How The Fowlkes Firm Helps
At The Fowlkes Firm, we advise:
Athletic departments and universities
NIL collectives and institutional partners
Athletes and families navigating scholarships + NIL simultaneously
Our work sits at the intersection of college sports law, NIL strategy, and institutional compliance. As this regulatory environment continues to evolve, informed planning is no longer optional — it’s a competitive advantage.
If you have questions about scholarship structuring, NIL compliance, or cap exposure under the House settlement, we’re here to help.