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NIL’s Impact on Title IV Financial Aid: News From the ED
Originally published on November 18, 2021
Updated on February 5th, 2024
On Nov. 8, 2021, the U.S. Department of Education (ED) released a “Dear Colleague” letter providing guidance on name, image and likeness’s impact on Title IV financial aid. As we’ve previously reported, cash and non-cash NIL income is taxable and will be reflected on a FAFSA form.
The first FAFSA to be impacted by NIL earnings is for 2023-2024. However, 2022 NIL activity (a full year’s worth compared to six months in 2021) will impact 2024-2025 FAFSA. This lag between earnings and reporting for financial aid purposes can be an advantage to student-athletes on federal assistance who earn NIL income during the first 18 months of NIL eligibility and graduate before the 2024-2025 academic year.
The letter also brings to light an institution’s responsibility to identify and resolve instances in which NIL income is improperly excluded from a student’s income for financial aid reporting purposes. Schools aren’t expected to search for missing NIL contracts. However, schools in states requiring athletes to report the value of all NIL contracts to their institution will need to resolve conflicting information. Athletics compliance and campus financial aid offices must work together to develop procedures to address this issue.
While the letter’s summary on the ED site references a recent Supreme Court decision, it provides no guidance on Alston benefits.
You can read the ED’s letter here. Please reach out to your collegiate athletics CPAs if you have questions about this news or other NIL matters.
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