Will California Mandate Cost of Attendance Scholarships and Stipends?

Whether student-athletes should be allowed to receive full cost of attendance (“COA”) scholarships has been a frequent topic of discussion in the college sports world over the past few years. First, an antitrust lawsuit brought in 2006 by former college basketball and football players—White v. NCAA—asked the courts to allow full cost of attendance scholarships. Although the case settled, it did not result in changes to the NCAA’s scholarship rules. Then, the issue appeared to be settled nearly two years ago when the NCAA Board of Directors approved a proposal to allow universities to give student-athletes $2000 stipends on top of their athletic scholarships. But the proposal never went into effect after more than 160 Division I members voted to override its implementation.

Now, a current bill winding its way through the California legislative process (assembly Bill 475b) seeks to end this debate for certain California universities. And not only does the bill require full cost of attendance athletic scholarships for certain athletes: it also requires that athletic scholarships be guaranteed for five years and that a “full” athletic scholarship include a stipend.

Before getting into the details of the new bill, a refresher on California’s Student Athlete Bill of Rights is in order. The Student-Athlete Bill of Rights, which was passed last year, requires California universities making at least $10,000,000 in annual income from the sale of athletics-related media rights to continue providing scholarships to athletes who suffer career ending injuries or who exhaust their athletics eligibility before they graduate. Assembly Bill 475b proposes that the $10,000,000 per year threshold be increased to $20,000,000 per-year and include money made from licensing fees (for things such as video games, jersey sales, etc.), not just the sale of media rights.

For now, this would be an insignificant change. The only California universities making $10,000,000 per year from media rights are Cal, UCLA, USC, and Stanford. And, due to the Pac-12’s new media deals, these universities are also making $20,000,000 per year from media rights and licensing fees. So, this amendment would not affect who the law applies to. It only gives other California universities (San Diego State, Fresno St, etc.) more of a buffer from having the law apply to them.

The important changes are Assembly Bill 475b’s scholarship-related amendments. First, the bill would require all athletic scholarships to be guaranteed for five years, or until the completion of the student-athlete’s eligibility, as long as the athlete is in good standing with the school and continues participating in his or her sport. This is a big change in the way scholarships are usually awarded. Currently, NCAA members are allowed, but not required, to offer multi-year scholarships. In the year and a half since the NCAA began allowing multi-year scholarships, the vast majority of athletic scholarships are still awarded for one year and are renewable at the school’s discretion. It is also important to note that this provision would apply to all athletic scholarships, not just full athletic scholarships. So it would apply to scholarships awarded in sports like baseball and track where partial scholarships are the norm.

Second, the bill would require that all full athletic scholarships cover a university’s full cost of attendance. Pursuant to NCAA rules, a full athletic scholarship only covers tuition, room and board, and books. This leaves a gap of around $3,000 between the value of a full athletic scholarship and the full cost of attendance at most schools. For example, the yearly cost of tuition and fees, room and board, and books at Stanford is $57,362. But, according to its own calculations, the total cost of attendance at Stanford is $60,749. This leaves a difference of $3,387 between the value of a full athletic scholarship and the total cost of attendance. And this number does not include transportation to and from a student’s home, which varies by student. When transportation is included it pushes the difference closer to $4,000. Assembly Bill 475b would require that Stanford cover this difference for all of its athletes receiving full athletic scholarships (football, basketball, volleyball, etc.).

The bill does not stop with mandating cost of attendance scholarships. It also provides that all full athletic scholarships must include an additional $3,600 stipend. Called a “student athlete participation stipend,” this is money that is intended to be used for expenses that fall outside of those included in the definition of cost of attendance. Stanford’s cost of attendance calculation includes amounts for clothing, toiletries, incidentals, and dorm activities. So, an athlete receiving a full athletic scholarship could use the stipend to cover expenses he has beyond these categories.

If the bill is signed into law, it sets the stage for a major fight between California and the NCAA, as it would require UCLA, USC, Cal, and Stanford to violate NCAA rules. With all of the criticism currently coming its way, the NCAA is likely rooting for the bill to die in order to avoid that showdown.