Tag: Financial Aid

Posted on

Unintended Consequences: How the House Budget Threatens Student-Athletes

A Uniquely American Model Under Threat

June 8, 2025, by Dean Hoke: Intercollegiate athletics occupy a powerful and unique place in American higher education—something unmatched in any other country. From the massive media contracts of Division I football to the community pride surrounding NAIA and NJCAA basketball, college sports are a defining feature of the American academic landscape. Unlike most nations, where elite athletic development happens in clubs or academies, the U.S. integrates competitive sports directly into its college campuses.

This model is more than tradition; it’s an engine of opportunity. For many high school students—especially those from underserved backgrounds—the chance to play college sports shapes where they apply, enroll, and succeed. According to the NCAA, 35% of high school athletes say the ability to participate in athletics is a key factor in their college decision [1]. It’s not just about scholarships; it’s about identity, community, and believing their talents matter.

At smaller colleges and two-year institutions, athletics often serves as a key enrollment driver and differentiator in a crowded marketplace. International students, too, are drawn to the American system for its academic-athletic fusion, contributing tuition revenue and global prestige. Undermining this model through sweeping changes to federal financial aid, without considering the downstream effects, risks more than athletic participation. It threatens a distinctively American approach to education, access, and aspiration.

A New Threshold with Big Impacts

Currently, students taking 12 credit hours per semester are considered full-time and eligible for the maximum Pell Grant, which stands at $7,395 for 2024-25 [2]. The proposed House budget raises this threshold to 15 credit hours per semester. For student-athletes, whose schedules are already packed with training, competition, and travel, this shift could be devastating.

NCAA academic standards require student-athletes to maintain full-time enrollment (typically 12 hours) and make satisfactory academic progress [3]. Adding another three credit hours per term may force many to choose between academic integrity, athletic eligibility, and physical well-being. In sports like basketball, where teams frequently travel for games, or in demanding STEM majors, completing 15 credit hours consistently can be a formidable challenge.

Financial Impact on Student-Athletes

Key Proposed Changes Affecting Student-Athletes:

  • Pell Grant Reductions: The proposed budget aims to cut the maximum Pell Grant by $1,685, reducing it to $5,710 for the 2026–27 academic year. Additionally, eligibility criteria would become more stringent, requiring students to enroll in at least 15 credit hours per semester to qualify for full-time awards. These changes could result in approximately 700,000 students losing Pell Grant eligibility [4].
  • Elimination of Subsidized Loans: The budget proposes eliminating subsidized federal student loans, which currently do not accrue interest while a student is in school. This change would force students to rely more on unsubsidized loans or private lending options, potentially increasing their debt burden [5].
  • Cuts to Work-Study and SEOG Programs: The Federal Work-Study program and Supplemental Educational Opportunity Grants (SEOG) are slated for significant reductions or elimination. These programs provide essential financial support to low-income students, and their removal could affect over 1.6 million students [6].
  • Institutional Risk-Sharing: A new provision would require colleges to repay a portion of defaulted student loans, introducing a financial penalty for institutions with high default rates. This could strain budgets, especially at smaller colleges with limited resources [7].

Figure 1: Total student-athletes by national athletic organization (NCAA, NAIA, NJCAA).

While Figure 1 highlights the total number of student-athletes in each organization, Figure 2 illustrates how deeply athletics is embedded in different types of institutions. NAIA colleges have the highest ratio, with student-athletes comprising 39% of undergraduate enrollment. Division III institutions follow at approximately 8.42%, and the NJCAA—serving mostly commuter and low-income students—relies on athletics for 8.58% of its total student base [8].

Even Division I, with its large student populations, includes a meaningful share (2.49%) of student-athletes. These proportions underscore how vital athletics are to institutional identity, especially in small colleges and two-year schools where athletes often make up a significant portion of campus life, retention strategy, and tuition revenue.

Figure 2: Percentage of student-athletes among total undergraduate enrollment by organization (NCAA Divisions I–III, NAIA, NJCAA).

The Pell Grant Profile: Who’s Affected

Pell Grants support students with the greatest financial need. According to a 2018 report, approximately 31.3% of Division I scholarship athletes receive Pell Grants. At individual institutions like Ohio State, the share is even higher: 47% of football players and over 50% of women’s basketball players. In the broader NCAA system, over 48% of athletes received some form of federal need-based aid in recent years [9].

There are approximately 665,000 student-athletes attending college. The NCAA reports that more than 520,000 student-athletes currently participate in championship-level intercollegiate athletics across Divisions I, II, and III [10]. The National Association of Intercollegiate Athletics (NAIA) oversees approximately 83,000 student-athletes [11], while the National Junior College Athletic Association (NJCAA) supports around 60,000 student-athletes at two-year colleges [12].

The NAIA and NJCAA systems, which serve many first-generation, low-income, and minority students, also have a high reliance on Pell Grant support. However, exact figures are less widely published.

The proposed redefinition of “full-time” means many of these students could lose up to $1,479 per year in aid, based on projections from policy experts [13]. For low-income students, this gap often determines whether they can afford to continue their education.

Fewer Credits, Fewer Dollars: Academic and Athletic Risks

Another major concern is how aid calculations based on “completed” credit hours will penalize students who drop a class mid-semester or fail a course. Even if a student-athlete enrolls in 15 credits, failing or withdrawing from a single 3-credit course could drop their award amount [14]. This adds pressure to persist in academically unsuitable courses, potentially hurting long-term academic outcomes.

Athletic departments, already burdened by compliance and recruitment pressures, may face added strain. Advisors will need to help students navigate increasingly complex eligibility and aid requirements, shifting focus from performance and development to credit-hour management.

Disproportionate Effects on Small Colleges and Non-Revenue Sports

The brunt of these changes will fall hardest on small, tuition-dependent institutions in the NCAA Division II, Division III, NAIA, and NJCAA. These colleges often use intercollegiate athletics as a strategic enrollment tool. At some NAIA schools, student-athletes comprise 40% to 60% of the undergraduate population [8].

Unlike large Division I schools that benefit from lucrative media contracts and booster networks, these institutions rely on a patchwork of tuition, modest athletic scholarships, and federal aid to keep programs running. A reduction in Pell eligibility could drive enrollment declines, lead to cuts in athletic offerings, and even force some colleges to close sports programs or entire campuses.

Already, schools like San Francisco State University, Cleveland State, and Mississippi College have recently announced program eliminations, citing budgetary constraints [15]. NJCAA institutions—the two-year colleges serving over 85,000 student-athletes—also face a precarious future under this proposed budget.

Economic Importance by Division

Division I: Athletics departments generated nearly $17.5 billion in total revenue in 2022, with $11.2 billion self-generated and $6.3 billion subsidized by institutional/government support or student fees [16]. Many Power Five schools are financially resilient, with revenue from TV contracts, merchandise, and ticket sales.

Division II: Median revenue for schools with football was around $6.9 million, but generated athletic revenue averaged only $528,000, leading to significant deficits subsidized by institutional funds [17].

Division III: Division III schools operate on leaner budgets, with no athletic scholarships and total athletics budgets often under $3 million per school. These programs are typically funded like other academic departments [18].

NAIA and NJCAA: These schools rely heavily on student-athlete enrollment to sustain their institutions. Athletics are not profit centers but recruitment and retention tools. Without Pell Grants, many of these athletes cannot afford to enroll [11][12].

Figure 3: Estimated number of NAIA, Division III, and NJCAA programs by state.

Unintended Tradeoffs: Equity and Resource Redistribution

Attempting to offset lost federal aid by reallocating institutional grants could result in aid being shifted away from non-athletes. This risks eroding equity goals, as well as provoking internal tension on campuses where athletes are perceived to receive preferential treatment.

Without new revenue sources, institutions may also raise tuition or increase tuition discounting, potentially compromising their financial stability. In essence, colleges may be forced to choose who gets to stay in school.

The High-Stakes Gamble for Student-Athletes

Figure 4: Estimated impact of Pell Grant changes on student-athletes, including projected dropouts and loan default rates.

For many student-athletes, especially those from low-income backgrounds, the Pell Grant is not just helpful—it’s essential. It makes the dream of attending college, competing in athletics, and earning a degree financially feasible. If the proposed changes to Pell eligibility become law, an estimated 50,000 student-athletes could be forced to drop out, unable to meet the new credit-hour requirements or fill the funding gap [19]. Those who remain may have no choice but to take on additional loans, risking long-term debt for a degree they may never complete. The reality is sobering: Pell recipients already face long-term student loan default rates as high as 27%, and for those who drop out, that figure climbs above 40% [20]. Stripping away vital support will almost certainly drive those numbers higher. The consequences won’t stop with individual students. Colleges—particularly smaller, tuition-dependent institutions where athletes make up a significant share of enrollment—stand to lose not just revenue, but the very programs and communities that give purpose to their campuses.

Colleges, athletic associations, policymakers, and communities must work together to safeguard opportunity. Student-athletes should never be forced to choose between academic success and financial survival. Preserving access to both education and athletics isn’t just about individual futures—it’s about upholding a uniquely American pathway to achievement and equity.

Dean Hoke is Managing Partner of Edu Alliance Group, a higher education consultancy. He formerly served as President/CEO of the American Association of University Administrators (AAUA). With decades of experience in higher education leadership, consulting, and institutional strategy, he brings a wealth of knowledge on small colleges’ challenges and opportunities. Dean is the Executive Producer and co-host for the podcast series Small College America. 

References

  1. NCAA. (n.d.). Estimated probability of competing in college athletics. Retrieved from https://www.ncaa.org/sports/2021/11/4/estimated-probability-of-competing-in-college-athletics.aspx
  2. Federal Student Aid. (2024). Federal Pell Grants. Retrieved from https://studentaid.gov/understand-aid/types/grants/pell
  3. NCAA. (n.d.). Academic Standards and Eligibility. Retrieved from https://www.ncaa.org/sports/2021/6/17/academic-eligibility.aspx
  4. Washington Post. (2025, May 17). Most Pell Grant recipients to get less money under Trump budget bill, CBO finds. Retrieved from https://www.washingtonpost.com/education/2025/05/17/pell-grants-cbo-analysis/
  5. NASFAA. (2024). Reconciliation Deep Dive: House Committee Proposes Major Overhaul of Federal Student Loans, Repayment, and PSLF. Retrieved from https://www.nasfaa.org/news-item/36202/Reconciliation_Deep_Dive_House_Committee_Proposes_Major_Overhaul_of_Federal_Student_Loans_Repayment_and_PSLF?utm
  6. U.S. Department of Education, FY2025 Budget Summary. (2024). Proposed Cuts to Campus-Based Aid Programs. Retrieved from https://www2.ed.gov/about/overview/budget/index.html
  7. Congressional Budget Office. (2025). Reconciliation Recommendations of the House Committee on Education and the Workforce. Retrieved from https://www.cbo.gov/publication/61412
  8. NJCAA, NAIA, and NCAA. (2023). Student-Athlete Participation Reports.
  9. NCAA. (2018). Pell Grant data and athlete demographics. Retrieved from https://www.ncaa.org/news/2018/4/24/research-pell-grant-data-shows-diversity-in-division-i.aspx
  10. NCAA. (2023). 2022–23 Sports Sponsorship and Participation Rates Report. Retrieved from https://www.ncaa.org/research
  11. NAIA. (2023). NAIA Facts and Figures. Retrieved from https://www.naia.org
  12. NJCAA. (2023). About the NJCAA. Retrieved from https://www.njcaa.org
  13. The Institute for College Access & Success (TICAS). (2024). Analysis of Proposed Pell Grant Reductions. Retrieved from https://ticas.org
  14. Education Trust. (2024). Consequences of Redefining Full-Time Status for Financial Aid. Retrieved from https://edtrust.org
  15. ESPN. (2024, March); AP News. (2024, November). Athletic program eliminations at Cleveland State and Mississippi College.
  16. Knight Commission on Intercollegiate Athletics. (2023). College Athletics Financial Information (CAFI). Retrieved from https://knightnewhousedata.org
  17. NCAA. (2022). Division II Finances: Revenues and Expenses Report. Retrieved from https://www.ncaa.org/sports/2022/6/17/finances.aspx
  18. NCAA. (2023). Division III Budget Reports and Trends. Retrieved from https://www.ncaa.org
  19. Internal projection based on available data from NCAA, NAIA, NJCAA, and CBO Pell Grant impact estimates.
  20. Brookings Institution. (2018). The looming student loan default crisis is worse than we thought. Retrieved from https://www.brookings.edu/articles/the-looming-student-loan-default-crisis-is-worse-than-we-thought

Posted on

Federal and State Budgets Impact on Higher Education

Jay Noren M.D.By Dr. Jay Noren.   During the past two decades, state and federal funding trends have significantly reduced student access to higher education programs. State funding has decreased continually for the past two decades and most recent federal tax reform and financial aid administrative actions have further diminished overall higher education funding and access. Four areas are of most significance:

 

 

  • State direct appropriations for higher education funding
  • Federal tax changes affecting charitable contributions to college and university foundations
  • Increased taxes on college and university endowments
  • Student financial aid

The impact of these state and federal actions are separate from the impact that will result from the legislative reauthorization of the Higher Education Act which could occur in the current Congressional session but will more likely occur in the next Congress following the 2018 elections.

State Budget and Policy Issues

 State Direct Appropriations for Higher Education

Since 2001, in 49 out of 50 states, higher education appropriations have decreased and tuition revenues have increased substantially as share of funding for public colleges and universities. In 2016 tuition revenues accounted for more than 50% of public college and university budgets in 22 states. Fifteen years earlier, in 2001, only two states depended upon tuition revenues for more than 50% of public college and university budgets. Between 2001 and 2016, 36 states increased the percentage share of dependence on tuition by more than 50%1. The state by state trends are as follows:

State by State fundind

More recent state higher education funding trends continue to pose challenges. A January 2018 report by the Association of State Colleges and Universities stated: “Beyond uncertainty emanating from Washington, lawmakers in many states will have challenging sessions due to stagnant state revenue growth. A strong national economy has not led to concomitant revenue growth in many states… these dynamics foreshadow ambiguity and difficult budgetary choices that could lay ahead for lawmakers in many states in 2018 legislative sessions.”8 Additionally, since federal funds transfers to states amount to an average nationally of 33% of state revenues, recent Congressional consideration of future reductions in federal funding of large state-based programs such as Medicaid could very substantially reduce state funding for higher education. Current Congressional leadership members have strongly advocated recently for such federal funding reductions. The National Association of State Budget Officers (NASBO) December 2017 report noted that state budget expenditures grew only 2.3 percent in fiscal year 2017 compared to the previous year which is the lowest increase since the 2008 recession and was a key factor leading to Moody’s Investor Service downgrading higher education’s financial outlook from stable to negative in December 2017.8

Federal Higher Education Specific Budget and Policy Issues

At the Federal level, the two most directly relevant actions are: 1-provisions specific to higher education in the tax reform legislation enacted in December 2017 and 2-US Department of Education administrative considerations on financial aid, particularly related to federal student loan programs.

Federal Tax on Charitable Contributions to Higher Education

The projected impact of the federal tax reform bill on charitable contributions to higher education are far-reaching. The most significant tax revision is doubling the standard deduction that taxpayers can claim. Indiana University’s Lilly Family School of Philanthropy estimates that 80 percent fewer taxpayers would itemize for charitable giving under the new law which will directly reduce the level of charitable donations overall2. The impact of reduced charitable donations to public colleges and universities most significantly affects student financial aid. When considered in the context of decreased state appropriation the result is even greater pressure on increased tuition, adding to the already powerful tuition increase pressure of the past two decades. The critical result is decreased access to higher education opportunity. In addition to financial aid the changes also markedly reduce private gift support for the college/university research enterprise.

The doubled standard deduction in the new tax reform law clearly affects charitable giving well beyond higher education as well. A report by the Congressional Joint Committee on Taxation estimates the 2017 tax reform legislation will result in a $95-billion drop in total charitable giving nationwide amounting to a 40% reduction overall. The reduction in higher education contributions has been estimated at $13 billion reduction.4

Federal Tax on College and University Endowments

The final tax reform legislation in December 2017 created a new tax on college and university endowments that creates an unprecedented approach departing from the long-established tax policy that exempts non-profit higher education institutions from taxation on these funds. Although the final tax legislation limits the tax to very large endowments defined as institutions with levels greater than $500,000 per student enrollment, it nonetheless raises great concern that the precedent could expand in the future to taxing endowments in a much larger proportion of colleges and universities3. The precedent has raised very serious concerns in the higher education philanthropic enterprise. Reliance on endowments for scholarships, capital improvements, and research is a critical element of the financial health of higher education. Endowment funding is key to productive research across all disciplines and student support at both the undergraduate and graduate level.

The debate on this issue continues. In early March a new bill, “The Don’t Tax Higher Education Act,” was co-sponsored by Rep. John Delaney, Democrat of Maryland, and Rep. Bradley Byrne, Republican of Alabama. This bill would reverse the tax on endowments and Congressman Byrne commented on his bill: “We should all be looking for ways to increase access to higher education, and endowments play a very important role in funding scholarships, student aid, and important research initiatives.”

 Student Financial Aid

In addition to the impact on student financial aid resources from higher education charitable contributions and endowments, other federal proposed tax and administrative actions have further potential major impact. The tax bill proposed in 2017 in the House of Representatives included a provision to tax as income tuition waivers provided to graduate students. Additionally the House bill would have eliminated the deductions for several forms of financial aid including deductions for up to $2,500 of interest paid on student loans; the Hope Scholarship Tax Credit, worth up to $2,500; the Lifetime Learning Credit up to $2,000; and the $5,250 corporate deduction for employee education-assistance plans.5 Fortunately for students, these provisions were eliminated in the Senate bill and the final legislation. However, concerns in the higher education community continues given the level of support that existed in Congress during deliberations on these provisions and the potential that such provisions might be revisited in future tax legislation.

Federal student loan provisions have also been recently reviewed by the Department of Education’s Office of Inspector General, which issued its report January 31, 2018. The report noted that the Federal Student Aid Office Strategic Plan for fiscal years 2015–2019 stated that as more students select income-driven repayment (IDR) plans that allow for student loan forgiveness, the cost could be a major issue for the Federal government. These aid programs benefitted 5 million student in FY2016, an increase from 700,000 in FY 2011, and the Department of Education set a goal of 7 million student IDR loans for FY 2017.

The Inspector General’s January 2018 review covered cost information for the income-driven repayment (IDR) plans, including Pay as You Earn (PAYE), the Revised Pay as You Earn (REPAYE), the Public Service Loan Forgiveness (PSLF) program, and Teacher Loan Forgiveness (TLF) program. The analysis raised concerns that the amount of federal student loans provided is in excess of the trends in repayment and the difference is increasing substantially. The Inspector General’s report noted that the problem is due to the increased income-driven repayment (IDR) loans, which allow students to repay their loans over an extended time period in correlation to their actual income. These plans have increased 625 percent between 2011 fiscal year and 2015 fiscal year. The income-driven repayment loan amount has increased from $7.1 billion in FY 2011 to $51.5 billion in FY 2015 resulting in a federal subsidy cost increase of 748 percent (from $1.4 billion to $11.5 billion).6

The Office of Inspector General has directed the Department of Education to develop a corrective plan for the problem within 30 days (a March 2018 deadline). It also is possible the problem could be addressed in the reauthorization of the Higher Education Act, but it is unlikely that reauthorization will occur as early as March 2018.   If there is no corrective action within six months, the matter is then referred to Congress.

The response to this report has the potential for major impact on several million students who depend upon these loans for their access to higher education opportunities.

Trends in Higher Education Attainment in the United States

An important observation that is relevant to funding impact on higher education access is the trend in level of higher education attainment experienced in the United State in recent years. A Lumina Foundation report compared US attainment trends to international trends among developed countries. In this Lumina analysis attainment is described as “…high-quality postsecondary credential… leading to further education and employment.”7   An analysis of higher education attainment by the Organization for Economic Cooperation and Development (OECD) found that the United States rank has fallen in the past decade to 11th among 15 economically advanced countries. Furthermore, US trends in attainment during the past decade have been flat while attainment levels in other developed countries have increased substantially.

In the context of these higher education attainment trends, the past and current state and federal policy directions related to higher education funding do not provide optimism for increased United States competitiveness internationally in higher education attainment and related economic development.

References

1 A Fifty State Look At Rising College Prices, Demos, February 2018

2 Tax Reform, Margaret Spellings, Chronicle of Higher Ed, November 30, 2017

3 Tax on Endowments Became Law, Chronicle of Higher Ed, March 8, 2018.

4 Final Tax Bill, Chronicle of Higher Ed, December 15, 2017

5 Passage of Senate Tax-Reform Bill, Chronicle of Higher Ed, December 1, 2017

6 Costs of Income Driven Repayment Plans and Loan Forgiveness Programs, US Dept. of Education Office of the Inspector General, January 31, 2018

7 Closing the Gaps in College Attainment, Lumina Foundation, April 2014

8 Higher Education State Policy Issues for 2018, AASCU, January 2018

Dr. Jay Noren M.D. 40-year career includes President of Wayne State University, Founding Provost of Khalifa University in Abu Dhabi, the founding Dean College of Public Health The University of Nebraska Medical Center, as well as the Executive Vice President and Provost for the University of Nebraska. is the Founding Director and Professor-Clinician Executive Master of Healthcare Administration Program, University of Illinois-Chicago College of Medicine and School of Public Health. He is a member of the Edu Alliance Advisory Council.

cropped-edu-alliance-logo-square1.jpgEdu Alliance is a higher education consultancy firm with offices in the United States and the United Arab Emirates. The founders and its advisory members have assisted higher education institutions on a variety of projects, and many have held senior positions in higher education in the United States and internationally.

Our specific mission is to assist universities, colleges and educational institutions to develop capacity and enhance their effectiveness.