More college athletes — not just those who go pro — are starting to make money. The Supreme Court in June ruled narrowly in favor of college athletes, saying that, as of July 1, they can benefit educationally from their wealth on the field. This is a blow to the NCAA, which claims its commitment to amateur sports is threatened.
Moreover, it might not be long before the Supreme Court joins the majority of states that are passing laws allowing college student athletes to be compensated for the use of their name, image or likeness.
Tucked into many of the state bills are requirements that college student-athletes take a personal finance course, an eminently sensible idea, given the likelihood that athletes are going to suddenly have more money to manage than ever before. With the stroke of a pen, the NCAA can and should begin encouraging personal finance courses, and ensure that all athletes in every state take it in high school.
We know that the earlier young people learn to manage their money the better. Research finds that sound financial habits established earlier in life are key to developing financial capability in adulthood. That’s one reason there’s momentum behind more high schools and middle schools offering personal finance classes.
Yet an anachronistic NCAA policy actively discourages high school student-athletes from taking a personal finance course. To qualify for college scholarships, high school student-athletes must take core courses defined by the NCAA and personal finance isn’t one of them. While courses in English and math are certainly valuable, so is a practical life skills course like personal finance.
Student athletes especially need to know about paying themselves first, the power of compounding returns, investing in the stock market, establishing and managing credit and avoiding banking fees. And high school is the right time to teach these essential living skills BEFORE they step foot on a college campus.
Scholarship athletes in the Power Five conferences today receive stipends of between $2,000 and $5,000. Given the many states passing laws to allow athletes to be paid—five state laws took effect July 1– many athletes will soon have money in their pockets as they market themselves and earn endorsement dollars. With the power of social media, those able to profit this way will not be limited to just star athletes.
It matters not whether you’re Zion Williamson or a talented female lacrosse player. You have to be smart with your money. My conversations with many high school teachers over the years have confirmed that the NCAA’s policy of not recognizing personal finance as a core course discourages students from taking it.
One teacher told me she applied to the NCAA to have her personal finance course qualify as a core course, only to be told that association’s guidelines disallow teaching about issues related to one’s personal life, such as paying for college, types of credit, investing, insurance and budgeting.
All those sad stories about professional athletes who lost all their money are due in part to a lack of financial literacy. The NCAA can help address this with all college athletes by simply changing a harmful, shortsighted policy that doesn’t add up. Afterall, 98% of NCAA athletes never land a professional contract.
Tim Ranzetta is co-founder of Next Gen Personal Finance, a Palo Alto, California non-profit startup dedicated to ensuring that by 2030 all high school students take a personal finance course. He was a collegiate athlete at the University of Virginia and grew up in New Jersey.