Ivy League Athletic Scholarships Could Be Imminent

A changing political and legal landscape might compel the Ivy League, the only major conference that doesn't award athletic scholarships, to amend its longstanding policy.

Published October 14, 2022

Edited by Rebecca Long
Ivy League Athletic Scholarships Could Be Imminent
Opinion & Analysis
Photo by Williams Paul / Icon Sportswire / Getty Images

  • Following the expiration of an antitrust exemption, the Ivy League's policy on athletic scholarships could face legal challenges.
  • Recent court cases have extended the rights of student-athletes to receive compensation.
  • No legal action has been taken, and it remains unclear how the Ivy League will proceed.
  • Athletic scholarships could ease the financial burden of thousands of current and future students.

After almost 70 years of competition, it may finally be time for the Ivy League to award athletic scholarships. And it might not have a choice in the matter. Thanks to a congressional decision not to renew antitrust legislation, the Ivy League finds itself in murky territory involving the legality of its longstanding policy not to award merit aid, including athletic scholarships.

Are we on the cusp of a watershed moment in college sports, one that could fundamentally alter the complexion of some of our nation's most prestigious colleges? And could the ripple effects of legal action have implications for college athletics well beyond the Ivy League?

College Financial Aid Antitrust Exemption Expires

On Sept. 30, an antitrust exemption known as Section 568 expired. This exemption, part of the Improving America's Schools Act of 1994, was a congressional sanction allowing colleges to formulate common approaches to awarding need-based financial aid — as long as they strictly adhered to need-blind admissions.

Following this expiration, the National College Players Association (NCPA) "declared victory" for Ivy League athletes. Since the advent of Section 568, the NCPA claims, Ivy League schools have "wielded…undeserved special treatment," enabling them to "impose a prohibition on all athletic scholarships."

"It's time for Ivy League universities to head in a new direction," said NCPA Executive Director Ramogi Huma in a statement, "one where they respect their athletes' rights and freedoms under the law."

But how does the expiration of a law about need-based aid and need-blind admissions relate to the awarding of merit aid in the form of athletic scholarships? Connecting these dots leads all the way back to the Cold War era, shortly after the formation of the Ivy League itself.

Elite Colleges Sued for Colluding to Limit Aid

The saga begins in the 1950s with the formation of the "Overlap Group." Representatives from numerous private colleges, including all eight members of the newly constituted Ivy League, devised common financial aid formulas and compared awards among students admitted to more than one member institution. The aim was to prevent "bidding wars" and allow students to make college decisions based on factors other than aid amounts.

That activity lasted for decades — until 1990, in fact, when the Justice Department sued the Ivy League schools, along with the Massachusetts Institute of Technology, for violating antitrust laws, particularly the Sherman Act.

The Justice Department claimed these colleges were guilty of colluding to fix financial aid awards and set tuition prices.

Shortly thereafter, the Ivy schools settled and signed a consent decree agreeing not to collude on financial aid matters. What's more, the decree declared the Ivies could not "agree on whether or not to offer merit scholarships."

MIT opted not to sign the agreement, preferring to wage battle in the courts. Its defense was that it had one fixed pot of financial aid and that setting limits meant every student with need would receive their full allotment of aid.

Although that defense was dismissed by the lower courts, eventually a Circuit Court of Appeals agreed with MIT's social justification. The Institute's resulting "Standards of Conduct" allowed it to cooperate with other colleges on financial matters as long as they practiced need-blind admissions (with an exception for waitlisted students).

Upset that their consent decree didn't afford them the latitude now enjoyed by MIT, Ivy representatives enlisted the help of Senators Ted Kennedy and Howard Metzenbaum, both on the Judiciary Committee, to gain a statutory exemption through Congress.

That exemption was Section 568, enacted in 1994. It granted the Ivy League and others the right to collectively determine financial aid allocations through a "consensus methodology" as long as the institutions strictly adhered to need-blind admissions. The exception granted to MIT for waitlisted students wasn't included.

Section 568 also allowed colleges to award financial aid "only on the basis of demonstrated financial need." Given that this exemption superseded the consent decree, the Ivies were no longer prohibited from agreeing on "whether or not to offer merit scholarships."

Congress renewed Section 568 three times over 28 years before allowing it to expire on Sept. 30.

Perhaps a primary reason for its non-renewal is a pending class-action lawsuit filed last January in U.S. District Court against the 568 Presidents Group, which formed shortly after the eponymous law was enacted. Today it consists of 17 elite private colleges, including six Ivy League schools. Dubbed the "568 Cartel" in the complaint, the case claims these schools have violated the exemption by not adhering to need-blind admissions and have overcharged thousands of students.

Now, with the 568 exemption removed, the Ivy League must resort to league policy regarding athletic scholarships. Since the league's formation in 1954, the schools have collectively determined all students — including athletes — would not receive merit aid, only financial awards based on economic need.

But amid a legal climate unfriendly to collusion, a foreboding antitrust cloud hangs over the Ivy League.

"The Ivy League schools cannot act as a group and decide they're not going to give merit aid to college athletes," Timothy Davis, a sports law professor at Wake Forest Law School, explained to BestColleges.

Recent Court Decisions Guarantee Student-Athletes Access to Compensation

In recent years, two prominent court cases tackled more directly the issue of antitrust as it pertains to intercollegiate athletics.

The 2015 O'Bannon v. NCAA case challenged the amateur status of student-athletes. Former UCLA basketball player Ed O'Bannon sued the NCAA, claiming athletes should be able to profit from the commercial use of their name, image, and likeness (NIL).

A Circuit Court ruled that the NCAA's policy barring compensation to student-athletes violated antitrust laws. The decision helped pave the way for student-athlete NIL deals while raising the cap on scholarships to the full cost of attending college.

And in the 2021 NCAA v. Alston case, the Supreme Court held that antitrust laws prohibit the NCAA from limiting "education-related compensation or benefits" to student-athletes who play Division I basketball and football. The court recognized an athlete's right to have schools compete for their services.

"Until the O'Bannon case, the basic idea was that college sports were an amateur activity where the college athletes were first and foremost students," Andrew Zimbalist, an economics professor at Smith College and president of The Drake Group, told BestColleges. "With the O'Bannon case, and more recently with the Alston case, people are now starting to challenge that."

Implications of Alston Ruling for Ivy League Sports

Although the Alston ruling doesn't address individual conference policies per se, note attorneys Alan Cotler and Robert Litan, it has indirect implications for the Ivy League's prohibition of athletic scholarships. As deputy assistant attorney general in the Justice Department's Antitrust Division, Litan directed the settlement of the case against the Overlap Group.

"The Ivy League's prohibition of full scholarships for any students is inconsistent with the Supreme Court's holding against the NCAA in Alston," Cotler and Litan write in Ivy Hoops Online. "If the Ivy League does not change its current policy in the near future … Ivy schools then will be at risk of one or more antitrust suits that will give the lower courts, if not the Supreme Court, the chance to decide the issue of single-conference limits on 'education-related compensation or benefits.'"

In their article, Cotler and Litan predict the expiration of Section 568 a year in advance given "strong bipartisan support for more vigorous enforcement and possible toughening of the antitrust laws" and speculate on the ramifications for the Ivy League.

"If that happens," they write, "then the Ivies would run a substantial antitrust risk if they were to continue, by explicit or implicit agreement, not to award merit aid of any type, or to prohibit the awarding of athletic scholarships."

In other words, in the event the Ivy League collectively abandons its policy of prohibiting athletic scholarships, but every Ivy school individually continues that practice, they could be subject to legal action. Who might have the standing to sue? Current and former athletes could file a suit, as could the Justice Department, as it did with the Overlap Group.

"Let's say the schools would make a public announcement and say, 'Hey, now that this exemption has expired, we're no longer going to agree among ourselves. We don't want to be potential antitrust defendants,'" Matthew Mitten, professor of law at Marquette University and executive director of the National Sports Law Institute, told BestColleges. "Then, if each of the schools decides not to start offering athletic scholarships, potentially it could be still an implied agreement if you could show uniform conduct."

At the same time, suggests Zimbalist, the Ivy League could argue that "the reason we do this is because we treat our athletes as students primarily, and we wouldn't separate them out from other students and give them scholarships because they're athletes."

Yet the Alston decision frames athletic scholarships as compensation, not financial aid, so it's entirely feasible that a decision to fund athletes might not result in other forms of merit aid for Ivy students.

Envisioning a Future With Ivy Athletic Scholarships

What happens next is anyone's guess. The Ivy League office declined to comment on the possibility that its policy could face legal pressure.

Perhaps the league tipped its hand last year by announcing it would allow its athletes to benefit from NIL deals.

"One of the fundamental philosophies of the Ivy League is that student-athletes should have the same opportunities as all students," said league Executive Director Robin Harris.

Zimbalist, for his part, believes there's "no single, clear legal answer that this will get decided one way or another."

Writing for The New Republic, Litan posits various scenarios for the Ivy League should it decide not to acquiesce.

"The Ivies could dig in their heels, lobby Congress to extend Section 568, or wait and run the risk of being sued," he writes.

Cotler and Litan dismiss the argument that the Ivy League "must somehow remain above the fray of competing for athletes" because of its academic reputation. They point to schools such as Duke, Stanford, and Vanderbilt as just a few examples of other institutions that exhibit athletic and academic excellence.

"Being superlative in academics and athletics," they write, "are not mutually exclusive."

Nor do they buy into the notion of a "fixed pot" of financial aid, noting the exponential growth of Ivy endowments in recent years.

"If the Ivies had to compete for students, as other schools do now through merit scholarships of many different kinds, and by offering athletic scholarships for sports in which individual schools wanted to excel, the Ivy schools' endowments are more than ample to allow them to do so while continuing to provide full need-based aid to all," Cotler and Litan argue.

And that's certainly one scenario: Absent a league-wide agreement, some of the Ivies decide to offer athletic scholarships in all or select sports, while others don't. However, as Mitten suggests, they're more apt to follow a similar path for the sake of competition.

"Let's say Yale says they're going to start offering athletic scholarships," Mitten said. "That doesn't mean Harvard would also have to. They would still be able to make their own business decision on that. But I think it's likely they would, because it would put them at a competitive disadvantage."

Should they move in that direction, the Ivies would follow NCAA Division I rules regarding "headcount" and "equivalency" sports. Athletes in headcount sports — football and basketball for men, and basketball, tennis, volleyball, and gymnastics for women — receive full athletic scholarships. For equivalency sports (essentially all the rest), coaches allocate lump sums among players, and no one is guaranteed a full ride.

Bear in mind football head count applies only to the D-I Football Bowl Subdivision (FBS), not the Football Championship Division (FCS), in which the Ivies compete. So the Ivy schools wouldn't have to award athletic scholarships to all players in its largest sport.

A legal defeat on antitrust grounds could have implications far beyond the Ivy campuses, Zimbalist notes.

"If somebody brings a suit against the Ivy League," he said, "it opens it up for a much larger group of over 400 Division III colleges that don't allow scholarships, either."

For students who stand to benefit, especially those from low- or middle-income families, an athletic scholarship could make all the difference.

"Many of us are desperate for financial relief," Julia Jordahl-Henry, a Columbia University women's track athlete, said in the NCPA release. "Every Ivy League athlete and recruit needs to know if our schools are going to begin offering athletic scholarships. We need to know if we can stop taking out student loans and working part-time jobs. We deserve to have the same opportunity as our athletic peers to have our financial burden lifted."