The NIL Deal Is Not the Problem. What Happens to the Money Is.
athletic · September 7, 2026
Everybody wants the NIL deal.
Key takeaways
- NIL financial literacy should begin before an athlete receives an NIL deal.
- NIL compensation can create tax obligations. The IRS says NIL income generally must be reported, including certain non-cash compensation. :contentReference[oaicite:12]{index=12}
- NIL income can potentially affect financial aid. Families need to understand that earning money may have consequences beyond the athlete's bank account. :contentReference[oaicite:13]{index=13}
- The NCAA recognizes financial literacy and NIL education as important components of student-athlete development. :contentReference[oaicite:14]{index=14}
- Financial behavior matters as much as financial knowledge. Understanding how an athlete naturally approaches spending, saving, debt, and investing can provide a better starting point for education.
- Small NIL deals are financial-learning opportunities. Athletes do not need to earn six figures before budgeting, recordkeeping, taxes, and saving become important.
- Parents need NIL financial education too. Younger athletes in particular need adults around them who understand the financial implications of these opportunities.
- A financial-literacy tool does not replace a CPA, attorney, financial adviser, or other qualified professional when professional advice is necessary. It gives athletes a foundation for understanding their money and asking better questions.
Everybody wants the NIL deal.
How much?
What brand?
How many followers?
What school?
What sport?
How big is the contract?
Those are the questions everybody wants to ask.
I have another one.
What happens to the money after the athlete gets it?
Because putting money into the hands of an 18-, 19-, or 20-year-old student-athlete without teaching that athlete how money works is not financial empowerment.
It might just be a more expensive lesson waiting to happen.
NIL has changed college athletics.
Now financial literacy has to catch up.
We Prepared Athletes to Earn Money Before We Prepared Them to Manage It
Think about how strange this is.
We can teach a student-athlete how to build a personal brand.
We can teach them how to create content.
We can discuss social media engagement.
We can explain sponsorships.
We can help negotiate appearances.
We can celebrate the announcement graphic when the deal gets signed.
Then the money arrives.
Now what?
Budgeting?
Taxes?
Saving?
Investing?
Debt?
Credit?
Emergency funds?
Business expenses?
Financial aid implications?
Long-term planning?
Suddenly the conversation gets a lot quieter.
That is backwards.
The ability to make money and the ability to manage money are two completely different skills.
NIL requires both.
NIL Money Is Real Money
This is where student-athletes and families need to understand something immediately.
NIL money is not play money.
The IRS considers monetary and other financial benefits received through the commercial use of a student-athlete's name, image, or likeness to be NIL income. That can include cash, merchandise, gift cards, services, endorsements, appearances, content creation, royalties, and other forms of compensation. Source: IRS
And yes.
It can be taxable.
The IRS specifically warns that student-athletes must report NIL income even when a payer does not issue a Form 1099 or W-2. Depending on the arrangement, athletes may also be treated as independent contractors and face self-employment tax obligations. Source: IRS
So that $5,000 deal?
It is not automatically $5,000 available to spend.
That free merchandise?
Potentially relevant.
Those appearances?
Potentially relevant.
Those social media promotions?
Potentially relevant.
That is why the financial conversation cannot start after the money is gone.
There Is Another NIL Consequence Families May Not See Coming
Financial aid.
The IRS specifically notes that NIL income and benefits can affect information reported through the FAFSA and potentially affect financial aid. Source: IRS
That means NIL decisions can potentially touch more than an athlete's bank account.
They can intersect with:
- taxes,
- financial aid,
- business expenses,
- savings,
- budgeting,
- credit,
- family financial decisions,
- and long-term financial planning.
This is no longer just:
"Congratulations, you got a deal."
The better conversation is:
"Congratulations. Now what is the plan?"
The NCAA Already Recognizes Financial Literacy as Part of the Student-Athlete Experience
This is not me inventing a problem so I can sell a solution.
The NCAA itself recognizes financial literacy as important.
Division I core guarantees include financial literacy education and NIL education among the resources schools are expected to provide student-athletes. Source: NCAA
NCAA NIL Assist also provides education on finance, taxes, contracts, personal branding, and other aspects of NIL. Source: NCAA NIL Assist
That tells us something.
The ecosystem understands the problem.
My concern is whether we are treating financial education as another presentation athletes sit through or as a skill they actually learn to use.
Because knowing the definition of a budget is not the same as having one.
Knowing you should save is not the same as saving.
Knowing investing exists is not the same as understanding investing.
Knowing taxes are coming is definitely not the same as having the money available when they arrive.
The Athlete Needs a Financial System, Not Another Lecture
This is where I think we need to change our approach.
Do not just tell student-athletes:
Save your money.
Show them how.
Do not just say:
You should invest.
Teach them what investing actually means.
Do not just warn:
You have to pay taxes.
Help them understand why, when, and how they should prepare.
Do not just tell them:
Create a budget.
Give them something that helps them build one.
Adult learning principles teach us something important here.
People learn better when knowledge connects to an actual problem they need to solve.
NIL creates the perfect opportunity for applied financial education because suddenly money is not theoretical anymore.
It is sitting in the athlete's account.
Now the lesson matters.
Disclosure: I may earn a commission if you use the Investing for Beginners links in this article, at no additional cost to you. I recommend it because I believe the tools fit the financial-literacy needs discussed here.
Start With How You Behave With Money
This is why I like the starting point offered through Investing for Beginners.
It does not begin by assuming everybody understands finance.
It begins with behavior.
The platform offers a free eight-question financial personality quiz designed to identify patterns such as being an Avoider, Stresser, Spender, Starter, Hustler, or Optimizer. It then provides a personalized AI-powered dashboard, beginner financial education, and tools focused on areas such as budgeting, investing, debt payoff, savings goals, and accountability. Explore Investing for Beginners.
That makes sense to me.
Because before I tell a 19-year-old what to do with $10,000, I want that athlete to understand something else.
What are you likely to do with $10,000 when nobody is watching?
Spend it?
Save it?
Avoid looking at the account?
Give too much of it away?
Assume another deal is coming?
Immediately start thinking about how to turn it into more money?
There is no financial strategy without financial behavior.
NIL Makes Financial Personality Matter
Imagine two athletes each receive $10,000.
Same amount.
Completely different outcome.
One athlete immediately upgrades everything.
New clothes.
Shoes.
Trips.
Food.
Maybe a car payment they can technically afford today.
The other athlete freezes.
They are scared to touch the money because they do not understand it.
Another gives money to everybody around them.
Another believes the $10,000 proves they are now an entrepreneur and starts making investments they do not understand.
Another sets aside money for taxes, creates an emergency fund, establishes a spending plan, learns basic investing, and starts thinking about what the money could become.
Same NIL deal.
Different financial behavior.
The check did not determine the outcome.
The decisions did.
The NIL Conversation Needs to Start Before the NIL Deal
I would go even further.
Financial education should begin during the recruiting process.
Not after the athlete becomes valuable enough for somebody to pay them.
High school athletes who are serious about college athletics should begin learning:
- how checking and savings accounts work,
- how credit works,
- how interest works,
- how taxes work,
- how budgeting works,
- what investing actually is,
- the difference between an asset and an expense,
- the difference between revenue and profit,
- how contracts create financial obligations,
- why financial records matter,
- and why receiving money does not automatically mean you can afford to spend it.
The athlete does not need an MBA.
They need a foundation.
Because NIL can turn financial education from something they will "need someday" into something they needed yesterday.
Parents Need This Too
I am not putting all of this on the student-athlete.
Parents need financial NIL education too.
Especially when athletes are younger.
The Taxpayer Advocate Service specifically warns student-athletes and parents or guardians that NIL income is taxable and may have broader tax and financial-aid implications. Source: Taxpayer Advocate Service
Parents should be asking:
What portion should be reserved for taxes?
Who is keeping records?
Who understands the contract?
Is this income or a gift?
Is the athlete being treated as an employee or independent contractor?
What expenses are legitimate business expenses?
Could this affect financial aid?
Does the athlete have a separate account?
Who has access to the money?
Does the athlete understand what they signed?
Who is providing professional tax or legal advice when the situation requires it?
Those are NIL questions too.
They are just not as exciting as posting the announcement graphic.
A $500 NIL Deal Can Teach the Same Lesson as a $50,000 Deal
One mistake we need to stop making is acting as though financial literacy only matters for star athletes making significant money.
Wrong.
The smaller deal may actually be the perfect classroom.
If an athlete earns $500, they can learn how to track income.
They can learn how to set money aside.
They can learn what taxes may apply.
They can create a budget.
They can decide what percentage they want to save.
They can begin learning about investing.
They can understand the difference between gross income and money available to spend.
They can make small mistakes while the numbers are still small.
That is valuable.
Because hopefully the next deal is $5,000.
Then $25,000.
Then $100,000.
I would much rather have an athlete learn how to manage $500 before somebody hands them $50,000.
NIL Has Changed Again
The NIL environment is also becoming more structured.
Following the House settlement, Division I athletes can receive direct revenue-sharing payments from institutions while still pursuing qualifying third-party NIL opportunities. The current system also includes reporting and review mechanisms for certain third-party NIL arrangements. Source: NCAA
That means the financial ecosystem surrounding college athletes is becoming more sophisticated.
The athlete's financial education needs to become more sophisticated too.
Not complicated.
Sophisticated.
There is a difference.
A sophisticated system can still be simple enough for a beginner to use.
That is exactly what we should want.
This Is Where Investing for Beginners Fits
I do not see Investing for Beginners as something an athlete should open only after getting rich.
I see it as part of preparation.
Take the free financial personality quiz.
Understand your tendencies.
Learn budgeting.
Learn the basics of investing.
Learn about debt.
Create savings goals.
Start asking financial questions before the financial stakes become significant.
The platform currently provides the free personality assessment, basic dashboard access, a two-day beginner bootcamp covering budgeting and investing, and optional AI-powered financial coaching tools. Start with the free quiz.
That makes the entry point simple.
You do not need to walk in knowing the difference between an ETF and an IRA.
You start where you are.
That matters.
Especially for student-athletes who may be receiving meaningful income for the first time in their lives.
This Should Be Part of Every Athlete's NIL Toolkit
Film.
Recruiting profile.
Social media strategy.
Personal brand.
Contract education.
NIL compliance.
Financial literacy.
Put it on the list.
Because we cannot celebrate athletes finally having greater opportunities to benefit financially from their value and then ignore whether they know how to manage what they earn.
That would be irresponsible.
The goal should not simply be:
Help student-athletes make money.
The goal should become:
Help student-athletes understand money well enough that earning it actually changes their future.
That is a much bigger mission.
The Deal Is Only the Beginning
I want athletes to get opportunities.
I want them to build brands.
I want them to understand their value.
I want them to negotiate intelligently.
I want them to earn.
But I also want them to keep some of what they earn.
Grow some of what they earn.
Understand what they owe.
Recognize bad financial decisions.
Ask better questions.
Avoid unnecessary debt.
Prepare for life after athletics.
Because NIL should not create a generation of athletes who learned how to monetize their name but never learned how to manage their money.
That would be a terrible trade.
So before the first NIL check arrives, I would start with one simple question:
What kind of relationship do you already have with money?
Find out with the free financial personality quiz.
Then build from there.
Take the free financial personality quiz and find out.
The NIL deal is an opportunity.
Knowing what to do with the money is the advantage.
Frequently asked questions
- Is NIL income taxable?
- Generally, yes. The IRS states that monetary and other financial gains received from NIL activities are generally taxable income. Athletes must report applicable NIL income even when they do not receive a W-2 or 1099. :contentReference[oaicite:15]{index=15}
- Can NIL income affect financial aid?
- Potentially. The IRS and Taxpayer Advocate Service both warn that NIL income can affect information used in the financial-aid process and potentially the amount of aid available. :contentReference[oaicite:16]{index=16}
- When should student-athletes start learning about money?
- Before they receive meaningful income. High school is not too early to understand budgeting, credit, taxes, saving, investing, contracts, and basic financial decision-making.
- Why use a financial personality quiz for NIL athletes?
- Because financial decisions are behavioral decisions. Understanding whether an athlete tends to spend, avoid financial decisions, worry excessively about money, hustle for more income, or naturally plan and optimize can help identify where financial education should begin.
- Is Investing for Beginners only for athletes who already have NIL deals?
- No. Its beginner-oriented approach is one reason I see value in using it before the athlete starts earning significant NIL income. The platform is designed for people who may have little or no investing experience. :contentReference[oaicite:17]{index=17}
- Does this replace professional financial advice?
- No. A financial-literacy platform can help an athlete learn terminology, budgeting, investing basics, savings principles, and better financial habits. Complex tax, legal, investment, contract, or business-structure questions may require appropriately qualified professionals.
- What is the first thing an NIL athlete should do?
- Before worrying about becoming an investor, understand the money coming in and where it is going. Start with your financial behavior. Build a basic budget. Track income and expenses. Understand potential tax obligations. Create savings goals. Then continue learning. :contentReference[oaicite:18]{index=18}
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