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Colleges

Assistance funds pay tab to insure stars

What do Florida State, Ohio State and Oregon have in common, other than each earning a spot in the first College Football Playoff? Each school footed the bill for disability insurance, loss-of-value insurance or both on a star quarterback before the 2014 season using the NCAA-funded Student Assistance Fund.

Disability insurance, which pays if an injured player is unable to play again, has been an option for college athletes for some time. That’s the type of policy that Ohio State bought for quarterback Braxton Miller, who injured his shoulder during preseason camp and missed the 2014 season. (With all reports indicating he will play in 2015, his $1 million disability policy won’t take effect.)

 
Quarterback Jameis Winston of Florida State and offensive tackle Cedric Ogbuehi of Texas A&M both had insurance policies paid for by their schools.
Photo by: GETTY IMAGES (2)
Miller, however, did not have loss-of-value insurance, another type of coverage that’s becoming increasingly popular for college football’s biggest stars. Oregon’s Marcus Mariota and Florida State’s Jameis Winston, the two most recent Heisman Trophy winners, both had that coverage, which pays out if an injury causes the student athlete to fall precipitously in the NFL draft, according to the specifics of the policy.

The NCAA says it has never specifically disallowed the use of SAF money for such policies, but the practice has become more widespread this season after one school, Texas A&M, asked for clarification from the NCAA and was told such spending was permissible.

With the NCAA giving A&M the green light, Oregon reimbursed Mariota, cornerback Ifo Ekpre-Olomu, center Hroniss Grasu and defensive lineman Arik Armstead for insurance they each bought for themselves. It was a first for Oregon, which previously thought covering either type of insurance premiums would constitute an NCAA violation. Only after reports of Florida State and Texas A&M buying policies for Winston and offensive tackle Cedric Ogbuehi, respectively, did Oregon investigate the matter and determine it was an allowable practice.

At least two other programs are known to have bought insurance for student athletes this year: Georgia for running back Todd Gurley and Wisconsin for Melvin Gordon.

Each school used money from the NCAA’s Student Assistance Fund to buy the policies or reimburse student athletes who had paid for them. Funded by revenue generated by the NCAA — primarily from the Division I Men’s Basketball Championship — SAF money is provided to conferences each year to “assist student-athletes in meeting financial needs that arise in conjunction with participation in intercollegiate athletics, enrollment in academic curriculum or recognize academic achievement.”

Historically, funds have been used for a variety of needs: travel expenses for family emergencies, clothing, academic supplies and even summer school fees. The NCAA’s most recent data show 87,000 student athletes received funds through the SAF in 2011-12.

According to the NCAA’s revenue distribution plan for 2013-14, SAF distributions to Division I institutions were budgeted at $75,572,000, a number that has increased 89 percent over the past seven years.

The funds are distributed to conferences, and each conference devises its own method of funding for schools. For example, the Big Ten uses a complex formula to divide the SAF among member institutions at the beginning of each academic year, taking into account the number of student athletes and scholarships at each institution.

The premiums on disability insurance and loss-of-value policies and riders differ, but the reported payments for Ogbuehi and Winston this year ranged from $50,000 to $65,000. As schools began to use SAF money to cover insurance premiums this season, one concern raised was whether it would deplete funds available for other student athletes with emergency financial needs.

For example, in April 2011, a tornado ripped through Tuscaloosa, home of the University of Alabama, destroying the apartments of many students, including student athletes. Alabama used money from its SAF distribution to buy clothing and other necessities for student athletes.

A few months later, terrorist attacks left 77 dead in Norway and hundreds injured. A member of Boston College’s soccer team, Chris Ager, was thousands of miles from his hometown of Oslo when he heard of the attack. After he found that his family was safe though understandably shaken, Boston College spent more than $2,300 to fly him home.

SAF money has been used to send student athletes home for funerals, and to pay for a lifetime’s worth of dental work for student athletes whose dental needs were neglected during childhood.

Chad Hawley, the Big Ten’s associate commissioner for compliance, says he doesn’t remember a conference institution ever running out of SAF money. In fact, the conference has built up a nice cushion over the years, carrying over about $2 million each year.

Last academic year, Big Ten institutions used $757,561 from the SAF on all types of insurance premiums. In tracking use of the SAF, the Big Ten doesn’t differentiate between insurance premiums for disability or loss-of-value insurance and other types of insurance purchased for student athletes, such as health insurance for those who cannot afford policies on their own.

Just as conferences distribute SAF funds through different formulas, the way in which they track the use of the funds also differs. Of several major conferences asked about members’ use of SAF money for insurance premiums, only the Big Ten could provide hard numbers.

Whether institutions will continue to use the SAF for these insurance premiums remains to be seen, as the NCAA took another new step in October: issuing a waiver allowing student athletes to borrow against future earnings to purchase their own loss-of-value insurance. The ACC has introduced a proposal to be considered at the NCAA autonomy meeting this month making this a permanent rule.

Some have speculated that if student athletes are able to take out loans against future earnings to purchase their own insurance, athletic departments will stop offering to pick up the tab. Student athletes have long been permitted to obtain these loans for disability insurance, however, and those who can afford it on their own have always been free to purchase both disability insurance and loss-of-value policies. Despite that, several schools still stepped in to cover the cost this year.

At least two of the schools who expended SAF money on insurance for student athletes this year — Texas A&M and Oregon — say they will still consider using those funds in the future, even if student athletes are able to take out loans for the loss-of-value policies.

“We were in a very unique situation last year with four exceptional student athletes,” said Craig Pintens, Oregon’s senior associate athletic director for marketing and public relations. “We will consider it again, but also are monitoring potential autonomy changes.”

Texas A&M’s director of athletics for compliance, David Batson, said, “At this time we are still planning on allocating SAF funds for the purpose of acquiring disability and loss-of-value insurance.”

The Aggies used the insurance purchase this season to lure back Ogbuehi, who was projected as a first-round draft pick in the 2014 NFL draft, for his senior season. The loss-of-value insurance reduces the financial risk for student athletes like Ogbuehi, perhaps encouraging them to stay and complete their degree before entering the draft.

Kristi Dosh is a sports business reporter for Campus Insiders and Outkick the Coverage on FoxSports.com. She is also vice president of public relations for public relations and content marketing firm Reputation Ink.

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