Athletic scholarships are largely regulated by the National Collegiate Athletic Association. There are also JUCO's and NAIA, National Association of Independent Athletics.
In 1973, the NCAA split its membership into three divisions: Division I, Division II, and Division III. Under NCAA rules, Division I and Division II schools can offer scholarships to athletes for playing a sport. Division III schools may not offer any athletic scholarships. Generally, larger schools compete in Division I and smaller schools in II and III.
Division I football is further divided into the Football Bowl Subdivision (FBS, formerly I-A) and Football Championship Subdivision (FCS, formerly I-AA). The two differ in several ways:
Some schools or leagues permitted by the NCAA to award athletic scholarships nevertheless prohibit them among their students. An example is the Ivy League, which is part of Division I FCS. The three service academies that participate in Division I FBS football (Army, Navy, and Air Force) are effectively exempt from NCAA scholarship limits because all students at those schools, whether or not they are varsity athletes, receive full scholarships from the service branch that operates the academy.
Institutions that engage in misconduct may be stripped of the ability to award a certain number of athletic scholarships. The ultimate penalty, the suspension of an entire athletic program from participation for a set period of time, is popularly known as "The Death Penalty"; it has only been levied three times against schools now in Division I: against Kentucky basketball in 1952, Southwestern Louisiana (now Louisiana-Lafayette) basketball in 1973, and SMU football in 1986.