First NIL needs to be defined.
If it is true purpose - in Exchange for name, image, likeness and there is a real contract then it is just included in Student’s gross income. Scholarship would remain the same.
Now with a collective, that is where the details matter. I would doubt they meet the rules. They are difficult to apply, without specific work and discussion with IRS. Then again, most things I know on that side are discussed flippantly. This is not a subject that can be considered without strict, precise, and accurate information.
If they receive money from the school (pay for play) then it scholarships should be taxable. I.E. House Settlement.
An athletic scholarship, can’t be pay for play. Even then, only a portion, would not be taxable.
The portion used for tuition and fees. Room and board would be taxable. It should be included in Gross income. I think any meal plans and other would be taxable. However, keep in mind That has always been true.
The sport can’t be required. otherwise, the whole thing is taxable income.
The House settlement, might address. However, they would likely not be able to change things with IRS taxability.