I was thinking a bit about the Reggie Bush stuff at USC, and whether we should compensate football/basketball players beyond their scholarships. Many people hold to the traditional ideal of the student-athlete: these guys are just students who just happen to have freakish amounts of talent; they participate in our school's athletic teams, and in return are given a scholarship to pay for their education. Others advocate for a more pro-style approach: the players entertain millions of tv viewers and make a lot of money for the athletic department, so they should be paid.
I used to fall firmly in the first camp. While at Michigan I was on an academic scholarship, and I had certain requirements to uphold - maintain a certain GPA, etc. As long as I did that, my tuition, room and board were paid for. The only difference between me and the guys on athletic scholarship is that their requirements had to do with the field, and mind had to do with the classroom - right? However, I was being compensated in the same field in which I excelled: I was a good student, so my schooling was paid for. Athletes are different, though. Their potential lies on the field, but we compensate them by paying for their education. They have much more work than I did - to earn their scholarship, they have to not only do their coursework and maintain a minimum GPA, but ALSO put in the ridiculous amount of work to be involved in collegiate athletics. It would be like my scholarship requiring me to hold down an unpaid part-time job in addition to my coursework. In that sense, the traditional notion of the student-athlete is a bit ridiculous.
Aside from that, I think we have to consider where all the money goes in the current system - money that is made based on the exploits of these players. Coach salaries are escalating every year. Schools are investing tons of money into facilities - some investments are necessary (*cough cough* Crisler renovation), but others are just an arms race to impress recruits (e.g. Oregon's locker room, which reportedly has personal xboxes in each locker). Compared to those extravagancies, tuition + room and board for the athletes seems like a fairly small amount.
I think there's a way to compromise without overhauling the entire system, though. Had I wanted to make extra money aside from my scholarship, Michigan offered opportunities for students to get paid while working for the school: work-study. Why not offer student-athletes work-study money for the time they invest in sports? Most work-study jobs benefit the school (research assistantships, landscaping, etc.) and athletes arguably benefit the school as much as anyone. They entertain students and alumni, raise huge amounts of money for the athletic department, and act as ambassadors for the school. Athletes do a lot for the University - why not compensate them while working within the existing system?
I see a couple problems, but I think they could be worked around. First, there are a lot of athletes at the university who aren't on scholarship - should they be paid too? I would say probably no; make this work-study opportunity available only to athletes who are on scholarship. I know it doesn't seem fair, but the work study money would be a drop in the bucket compared to the cost of a full scholarship. This really wouldn't be much of a change from the status quo from a financial standpoint.
The other issue is how much to pay student athletes. I think that's actually pretty easy. I believe there's a fixed hourly rate for work-study jobs (correct me if I'm wrong), and Michigan fans are all intimately familiar with the countable hour - seems like this would be a fair way to do things.