<P> The NCAA's first split was into two divisions, the University and College Divisions, in 1956 . The College Division was formed for smaller schools that did not have the resources of the major athletic programs across the country . The College Division split again in 1973 when the NCAA went to its current naming convention: Division I, Division II, and Division III . Division III schools are not allowed to offer athletic scholarships, while D - II schools can . </P> <P> Division III is the NCAA's largest division with around 450 member institutions, which are 80% private and 20% public . The median undergraduate enrollment of D - III schools is about 2,750, although the range is from 418 to over 38,000 . Approximately 40% of all NCAA student - athletes compete in D - III . </P> <P> Division III institutions have to sponsor at least five sports for men and five for women, with two team sports for each gender, and each playing season represented by each gender . There are minimum contest rules and participant minimums for each sport . Division III athletic programs are non-revenue - generating, extracurricular programs that are staffed and funded like any other university department . They feature student - athletes who receive no financial aid related to their athletic ability . Student - athletes cannot redshirt as freshmen, and schools may not use endowments or funds whose primary purpose is to benefit athletic programs . </P> <P> Division III schools "shall not award financial aid to any student on the basis of athletics leadership, ability, participation or performance". Financial aid given to athletes must be awarded under the same procedures as for the general student body, and the proportion of total financial aid given to athletes "shall be closely equivalent to the percentage of student - athletes within the student body ." The ban on scholarships is strictly enforced . As an example of how seriously the NCAA takes this rule, in 2005 MacMurray College became only the fifth school slapped with a "death penalty" after its men's tennis program gave grants to foreign - born players . The two service academies that are D - III members, Merchant Marine and Coast Guard, do not violate the athletic scholarship ban because all students, whether or not they are varsity athletes, receive the same treatment, a full scholarship . </P>

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