Here is an interesting table. It shows the head coaches at notable colleges in 1926 who had been All-American players in their day. There was Lonzo, with 45 years in the saddle, and five who had earned pretty big jobs just one or two years after their playing days. As the headline and article contents show, the writer considered the 16 men on the list surprisingly small.
Few of the men picked by Walter Camp as outstanding football players through more than a third of a century of football history have remained in the game as teachers.
My math says there were about 500 All-Americans between 1889 and 1925, accounting for some repeats, so the 16 in the table represents about 3% of All-Americans. Undoubtedly, over 90% percent of All-Americans played at one of 30 schools, and 75% came from 15 elite Eastern colleges, with most coming from money, so they had other opportunities upon graduation. On the other hand, football was still transitioning from seasonal to full-time coaches (many handling multiple sports) in the 1920s, so among the 16 were guys like Walter Steffen, a Chicago judge coaching a team based in Pittsburgh, and Spears, who was a practicing physician throughout his coaching career. (An entire article on Steffen is coming soon.)
After the mid-1920s, the NFL became a viable option for more players and coaches to extend their football careers, so things may have changed. I don't have an easy way to look at how many first-team Walter Camp All-Americans over the last 45 years are currently college head coaches, but the list is not very long. (Here's a Wiki list of current FBS coaches.) Those who qualify include Trent Dilfer (UAB) and Deion Sanders (Colorado). Who else was a first-team All-American player?
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So, Michigan considers Jim Harbaugh an All-America because he was first team All-America for the Football News (obviously, it was going to be hard to beat our Vinny Testaverde in 1986.)
https://bentley.umich.edu/athdept/football/fballam/aaharbau.htm
Harbaugh also finished third in the Heisman voting in 1986.
I looked at Harbaugh but Wiki he was not a consensus All-American. The original list was based solely on the Walter Camp All-American list whereas now there are numerous AA lists.