The Orlando Sentinel has this article (free registration required) about the new NCAA legislation that gives it the power to take scholarships away from Division 1 teams that do not remain academically eligible. One other bit of legislation that the NCAA passed was the 40-60-80 rule. Under this rule, athletes must have earned 40% of their credits towards graduation by the end of their second year, 60% by the end of their third year, and 80% at the end of their fourth year (up from 25%, 50%, and 75%). Incentives matter and when incentives change, decisions change too:
With the 40-60-80 rule, Mooney said he has heard anecdotal evidence that more junior-college recruits increasingly are looking to transfer to Division II schools instead of Division I schools, because the continuing-eligibility standards will not be as stringent in Division II.
The marginal athletes (in the economic meaning of the term) are now looking more closely at their next-best alternatives. I've heard that some D1 schools were caught off-guard by the high cut-off rate (no more than 10% of scholarships can be lost in any one program - many schools apparently thought it would be less than 10%). D2 schools are also going to feel the effects... and they had no vote in the matter.