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^^^ Well my understanding of the situation could be totally off, and usually what they do is simply offer fewer scholarships next year and the next, etc. to keep under the total - ESPN says to stay at 65 they will probably be able to offer only 15 new scholarships for the next few years (it's typically around 25 for most schools).
If I'm off on that however, and they do have to let guys go to stay under the limit (sometimes coaches have been known to "encourage" guys to quit to make room for more talented newcomers and stay under the limit), they couldn't honor their athletic scholarship if they kicked them off because that scholarship still counts against their total whether they play or not (I think-there may be an exception for medical issues and maybe this situation would qualify as well). They could switch them to an academic or need based scholarship depending on the circumstances, I suppose.
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