NCAA regulations say you can cancel/reduce a player's scholarship for one of four reasons: player voluntarily quitting, engaging in serious misconduct, providing false information, or suffering from a disabling injury.
In this game, only the last scenario is truly realistic in terms of what could be introduced into the game to allow a coach to "cut" a player and have them lose their scholarship. Coaches can "cut" players for other reasons in real life, but they can only lose their scholarship for one of the four reasons above, and in the end, it is all about those 85 scholarships. Just as I would not expect EA to build in a bunch of storyline logic to allow a coach to legitimately cut a player because, say, they got a DUI, I also do not expect them to build in advanced logic that allows more than 85 players on a team (walk-on's) that are getting the scholarship funded by NIL. That would take WAY more logic than is feasible with each team having varying capabilities of doing this (and it would be nearly impossible to accurately guestimate these amounts).
Encourage to transfer is more than sufficient for proper roster management, if you monitory your eligibilities by position, recruit well, and utilize the transfer portal to fill in gaps as needed.