Grad students should not get athletic scholarships and should not play on varsity teams. If a kid wants to finish early that's fine but he should leave the scholarship and his hoops career behind. Grad schools should be protected from the creeping corruption from athletics programs.
Don't discourage kids from working hard and getting a degree, or the schools that facilitate them. Penalize the schools that cherry pick. If a school wants to sign a grad transfer, they should commit to a two-year scholarship that counts against their limit even though the player has one year of eligibility remaining.
If schools are going to recruit and sign one and dones, they should be charged a scholarship for the next four years regardless of whether the player leaves early for the NBA or attends school in the league's off season. It would make the KY's of the world think twice about their current business plans.