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I am sure this is a practice that has been going on in all leagues for many years. I can't go as far as to say that coaches encourage it.
Before the xfer rule the only way a coach, IMO, could be thought of "not encouraging" the transfer is by not accepting the player to begin with. Publicly he may say he doesn't encourage transfers but he's probably the first in line with a hug and "welcome to the team" message and that is "backdoor encouragement" IMO. A "downward" transfer may have indicated that a player felt he was out of his league, and while I may commend his honesty, he should still have to pay the piper. While not knowing top programs and coaches personally, I venture to say that elite school coaches are so egotistical and power hungry that they would go to all ends to make their team better. That may be the pressure their under, but does that make it right?
Bottom line a school commits a scholarship to an athlete to represent that school, if the school reneges on the % of that agreement then the door should be open for xfer. But the "sit" rule I feel ultimately is a result of the elite schools using the lower and mid-majors as their personal development league, and many times use their elite players as recruiters during the summer leagues seasons. I personally know this because my son was approached by players of big Conference teams in the Northwoods League and I personally watched the "lure" successfully happen with a college teammate of his. Everything was great "at home" until he went to the Cape.
It's a great rule that if nothing else teaches a kid commitment and penalty and at the same time the coaches.........ah.........it may be to late for them to see the wrong in it.