The General Problem
At the time, the mid-major coach on the Rules Committee who pushed hard for the adoption of the 35-player limit in Division I thought he was doing his own and other mid-majors a favor. The theory was that the larger, better-funded programs would be forced to stop the practice of carrying closer to 40 players on their rosters, and the players who failed to make the cut at the major programs would naturally fall into the laps of the mid-majors.
Unfortunately for the mid-majors, that's not what many have done since the 2007 imposition of the restriction. Instead of transferring to mid-majors, losing a year of eligibility in the process, many have transferred to junior colleges; where they not only can play immediately, but also can become eligible for that academic year's draft.
Before the imposition of the 35-player limit, there were often a handful of players at major programs who knew that their playing time would be limited; but, for reasons of their own, would make the choice to stay on. Others would occasionally decide to transfer, choosing not to be the 40th player on a talented roster; but, at least, the players and the coaches had some flexibility with which to work.
Why Things are Now Worse for the Invited Walk-on
Now that the flexibility in the roster size has been taken away and the program finds itself required to provide 27 players with at least 25% of a scholarship, the remaining 8 have to fund their education from non-athletic sources. Meanwhile, coaches know two things about the players who are not receiving an athletic scholarship: (1) they have the collective resources to fund their own education and (2) their loss from the roster does not adversely affect the program's Academic Progress Rate (APR). Conversely, they know that many of their players on athletic scholarship depend in part upon those funds to be there; and, any time one of them is cut, the APR suffers.
So, given those dynamics, guess where the pressure is to cut? That's right...the invited walk-on who receives no athletic scholarship.
Before 2007, the greater flexibility in the roster size gave the coaches the latitude to retain invited walk-ons more frequently. Unfortunately, today's coaches find the pressure much greater to do the necessary roster trimming at the expense of the invited walk-on group.