I like the current Grad Transfer format. Student Athletes who complete their degrees should be rewarded, not punished. Isn't the goal to graduate kids? If they have a year of eligibility, want to pursue a graduate degree, and play their sport, they should be allowed to, no strings attached.
Most Grad Transfers typically aren't sought after by the professional ranks. They are too old and/or have a limited ceiling. Let them have their year of playing and don't punish them. In hockey it hasn't upset the competitive balance. One could also argue it hasn't upset the balance of power in basketball or football either. In following U of MI, their grad transfers rarely go on to have a huge impact. They have a modest impact and are borderline starters/stop gap options for teams. They rarely push the team they go to into the next tier.