Aren't there suppose to be some sort of graduation or other academic requirements? If there are how does Kentucky get so many recruits each tear?
Short answer: Students, in good academic standing, that drop out to go pro are excluded from the calculation.
Longer answer:
Teams need a rolling 4 year average APR of 930 to avoid sanctions (Earn 93% of the possible points). A lot of students going pro early make the academic progress of the others much more important. If you have 4 people going pro each year, you can afford an average of 1 academic issue per year, or 1 academic wash out (drop out or transfer in bad standings) every other year.
APR = Points earned * 500 / # of scholarship athletes (last year)
+ 1 point per scholarship athlete that returns
+ 1 point per scholarship athlete in good academic standing
Students in good standing who transfer out, or go pro are ignored. If they ever return and get their degree, they bolster the results.
Transfers out, in poor academic standing, are really bad (0 pts, and they count in the denominator)
Example 1:
7 returning players in good academic standing
1 returning players in poor academic standing
1 drop out
4 go pro
(7*2 + 1*1 + 1*0) * 500 / (7+1+1) = 833. Uh oh.
Example 2:
7 returning players in good academic standing
1 returning players in poor academic standing
4 go pro
(7*2 + 1*1) * 500 / (7+1) = 937. Barely okay.
This is why teams often like to have a few deep bench players who are solid students.