This can happen at any level. The difference in D1 or D2 is that if you sign (once you sign) you’d be restricted from swimming/playing at another school for a year or taking a scholarship from that school for a year. You can always GO to another school and the NLI doesn’t prevent that.
I’m not sure how the new transfer portal works, but I think you can even get around the NLI now. Many athletes are transferring all the time now.
The coaches can cut anyone they want at any level too, or just not play you. They might not be able to re-award your scholarship. The athlete also has some rights to appeal if the scholarship is removed.