Agree w/tarvolon. The only time I have received this message was when I tried to pull a recruit down, but didn't send enough scouting visits for the pulldown to be successful. Assuming you had the money and the inclination to do so, you could send additional scouting visits and eventually your target will drop down and you will get a more positive scholarship message. So he's not necessarily 'out of your league' -- you still have a shot -- but you will have to decide for yourself whether the extra cash and potential risk that goes with that is worth it.
I've never received this message in the second scenario tarvolon mentioned - if you are recruiting a guy in your league but haven't recruited hard enough. Not saying that is not possible, just that I haven't observed it in my experience.