Nothing happens! My last season at D3 (Ferrum) I had built a program up from nothing in a four year cycle and then departed for D3. The human coach who came in after me cut all three seniors on the squad for some reason or another as they were not maxed out yet, but had low ATH and had been drop downs originally from D2. The D2 team (Concord) I took over was trying to recruit eight, and since I was going to play same off/def I recruited all three previous players. I got two of the three to sign, and they started at the D2 level for me my first year because they were already A IQ in both off/def, and I kinda liked them after three years. No penalty at all, and I got to Coach them in there senior seasons.