Yes. Once the season is over and before the next season begins (during the jobs period), you will have a chance to evaluate your team and decide whether or not a player deserves to keep his scholarship. Rescinding scholarships can have an effect on your reputation as a coach and make it harder for you to recruit. You must have seasons remaining on your account in order to rescind a scholarship.
When the option is available to you, there will be a 'Rescind Scholarship' link next to players' names in your office roster listing. All rescinded scholarships are then available to be filled during the next recruiting period (the appropriate amount of money is added to your recruiting budget).
The amount your reputation is affected by is based on whether or not you recruited the player. There will be more of a reputation hit if you recruited the player (not SimAI).