From what I've seen in some heavy testing this is caused by how your teams Prestige settings are. Prestige appears to limit schools to their "Recommended Targets" rank of recruits. If you do not have enough teams in that range the players seem to go unrecruited.
To solve this issue I have grouped all my power 5 teams with prestige from 90 to 65. Elite schools are 90, Blue Bloods are 85, Then we skip 80 prestige, average schools (which make a bulk of the schools) are 75, barely sub .500 schools are 70 and terrible schools are 65.
In the setup I'm using I have 18 schools in the Elite and Blue Bloods area so if you think about 18 schools, 20 scholarships a year open they will be battling for the top 360 recruits. Then the 75 prestige starts looking for recruits around 137. With these overlaps in recruits the schools are going after you will see a drastic reduction in kids going unrecruited. If you are playing in a setup that only have 5 teams at 85 and above they are going to need 100 recruits a year and your lower prestige schools don't recruit up top players this causes many kids to not have anyone recruiting them.
You might worry that you have to many teams with "High" prestige but it really isn't an issue. The prestige rating mainly controls the initial rosters that are generated: 90 prestige gives an avg roster rating of 87.8 and have access to all recruits, 85 prestige gives an avg roster rating of 86.9 and starts recruiting from recruits 38 down, 80 is skipped because the rating really isn't different recruiting wise from 85, but roster strength wise its the same as 75 prestige, 75 prestige gives an avg roster rating of 84.4 and starts recruiting from recruits 137 down, etc.... Once prestige falls below 63ish all rosters will start with an avg of 76, the prestige just locks schools out from certain levels of recruits. (note if you put prestige at sub 30 in the teams.xml file the teams will start above 76 avg roster, normally around 78, my guess is that it is some type of catch up logic that tries to keep the bottom teams from being so terrible).
When you look at the chart below you might be worried that no teams will be recruiting the players 800 to 1800 range because we do not have teams assigned in that prestige range. This isn't the case in my testing. With 65 teams in the "Power 5" group that is 65 teams at about 20 scholarships a year so they are going after about 1300 players. The lower teams seem to step up and try to take the players at the bottom of that range.
Then I do this same idea for mid majors but from 50 down to 30 scale using the same idea.
With this setup I still see midmajors getting upsets and after looking at how prestige works and used in roster creation it makes sense that it would. A school with 60 prestige starts with the same average roster (76) as a team with 30 prestige does. Brooks might be able to chime in on the other things prestige affects in the game since I'm sure their is more. These are just the affects that were easy to observe.
http://www.thepocketscout.com/DDCF/2020/TeamInfo.html <--- Is a list of how the schools are setup and changed after the first season.
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Suggested Generated
Prestige Top Recruit Team OVR
90 1 87.8
85 38 86.9
80 62 84.7
75 137 84.4
70 305 82.6
65 516 80.6
60 905 76.0 <------------ I use this as a floor for power 5 schools, if a school falls below I move them back to 60 before the next season.
55 1506 76 <------------ I use this as a ceiling midmajors, if a school rises above I move them back to 55 before the next season.
50 1807 76
45 2106 76
40 2508 76
35 2508 76
30 2508 76
25 2508 78