That's horrible if that's the case. Stanford, which is a better school than ND academically, took 4 transfers this year who spent 2 years at other schools. Those schools were Colorado, UCF, Idaho, and Texas Tech. Those last 3 schools aren't exactly elite institutions, to put it lightly. The previous year, they took a kid from Northern Iowa who was 2 years out of High School. Again, not exactly an elite institution. If Stanford is able to take in multiple transfers who are 2 years out of HS, there is absolutely no excuse for ND to not be able to as well.
The problem with taking transfers is not as much about the quality of the academics as about our specific graduation requirements, and Notre Dame's belief that everyone should be on track to graduate in four years (or eight semesters), even if they arrive two years in.
IDK about Stanford but in order to graduate, Notre Dame requires you to take two classes in theology, two classes in philosophy, multiple credits in a foreign language, freshman writing, etc. etc. These are just the rules, and they apply to everyone. If you've spent your first three or four semesters as an athlete at UCF, you're not likely to have taken many of those things and you're not likely to have enough time left to fit them all in, plus all the usual university/college/major requirements, before your four years are up. (also Notre Dame doesn't offer online classes, and I'm not sure how widely they honor ones taken elsewhere).
That's why we can (theoretically) take freshman transfers - they have time still to take all those classes - but sophomores or juniors are hard. The rare undergrad transfers we have taken tend to come from private schools with a similar liberal arts orientation where, even if you haven't taken theology, you probably had foreign language and something like an intro to philosophy class.