They are granted one year at a time and renewed. While it is common practice for a player to be granted his scholarship for 4 years, that can change at any time. If the coach finds someone better, he can give the scholarship to someone else.

I really don't understand this notion that the players owe the schools they play for some sort of loyalty when the system is stacked against them and making millions off of them.

Sure, they get an education, albeit, often a diluted one. As evidenced by some insiders mentioning that players are actively steered away from the "difficult" majors, so that school work doesn't interfere with basketball.