Because the NCAA recognizes that these are 17 and 18 year old kids that don't have the maturity to look at things the same way adults do. They're very impressionable and, be honest, when you were that age and somebody said come work for me and here is all this money, beautiful women that will do anything you want, and as long as you don't act too out of line, we'll cover it up. Then compare that to another school saying come in and work your butt off for a chance to play and don't even think about asking for money, cars, or women. For most, that would not be a hard choice.
The NCAA is not out to ruin kids' lives. They realize that for a lot of them, an athletic scholarship is the only they attend college. If they deem them permanently ineligible to play, then their lives are pretty much ruined. They are more concerned punishing the adults that are taking advantage of their situation for their own gain and benefit and giving the kids a second chance.