Dropping varsity basketball was not the end of the story at Tulane after the scandals in the sport there a couple of months ago. Eamon Kelly, the university president, formed a select committee on Tulane intercollegiate athletics directed -- none too hopefully -- toward opening a new era.

Kelly asked the committee to analyze the problems and develop recommendations for a program "under which a university of Tulane's caliber and quality can participate in Division I-A intercollegiate athletics, maintain our academic standards and see that the kind of things that happened in the basketball scandal do not happen again."

That task, Kelly said recently, "is one of the most complicated intellectual questions that any group can face." He is not optimistic that Tulane will be able to resume its basketball program soon.

"I do not want to prejudge what will be the recommendation of this committee," he said, "but I would not reinstitute Division I-A basketball unless there was a dramatic change in the national environment, and I just do not see that in the foreseeable future."

Asked to define dramatic change, Kelly said: "Where there is an end to the commercialization of collegiate athletics, elimination of the culture of win at all costs in order to appear on television and a removal of the economic incentives of intercollegiate basketball."

Kelly was describing intercollegiate sports' version of Utopia, when games are being played by students and for students. The athletes would be students first and foremost, with no double standards on admission or in the classroom.

But that is easier said than done in the broad-based NCAA, where highly selective private institutions compete on the playing fields against state universities, some with open admission policies.

When a special NCAA convention this week in New Orleans considers eight proposals dealing mainly with institutional integrity, some say the convention voters -- college presidents or their selected representatives -- will be dealing with symptoms, not with the problems.

"It's professional athletics as far as the schools are concerned," said Bob Piper, a former high school coach now working as a financial consultant in the Washington area. "The kids aren't getting paid, but it's a big business. I don't know what the problem is, but I do know educating their athletes isn't one of their goals."

Commercialization is cited by more than six of every 10 college presidents in a recent poll by The Washington Post as a major problem in intercollegiate athletics today. The difference in admissions standards among NCAA members is causing many colleges to adopt a double standard in order to compete in Division I.

This is the root of the problem: decisions concerning academic philosophies are being based on financial considerations.

"I spoke to a group of athletic directors about three years ago in Las Vegas," said John Thompson, basketball coach at Georgetown University. "The issue came up as to whether freshmen should be ineligible. Most of the people in the room agreed it would be beneficial for freshmen not to be eligible, because of school adjustments and sociological adjustments.

"But when they voted, a majority of the people voted against it, because people discuss education and morality but they vote economics. It's constantly done. Moral issues and educational issues are discussed, but the vote becomes an economic (issue). That's the real world we live in, too."

The Washington Post's poll showed that 65 percent of the college presidents who responded favor freshman eligibility. The strongest sentiment against freshmen on varsities comes among the schools with the biggest programs. In Division I-A, 36 presidents favored freshman eligibility and 27 opposed it. In Division I-AA, encompassing all other schools that play Division I football, 53 presidents favored freshman eligibility and only nine opposed it.

A return to freshman ineligibility likely would cause a significant deterioration of the parity that exists among schools in football and basketball. The biggest would become bigger and better, because they again could stockpile players, while the smaller schools would be less able to cope. It would increase costs and lessen the available talent pool to those schools without the tradition to attract recruits.

One of the leading proponents for declaring first-year students ineligible is Bill Friday, president of the University of North Carolina system: "It gives you a chance to really get your feet on the ground. The average SAT score of entering freshmen is just at 1,100 (at Chapel Hill). It's the same at Raleigh, so the competition is pretty severe."

But not everyone agrees.

"Who can afford at a small school just to keep a guy around?" counters Joe Johnson, president of Grambling State University, whose school already is feeling the financial pinch of a Supreme Court decision that stripped the NCAA of its hold on college football's network television packages. "Big schools have foundations and things like that. Small-college presidents feel they can provide support services to help the kid survive."

There is likely to be a push to repeal the freshman eligibility rule at the NCAA's annual convention in January. Bruce Poulton, chancellor at North Carolina State, wanted the Presidents Commission to put freshman ineligibility on the agenda this week in New Orleans. But leaders for reform in college athletics know it is difficult to push for more than one major reform at any convention. This time, they will concentrate on uniform penalties for cheating and take-the-program-away measures for repeat offenders.

Reform leaders are hopeful that a compromise to Proposition 48 can be achieved before the January convention. Proposition 48 sets new minimum requirements for first-year eligibility based on entrance exams and a core curriculum of 11 academic subjects as of August 1986. If the compromise can be reached, they can tackle other issues, such as freshman eligibility, in January.

William Lee Atchley, who resigned after failing in his attempt to get the Clemson University trustees to give him a vote of confidence in his power struggle against athletic director Bill McLellan, says there is only one issue that matters.

"That issue is athletics versus academics," he said. "No matter what your intentions and reasons may be, what you decide today, as far as almost everybody is concerned, is athletics versus academics . . .

"When you have an image problem that academics takes a back seat to athletics, you have a problem. You no longer have an institution where people with integrity want to teach, or where people with common sense and good values want to send their children to learn."

Clearly, college athletics have an image problem these days. A recent poll by the Associated Press showed that six in 10 Americans believe college sports are overemphasized and seven in 10 believe that betting on college games encourages athletes to cheat.

Perhaps that is why many presidents believe that among the most important proposals this week is one dealing with "the Principle of Institutional Control and Responsibility." It requires an annual audit, by auditors with no ties to the university, of all expenditures for a school's intercollegiate athletics programs, so the president of the university knows exactly where each dollar is going.

"They want to make sure that they don't have a ticking bomb," said Shelly Steinbach, general counsel of the American Council on Education.

In theory, passage of this proposal, combined with two others, would mean that presidents would have audits not only from their athletic departments, but all booster clubs -- even those incorporated outside the university.

"It's not a bad price to pay for a little more insurance and public confidence that athletics is being run in a businesslike way," said William Muse, president of the University of Akron.

Still, some apparently don't want to know, or believe that an outside audit is a wasted expense, since they already are covered by state auditors. That is the one proposal gaining the smallest majority of the presidents in The Washington Post's survey. Only 61 percent favor such a rule, compared with at least 85 percent favoring uniform penalties, sanctions on coaches, and disclosure of data on freshman athletes, on the progress of other athletes and on graduation rates.

Clearly, the financial bottom line remains among the NCAA's more controversial subjects. The dollars generated by football and basketball -- and network telecasting thereof -- are needed to subsidize nonrevenue and women's sports and, for many colleges, mortgages or bonds to pay for construction of new arenas and modernization of stadiums.

Some say all college sports should follow the Ivy League model, where athletes are truly students first, with scholarships awarded on a need basis, with no spring football, with the most broad-based of college sports programs. But most administrators don't believe that is a realistic approach.

Instead, some major universities are simply deemphasizing some of the nonrevenue sports, easing the pressure on football and basketball to generate huge sums of money.

"You can't disarm unilaterally, either by school or conference," said Art Padilla, associate vice president for academic affairs for the University of North Carolina system. "It's always been my contention -- I may be wrong about it -- that you can put five midgets with State basketball uniforms on and put five midgets with Carolina basketball uniforms on, have a game and the rivalry would still be there, just as intense. However, we have to make sure Lefty (Driesell) doesn't give you tall ringers. It's the whole question of unilateral disarmament."

Other critics say coaches should only recruit athletes who their admission offices believe can graduate. And once in school, the coach and the university should be willing to offer the academic support systems necessary to get an education. Schools like Duke, Georgetown, Virginia, Indiana, Notre Dame, North Carolina and Villanova -- to name but a few -- prove it can be done. Maryland, for instance, spent $220,000 on academic supports last year, according to athletic director Dick Dull.

Of course, smaller schools, trying to compete for a share of the NCAA basketball tournament pie, hardly have the resources to provide that support. Those schools must find a way to pay that price, or else compete at a lower level.

The athlete himself must be motivated to do well in the classroom. And both the coach and the athlete, as the NCAA is proposing, must be held accountable for transgressions in recruiting, such as taking cars and cash.

For those who portray the athlete as often a victim, especially athletes from deprived backgrounds, Georgetown's Thompson says: "The student has to take a major responsibility, and that will correct a lot of problems . . . I've met a lot of very moral and ethical people. Some of the most moral and ethical people I've ever met have been in low-income areas. So those people know right from wrong. I'm not going to buy they don't know right from wrong. So they've got to share the responsibility."

Above all, administrators agree, college presidents must continue to take a leadership role in athletics. As Edward Weidner, chancellor at Wisconsin-Green Bay, said, "The initiative that college presidents are taking is long overdue. I just hope it's permanent."

Said Bob Atwell, president of the Washington-based American Council on Education, a leader in the push for reform of college athletics: "The sands of time are running out, and you've got to have something fairly dramatic. Whether the kind of stuff we're seeing at the June convention is dramatic enough, I don't know. It's all good stuff, but is it enough?

"When all the sands have run out, where are we? We are no longer able to sustain the myth or reality of the amateur model. We will have arrived, without deciding to do so, at professionalism."