Loaning players out reduces their potential even if their value goes up. Players drop from "exciting prospect" and "has potential to be special" down to "showing great potential" or lower. Issue cannot be avoided even when terminating loans early.
Same thing happens when you finish a season and move on to the next. Once the new season loads, all player potentials drop even if they were not loaned out.
This makes it futile to scout young and promising players since they all randomly get reduced to average players.
This is definitely ruining my experience with this game so far, would definitely appreciate if this could get resolved soon.