I can't imagine the school dropping scholarships. I'll be shocked if the school doesn't just eat the loss and let the students keep their scholarship. Not the students fault, and taking away the scholarship would just for some more bad PR.
They'll either have to go on academic scholarship or walk-on and play FB. FB players aren't allowed to be on academic scholarships.
I do think this is going to hurt PSU a lot more than USC since State College is basically in the middle of nowhere and a lot of people seem to be claiming to be "done" with the school (either because they're disgusted with the scandal, disgusted with the school for "not defending themselves", or just bandwagon fans who aren't going to support a losing team).