Look, this isn't hard to understand.
1. The Nittany Lions are a football program.
2. Their chief incentive is to win bowl games.
3. They win bowl games by fielding athletically superior teams overseen by knowledgeable training staff.
4. If an organization is to be punished, whether it be a bank or a football team, one of the chief avenues of doing so is to destroy the warped incentive that led them astray in the first place. In the case of a bank, you take away incentive to load up on risk (and therefore on potential profit).
5. A football team is entirely composed of human capital. There is no other capital, unless you want to count stadiums and weight rooms. The NCAA isn't about to take a bulldozer to a stadium. So the only way to punish the Lions is through their human capital because that's all they are.
6. The padded salaries of the coaches are paid because of TV deals and the ability to recruit superior athletes vis-a-vis scholarships. That's how the coaches get paid because that's how the program makes money. Consequently, you have to punish the players no matter what. That's how they win, that's how they get paid, that's what made them cover up the rape, so THAT'S how they get punished.
It's that simple.
And yeah, it sucks.