FAMOUS American sporting college Penn State has been fined an unprecedented $60 million for the child sex abuse scandal that shook one of the largest and most lucrative sports programs in the US.

Other sanctions include the loss of all once-legendary coach Joe Paterno's victories from 1998-2011.

Though the National Collegiate Athletic Association stopped short of imposing the "death penalty" - shutting down the football program completely - the punishment is still crippling for a team that is trying to start over.

Jerry Sandusky, a former Penn State assistant coach, was found guilty in June of sexually abusing several young boys, at times on campus, sometimes after finding them through the charity he founded for at-risk youth.

The NCAA action came in the wake of a devastating report asserting that top university officials buried child sex abuse allegations against Sandusky more than a decade ago.

The investigative report by former FBI Director Louis Freeh found that Paterno and three other top Penn State administrators concealed sex abuse claims against Sandusky.

The NCAA said the $US60 million fine is equivalent to the annual gross revenue of the football program. The money must be paid into an endowment for external programs preventing child sexual abuse or assisting victims and may not be used to fund such programs at Penn State.

"Football will never again be placed ahead of educating, nurturing and protecting young people," NCAA President Mark Emmert said.

Emmert cautioned last week that he hadn't ruled out the possibility of shutting down the football program altogether, saying he had "never seen anything as egregious" as the Sandusky scandal.

On Sunday, Penn State tore down a statue of Paterno six months after his death from lung cancer at age 85.

The Paterno family released a statement criticising the decision, saying it was made in haste and before all the facts about Paterno's role in the Sandusky scandal were known.

In Washington, the White House said President Barack Obama believed "it was the right decision."