Yes he could sit out next year and and redshirt and still have 3 years left. I would be shocked.
Here is the Big Ten Rule. He would have to sit out the year and and have 2 years of eligibility left. The only exception would be if Penn State were to grant him a full waiver.
Here are the specific Big Ten intraconference transfer rules from the conference.
Intraconference Transfer Rules.
1. Pre-Matriculation. A prospective student-athlete who has signed a tender from a Conference institution and has not yet triggered transfer status per NCAA Bylaw 14.5.2 (conditions affecting transfer status), is subject to the following intraconference transfer requirements:
a. Signed National Letter of Intent. A prospective student-athlete who signs a valid National Letter of Intent (NLI) with a Conference institution but subsequently enrolls at an alternate Big Ten institution shall be required to complete one (1) full year of residence at the alternate (i.e., certifying) Big Ten institution and shall be charged with the loss of one (1) season of eligibility in all sports. These penalties shall be applied regardless of any decision made by the NLI Steering Committee on behalf of the prospective student-athlete.
1. Exception – Complete Release by Signing Institution. If the Big Ten institution at which the prospective student-athlete originally signed the NLI grants a “Complete Release” from the NLI, the prospect shall be permitted to enroll at any other Conference institution without penalty.
2. Exception – NLI Declared Null and Void. Should the NLI become null and void prior to the prospective student-athlete’s matriculation, the prospective student-athlete shall be free to enroll at any other Conference institution without penalty.
b. Signed Tender without National Letter of Intent. A prospective student-athlete that signs a valid tender with a Conference institution but subsequently enrolls at an alternate Big Ten institution shall be required to complete one (1) full academic year of residence at the alternate (i.e., certifying) Big Ten institution and shall be charged with the loss of one (1) season of eligibility in all sports. Upon mutual agreement of the two involved Conference institutions, this penalty shall be waived by the Chair of the Academics and Eligibility Subcommittee.
2. Post Matriculation. A student-athlete that has signed a tender from a Conference institution and has triggered transfer status per NCAA Bylaw 14.5.2 (conditions affecting transfer status), may not represent an alternate Big Ten institution in intercollegiate athletics competition until the individual has completed one (1) full academic year of residence at the alternate (i.e.,
certifying) Big Ten institution and shall be charged with the loss of one (1) season of eligibility in all sports.
3. Pre- and Post-Matriculation Exceptions
a. Cancellation of Tender Due to Inadmissibility. When a prospective student-athlete is inadmissible to the institution for which a tender has been accepted, the tender shall be considered null and void and the intraconference transfer penalty does not apply.
b. Dropped Sport. When a Conference institution drops the student-athlete’s sport in which the student-athlete has participated, the intraconference penalty does not apply.