Penn State has a pretty reasonable path to the Big Ten title game, too. If Michigan loses two and Ohio State wins out, they're in. Michigan is unlikely to lose two, but it's not outside the realm of possibility.
That said, I'm fairly surprised that Penn State has been this good recently. Franklin just completely gave up against Michigan in the 3rd quarter, and I honestly wondered at the time if Penn State was going to come out of that game with any motivation. Seems like after they beat Minnesota, they righted themselves.