What's the relevance of USC? Were they part of a 3 way tie or something? If it was only a 2 way tie between PSU/Ohio, then I don't know why that happened. I've never seen a 2 way tie that didn't go to the team that won the head to head.
If it's a 3 way tie it comes down to head to head still. If there's no winner I'm not sure what's used, but I know for a fact that at some point alphabetical order is used (which would support Ohio getting the nod over PSU).
If this is an offline dynasty you could very easily use the editor to put PSU in the B1G CCG.