A combination of funds, including the football program's financial reserves, will be used to pay the fine, Rodney Erickson told CBS' "Face the Nation." The NCAA imposed the fine last week along with a four-year bowl game ban, reduced football scholarships and the forfeiture of 112 wins.
"And in all likelihood the university will have to extend the athletic department a long-term loan that they can pay back as they get on their feet, and as we adjust their budget going forward in the football program," Erickson said.
Asked whether Penn State had put too much emphasis on football, Erickson called the athletics program "a tremendous success" but said changes are being considered.
"To the extent that some parts of intercollegiate athletics perhaps became too separate, and became too much areas unto themselves and not sufficiently wrapped into the rest of the University - that's something that we really are looking at," he said, adding that the critical report by former FBI director Louis Freeh had made recommendations on the issue.
Retired assistant coach Jerry Sandusky was convicted last month of 45 counts of sex abuse and is awaiting sentencing. Longtime coach Joe Paterno was ousted in the wake of the scandal and died of lung cancer in January at age 85. The forfeiture of victories imposed by the NCAA imposed erased 14 years of Paterno's victories, stripping him of his standing as the winningest coach in the history of big-time college football.
Erickson also said people will have to judge for themselves the legacy of Paterno.
"When some years pass and we get more perspective, we will also come to understand that he had a very important role over 60 years in the education that - our educational goals and our aspirations at the university - and nothing will change that part of Coach Paterno's legacy."
He said he had the coach's statue removed because it had become "kind of a symbol, a kind of a lightning rod" as well as an "open wound" for child abuse victims across the nation. But he did not rule out the possibility of the statue - now "in a safe place" - coming back or being put on display somewhere.
"It needs perspective, it needs time," he said.
Erickson said he was horrified by reading accounts of abuse in the report by the grand jury that charged Sandusky.
"The first question that came to my mind is, 'How could something like this have happened at a place that I thought I knew after 35 years quite well?'" he said. "And so I think many of us are still asking that question."