Acutally no, in this case, Michigan beating Penn St does not matter.
Michigan finished 3rd in their own division:
Big Ten East Divisional Standings:
1. Penn St 9-1
2. Ohio St 8-1
3. Michigan 7-2
Then, while it may splitting hairs, Penn St has a better winning percentage and has played more teams and beat more teams with a winning record. I rank Penn St 1 spot ahead of Michigan, but it really doesn't matter since I'm only taking conference champions...Michigan could be ranked ahead of Penn St and it wouldn't matter.
My rankings:
>Teams in bold is who I would have in the 4 team playoff - as previously stated, I only believe conference champions should be eligible.
>Number in parenthesis is wins vs teams with winning record
>Quality win is any win vs a IA/FBS team with a winning record
>Quality loss is any loss vs a IA/FBS team with a winning record (regardless of margin of victory – debatable, some could call some of those bad losses even though the team had a winning record)
>Questionable Performance is an uninspiring win or a game that was nearly a loss vs a :500 or worse team.
>Bad loss is any loss vs a IA/FBS team with a :500 or losing record
>Wins or losses vs IAA / FCS teams are not factored for or against teams (shown in overall w / l record, but not in the wins vs teams with winning record parenthesis number or questionable / bad loss category if applicable).
>I only use head-to-head for ranking order when records are the same, head-to-head will trump all else when the w/l record is the same.
1. Alabama 13-0 – (9)
Best wins: 9-3 vs USC 52-6, vs 10-3 WKU 38-10, at 8-4 Tenn 49-10, vs 8-4 aTm 33-14, at 7-4 LSU 10-0, vs 8-4 Auburn 30-12, vs 8-4 FL 54-16
Questionable Performance: at 5-7 Ole Miss 48-43
2. Ohio State 11-1 – (5)
Best wins: vs 9-3 Tulsa 48-3, at 10-2 Oklahoma 45-24, at 10-3 Wisconsin 30-23, vs 9-3 Nebraska 62-3, vs 10-2 Michigan 30-27
Quality loss: at 11-2 Penn St 21-24
Questionable Performance: at 3-9 Michigan St 17-16, vs 6-6 Northwestern 24-20
3. Clemson 12-1 – (6)
Best wins: at 8-4 Auburn 19-13, vs 9-3 Troy 30-24 (or is this questionable?), at 8-4 Georgia Tech 26-7, vs 9-3 Louisville 42-36, at 9-3 FSU 37-34, vs Virginia Tech 42-35
Quality loss: vs 8-4 Pitt 42-43
Questionable Performance: vs 6-6 NC St 24-17
4. Washington 12-1 – (5)
Best wins: vs 8-4 Idaho 59-14, vs 9-3 Stanford 44-6, at 8-4 Utah 31-24, at 8-4 Wash St 45-17, vs 10-3 Colorado 41-10
Quality loss: vs 9-3 USC 13-26
Questionable Performance: at 3-9 Arizona 35-28
5. Penn State 11-2 (5)
Best wins: vs 10-3 Temple 34-27, vs 8-4 Minnesota 29-26, vs 11-1 Ohio St 24-21, vs 8-4 Iowa 41-14, vs 10-3 Wisconsin 38-31
Quality loss: at 10-2 Michigan 10-49, at 8-4 Pitt 39-42
6. Michigan 10-2 – (3)
Best wins: vs 10-3 Colorado 45-28, vs 10-3 Wisconsin 14-7, vs 11-2 Penn St 49-10
Quality losses: at 8-4 Iowa 13-14, at 11-1 Ohio St 27-30
Questionable Performance: vs 6-6 Indiana 20-10
7. Oklahoma 10-2 (3)
Best wins: vs 8-4 Kansas St 38-17, at 10-2 West Virginia 56-28, vs 9-3 Oklahoma St 38-20
Quality losses: vs 9-3 Houston 23-33, vs 11-1 Ohio St 24-45
Questionable Performance: at 3-9 Iowa St 34-24
8. Wisconsin 10-3 (4)
Best wins: vs 7-4 LSU 16-14, at 8-4 Iowa 17-9, vs 9-3 Nebraska 23-17, vs 8-4 Minnesota 31-17
Quality loss: at 10-2 Michigan 7-14, vs 11-1 Ohio St 23-30, vs 11-2 Penn St 31-38
9. Colorado 10-3 (4)
Best wins: vs 7-5 Colorado St 44-7, at 9-3 Stanford 10-5, vs 8-4 Washington St 38-24, vs 8-4 Utah 27-22
Quality losses: at 10-2 Michigan 28-45, at 9-3 USC 17-21
Questionable Performance: vs 4-8 UCLA 20-10
10. Stanford 9-3 (2)
Best wins: vs 8-4 Kansas St 26-13, vs 9-3 USC 27-10
Quality losses: at 11-1 Washington 6-44, vs 8-4 Washington St 16-42, vs 10-3 Colorado 5-10
Questionable Performance: vs 4-8 Oregon St 26-15 (could’ve won by more), at 4-8 Notre Dame 17-10
11. USC 9-3 (2)
Best wins: vs 10-3 Colorado 21-17, at 11-1 Washington 26-13
Quality losses: vs 13-0 USC 52-6, at 9-3 Stanford 10-27, at 8-4 Utah 27-31
Questionable Performance: none other than the losses
12. Western Michigan 13-0 (3)
Best wins: 7-5 Eastern Michigan 45-31, vs 9-3 Toledo 55-35, vs 8-5 Ohio 8-5
Questionable Performance: at 3-9 Kent State 37-21
13. Houston 9-3 (3)
Best wins: vs 10-2 Oklahoma 33-23, vs 9-3 Tulsa 38-31, vs 9-3 Louisville 36-10
Quality loss: at 9-3 Navy 40-46, at 8-4 Memphis 44-48
Bad loss: at 5-7 SMU 16-38
14. Oklahoma State 9-3 (3)
Best wins: vs 8-4 Pitt 45-38, vs 10-2 West Virginia 37-20, at 8-4 Kansas St 43-37
Quality loss: at 10-2 Oklahoma 20-38
Questionable loss: vs 6-6 Central Michigan 27-30
Bad loss: at 6-6 Baylor 24-35
15. Louisville 9-3 (1)
Best wins: vs 9-3 Florida St 63-20
Quality loss: at 12-1 Clemson 36-42, at 9-3 Houston 10-36, vs 7-5 Kentucky 38-41
Questionable Performances: vs 4-8 Duke 24-14, at 2-10 Virginia 32-25
16. Florida State 9-3 (3)
Best wins: at 10-2 USF 55-35, at 8-4 Miami 20-19, vs 8-4 Florida 31-13
Quality loss: at 9-3 Louisville 20-63, vs 8-4 UNC 35-37, vs 12-1 Clemson 34-37
Questionable Performance: at 6-6 NC St 24-20, vs 6-6 Wake Forest 17-6