After sitting out the 2018 season due to transfer rules, Holmes played safety for the Nittany Lions in 2019.
"The use of racist and dangerous behavior fosters an unsafe environment for marginalized communities at Penn State, and it should not be simply condemned."
The chapter originally claimed Penn State violated its federal rights to due process and engaged in conspiracy and fraud. The lawsuit sought unspecified damages.
The cancellation "in no way reflects" Penn State's plan for the fall semester, which President Eric Barron will announce on Monday, June 15.
"We are making this change to give Penn State applicants a choice that will ease the anxiety that many future students and families are experiencing as a result of test-taking disruptions due to the COVID-19 pandemic."
