The game will kick off at noon on Saturday, December 21, on TNT and Max. The winner will play Boise State in the Fiesta Bowl.
The offense tired to mount a comeback, but penalties and turnovers plagued its efforts.
Penalties were a major contribution to the Nittany Lions' slow start.
The Nittany Lions gave up 283 passing yards and 183 yards on the ground in the loss.
Penn State's second-half comeback bid fell agonizingly short in the game's final minutes.
Wallace was questionable in last week's game against Maryland and Washington has missed the last two weeks due to an injury.