There will be no playoff this year, and short of a few minor miracles, no division championship. Here's the good that I believe can come from this disappointing loss:
This will allow the coaches and players to reevaluate, and evolve to be able to beat better teams.
It wasn't just the offense that lost that game. The defense was whipped as well. For two seasons, Michigan has been mostly relying on a defense that is so effective with its man pressure that overwhelms every opponent. But that defense finally met its match. So they will have to improve and evolve.
PSU was unusual in that it had playmakers at four positions on offense. Mismatches in the passing game and over-aggressive 2nd level flow in the run game were exploited. This time, the pressure didn't seem to rattle the QB- he was on the money with almost every throw. It was painful. I believe the experience will serve Michigan well in the long term preparing for teams with higher talent levels.
Maybe more importantly, the offense now has license to stop playing so conservatively. To develop and work on the vertical passing game one way or another, even if that is riskier. Just as teams seem to get a little bolder with their playcalling in bowl season, the offense can explore a few more possibilities as they try to get better on the OL and at receiver.
In a way, they are now free to develop (what is still a fairly young team) for the long run. They can also beging playing some younger players at various positions (including QB) that they may not otherwise take a chance on.