STATE COLLEGE, Pa. -- Penn State president Rodney Erickson admonished students who wore costumes and held offensive signs in photographs circulated on the Internet, but said in a campus-wide letter Thursday that the school won't pursue disciplinary action. 

The letter didn't specifically reference the photos or name the Chi Omega sorority, which has apologized. But Erickson said it became clear in recent days that some students "celebrated Halloween in costumes that offended others" and acted contrary to university values. 

One sign in the photo of sorority sisters says "will mow lawn for weed + beer." Two women holding signs are wearing fake mustaches. Others in the photo wore sombreros. 

Erickson said the "disturbing behaviors" were protected by free speech rights. He said he was disappointed and dismayed, but hoped that lessons would be learned from the case. 

"The simplest of those lessons is that costumes that include blackface, or that parody or imitate a person or groups of people, are always offensive to someone," Erickson said. "They convey either a lack of awareness about the human condition and human sensitivities or, worse yet, disdain for the thoughts, feelings, histories and experiences of others. 

"It is that belief that calls upon all Penn Staters, wherever they may be, to reflect for a moment on the value of diversity in the university and the broader communities we inhabit," he added. 

Also Thursday, a posting on the Chi Omega national chapter's website said the Penn State sorority has been placed on probation. The posting cited members "portraying inappropriate and untrue ethnic stereotypes at a social function." 

Chi Omega's Memphis-based national office said it was working closely with Penn State and the school's Panhellenic Council to "implement corrective educational directives for the chapter." 

"I am disappointed in the choices made by our Nu Gamma Chapter members and we regret any pain caused," Chi Omega national president Letitia Fulkerson said in the statement. "Chi Omega does not condone behavior that violates our organization's policy on human dignity."

More content from NBCNews.com:

Image posted by a Penn State sorority on Tumblr.

• 2012 warmest year in US? Odds rise to 99.7 percent
• Buzzkill: Feds fire warning shot over pot legalization
• Abortion mandate costs Planned Parenthood a few affiliates
• Contest to kill Burmese pythons in Everglades includes $1,500 grand prizes
• Video: $45 million worth of cocaine hauled in from sea

Follow US news from NBCNews.com on Twitter and Facebook

Gene J. Puskar / AP

The statue of former Penn State University head football coach Joe Paterno stands outside Beaver Stadium in State College, Pa.

A small plane flew around the Penn State campus in State College, Pa., on Tuesday with a banner urging that the school dismantle the statue of football coach Joe Paterno.

"Take the statue down or we will," the banner said.

The incident follows the release Thursday of former FBI Director Louis Freeh's report that accused Paterno of helping to cover up child abuse by assistant coach Jerry Sandusky.

And it comes on a day when Brown University, Paterno's alma mater, said it was taking his name off an annual athletic award, and a Penn State student group that manages a rallying spot for the Nittany Lions' football games changed the spot's name from "Paternoville" to "Nittanyville."

National Sky Ads, the Long Island-based company that flew the banner, told NBC News that the person who hired them is "a concerned citizen" who "takes offense to certain things." The owner, who only wanted to be identified as "Ted," confirmed that this was the same person who hired an airplane banner poking fun at Tiger Woods in 2010.

The plane is registered to Ohio-based Air America Aerial Ads, according to the Centre Daily Times. The operator of that plane, James Miller, would not identify his client, but told the Centre Daily Times that he believes in the freedom of speech.

Related: Middle school to remove Paterno mural following Freeh report

A Penn State spokesman, David La Torre, confirmed the banner's appearance but had no further information.

In an interview Tuesday with WJAC-TV, Penn State President Rodney Erickson said top university officials are looking into what, if anything to do with the 7-foot statue of Paterno, which stands outside Beaver Stadium.

“We're obviously also hearing from members of the Penn State community and far beyond. Obviously, Joe Paterno was a legend. He had a very important influence on the university for many years, so we need to look at in a comprehensive kind of fashion the things that coach Paterno did that were supportive of our educational efforts and other things,” Erickson said.

“Obviously, as the Freeh report indicates, there were clearly very bad judgments that were made along the way with respect to the Sandusky matter and that will forever be a mark against Joe's contributions.”

Watch US News videos on NBCNews.com

He added: “So we need some time to separate out the positive kinds of things with respect to education, as well as the things that would serve as a very negative reminder of the consequences of possibilities of what transpired here at the university.”

Last month, Sandusky was convicted of abusing 10 boys over 15 years, and he could face up to 373 years in prison. The Freeh report found four top university officials including Paterno, who died in January of lung cancer, could have prevented the sex abuse from continuing.

In the WJAC-TV interview, Erickson also said he’s still counting on the university’s insurance policies to cover the cost of settling lawsuits arising from the Sandusky scandal.

“At this point, we're counting on insurance funding and the other sources of funding that we identified earlier in the year, which is funds that were derived from loans - interests on loans to self-supporting units within the university - including the Department of Intercollegiate Athletics.”

He said no taxpayer, donor or tuition money would be used to pay any settlements.

Erickson also said in the interview that the university would soon submit a response to questions from the NCAA, which is considering sanctions against the school’s sports programs.

NCAA President Mark Emmert said the Penn State sex abuse scandal was so egregious that he would not rule out applying the so-called "death penalty" to the university – the cancellation of an entire football season.

Asked in an interview on PBS's Tavis Smiley show Monday night about such a severe sanction, Emmert said: "I don't want to take anything off the table. The fact is this is completely different than ... anything else we have dealt with."

"I don't know that past precedent makes particularly good sense in this case," Emmert said.

Once Penn State responds to the NCAA's letter, the organization will decide whether to press charges against the college.

Reuters contributed to this report.

More content from NBCNews.com:

• US tough on saving elephants from slaughter? Hardly, says WWF
• Uncloaked: Army testing new camo to replace flawed design
• 'No relief' from drought as heat returns to Midwest, Northeast
• Boy Scouts: We're keeping policy banning gays
• Video: Bus driver catches girl, 7, in three-story plunge

Follow US News from NBCNews.com on Twitter and Facebook