Well, I certainly have no personal knowledge of what either Paterno or Schembechler knew, but wasn't there a thread here in the last year where people were discussing news reports that Schembechler was told of abuse by his football players and responded with "You need to toughen up," or something similar to that? That kind of comment suggests to me that Schembechler was in fact confronted with these allegations but elected to do nothing about them. Now it is possible that these news reports are inaccurate. Someone here likely has more information on the subject.
As for Joe, I am not aware that he was ever confronted with allegations of abuse by Sandusky until the shower incident. And he did, in fact report it to Schultz and Curley, soon thereafter, no? He certainly did not say "toughen up."