It was not a student. It was an assistant coach that reported the incident to him in which he walked into Sandusky raping a little boy in the team locker room shower.
According to the case's Wikipedia page it was a "graduate assistant", which is a graduate student who assists the couches. The same concept as a teacher or professor's assistant.
I'm not going to sit here and say I read the full Grand Jury Report, but I'm 95% sure in the report it says Paterno saw with his two eyes Sandusky taking a shower with a little kid.
If that were the case Paterno would be prosecuted as an accessory. The Grand Jury didn't find him liable for anything.