Penn State and Southern California both were squeezed out of the national championship picture.

But the two storied football programs with high-profile coaches and matching 11-1 records will square off New Year's Day in a marquee matchup at the Rose Bowl.

"Maybe this is the best game in the country," USC coach Pete Carroll said last night.

The Trojans finished No. 5 in the Bowl Championship Series standings, while the Nittany Lions were No. 8. USC was No. 5 in the final Associated Press rankings and Penn State No. 6.

"We're delighted to have an opportunity to go out there to Pasadena and play against a team with the caliber and tradition of Southern Cal," Penn State coach Joe Paterno said. "We're excited. ... We realize we have a very formidable challenge.

"... I think [USC] is one of the two or three best teams in the country."

Carroll is 87-15 in eight years as the Trojans' coach, with two national championships. Since 2001, he has the best winning percentage (85.3 percent) among Division I-A coaches with at least five years of experience.

Paterno, completing his 43rd season, is the winningest coach in major college football with 383 victories. He also has won two national titles and is the all-time leader in bowl appearances (35) and victories (23).

"To have a chance to coach against coach Paterno is a great honor," Carroll said. "We're going to give him everything we got, but we know we're up against the best of all time."

USC, which has won 85 of its past 95 games, is headed to its seventh consecutive BCS game following Saturday's 28-7 romp of rival UCLA at Rose Bowl stadium. The Trojans have posted seven consecutive 11-win seasons and captured seven consecutive Pac-10 titles.

This will be the first Rose Bowl matchup of Pac-10 and Big Ten champions since Jan. 1, 2004, when USC defeated Michigan, 28-14, to clinch a share of the national title.

"We think the world of this opportunity," Carroll said. "To put Penn State as a matchup is extraordinary for us. I think it will be of great interest across the country."

The Lions ended their regular season Nov. 22 with a 49-18 victory against Michigan State. That win clinched a share of their third Big Ten crown and punched their ticket to Pasadena.

Paterno, who turns 82 in 13 days, had hip replacement surgery the day after the season finale against the Spartans, but returned to work a week later.

Speaking publicly for the first time since the surgery, Paterno said he felt pretty good this past weekend and actually got out of the golf cart during practice.

He would like to be back on the sideline for the Rose Bowl after spending the past seven games working from the coaches' booth.

"I'm feeling good," Paterno said. "I'm walking around pretty good. I think I'm going to be able to be on the sideline. I hope to. I'd hate to miss that experience."

The Trojans will be playing in college football's oldest bowl game for a record 34th time. The Lions will be making their third trip to the Rose Bowl, but first since the 1994 season.

The all-time series between Penn State and USC is tied, 4-4. The Lions and Trojans will be playing in a bowl game for the third time.

USC defeated Penn State, 14-3, in the 1923 Rose Bowl, the first played in the present stadium. The Lions defeated the Trojans, 26-10, in the 1982 Fiesta Bowl.

The Lions have won their last three postseason games, including victories in the Orange, Outback and Alamo Bowls.

Penn State and USC had two common opponents -- Oregon State and Ohio State.

USC blasted the Buckeyes, 35-3, while the Lions beat Ohio State, 13-6. The Lions, meanwhile, trounced Oregon State, 45-14, Sept. 6 at home, but the Beavers shocked USC, 27-21, less than three weeks later, knocking the Trojans from the No. 1 ranking.

"All year, for whatever reason, the loss we had hung on us," Carroll said.