I think the argument for Greek Life is that it provides an option for students.
Im not exactly sure what "fraternity culture" means. Or what it is? To paint the entire Greek system with a broad brush due to this one incident seems unfair.
Do I think PSU will cease to exist or it will fall apart if the Greek system is shut down. Nope. Do I think that it will lose a bit of the flavor of what has shaped PSU over the last 50 years. Ya, I think it will.
But my question is why shut it down? What will it fix? What will it make better?
Shutting it down will be an option, but as you say, won't solve the larger problem of binge and excessive drinking.
I think the fraternities need to be a big part of the solution to keeping them. Be proactive and propose measures that will keep them relevant, keep them 'in line', address what they want the perception of their culture to be (via actions and promotion), etc. Get in front of this and go to the University and indicate that they want to help and lead and collaborate about this and any other issues that hinder their stated, but often overlooked, purposes as fraternal organizations. That often includes providing various positive services to the university community and beyond the campus boundaries as well. Make that have a real meaning and purpose and results.
My guess is that this has been attempted before, but has not stuck or has been ineffective enough to see the problem persist. So they need to come together and figure out how to make it different from this point. The university admin has all the reasons they need to come down hard at this point. If the fraternity system wants to stay in place in University Park and elsewhere in the PSU system, they need to go beyond being merely contrite, and prove their maturity and common sense in addressing the issue and finding common ground allowing them to stay in place.
It's a little like the parenting technique of taking all the toys away from a young child who does something 'bad' (relatively!). Take them all away, and allow the child to earn back one at a time for good behaviors. Incentivize the behaviors wanted. There is some young adult equivalency to be found somewhere in there, I'm sure.
I happen to think the beyond-Greek drinking issue needs to be approached differently, too. Beer legal at 18 may sound like a bad idea on the surface, and maybe it ultimately is, but deserves some thought and study. Alcohol prohibition isn't coming back, so how is it all best controlled? An argument can be made that it isn't being controlled all that well as is all across the country.