Over 60 students being investigated for cheating

The USC Judicial Council for the Undergraduate Student Government is knee-deep in investigating the cheating scandal at the school, and we're told students are blowing the whistle on scores of their fellow students who allegedly cheated their way into the University.

Sources directly connected to the Council tell TMZ, USC students have referred 60 of their classmates to the Council, claiming they used underhanded or illegal means to gain admission. One source tells TMZ, there is "hysteria" on the campus in the wake of the scandal, and the accusations are flying.

We're told of the 60, the Council determined 57 allegations were unfounded.

As for the remaining 3 ... our sources say 2 of the students are freshman and used the services of the ringleader of the scandal, Rick Singer, who contacted the athletic department on behalf of both of them. Our sources say there is some connection to the men's lacrosse team, however, they are quick to add they have not determined if there was any wrongdoing ... at least, not yet. We're told the 2 students appeared "very nervous" after the scandal broke.

As for the third student ... our sources described her parents as "unindicted co-conspirators" who live on the East Coast. The case was referred to the Judicial Council by a faculty member. We're told the student in question is a junior who used Rick Singer to help gain admission.

As for Lori Loughlin's daughters, Olivia and Isabella, we're told the Judicial Council was about to begin an investigation, but members were called to the Provost's Office on March 14 and were asked to stand down -- the University would handle the matter. TMZ broke the story ... Olivia and Isabella will not be returning to the school. 

TMZ has obtained the document in which the Council surrendered the case to university officials.

The Judicial Council has the power to suspend students for one semester and to place students on unlimited academic probation.