PA public colleges are expensive. I don’t think repeating exactly the same applications after a year of community college would yield a smaller gap in aid.
“He got into all of the schools he applied to, which were a mix of in-state public colleges, and out of state public historically black colleges. Kicker: he got close to no merit aid from any of them”
I don’t see any mention of schools that meet need, or surprises from expectations set by net price calculators that had yielded affordable results when creating the application list. I see a lot of potential for better results through a second, more informed round of applications.
There may be still be time to do so now, or through the unfilled class lists that come out.
There is also the option of taking a gap year to work, save and apply to schools that are better financial fits.
Applying to a specific major opens department/major funding possibilities that might even yield a better result from some schools in a re-application next year.
I would love if OP were able to commit to filling that gap for his brother. I think a Penn State freshman year for an undecided student is a luxury, not a necessity. Is it worth a $5,500 freshman student loan and whatever a family can contribute? Yes. Should a freshman take on $20,500 of debt for that year? No.