State College, until the mid 1950’s, was a podunk, rural, nothingburger of a town. It was akin to what Mansfield, PA is today. It was a small farming crossroads that had a small land grant university which was mostly based on agricultural studies. My grandfather was born in 1939 and grew up in Pine Grove Mills and later State College, and he had said that Lock Haven was a much bigger city and a much bigger deal than State College was at the time, back then. State College was small.

Then, in 1953 Penn State College became Penn State University. PSU also had a University president who was then USA president Dwight D Eisenhower’s brother, Milton Eisenhower. The university started expanding their offerings, attracting large federal grants, expanding their sports program, and building up and modernizing the campus and facilities. State College’s downtown and surrounding areas began to flourish. There was even talk of renaming State College to McCallisterville, and other various names, since the college had become a full-fledged university.

The town began to grow rapidly in the 1970’s as the University continued rising to national prominence. The town gained even more traction when the University joined the Big Ten Conference in 1990. State College as a result continues to grow and densify today. It now has arguably the 3rd (or, definitely in the Top 5) best downtowns in the entire state of PA, behind only Philadelphia, Pittsburgh and only a couple of others, depending on your preferences/criteria.

TLDR: There was no real need for passenger rail service to State College, until much more recently. That is why it does not exist.

Also given the mountainous terrain, it would be hard to build a continuous rail service up into Nittany Valley. You would need a series of tunnels. Just look at how treacherous 322 (Seven Mountains pass towards Lewistown) and I-99 (between Altoona and Port Matilda) are. So the cost to build that infrastructure would be quite steep, no pun intended.

Amtrak is really helping Lancaster and Harrisburg a lot - both have Amtrak stations. It’s a shame State College isn’t in on the action, too. State College has come a long way, and I imagine it will continue to do well without rail service. I mean, look at how much the airport there has expanded. How much the state is pouring into finishing I-99 and upgrading 322, and building a new 99/80 interchange. State College is still a priority site for state and federal infrastructure, I would imagine.