The school announced Monday that Masiello, who had been coach of the Jaspers for three seasons, will be on unpaid leave until he gets the degree. During his absence, associate head coach Matt Grady will lead the program.
Masiello, who has a 61-39 career record at Manhattan, led the Jaspers to a 28-5 record this season and the Metro Atlantic Athletic Conference tournament title. The Jaspers lost 71-64 to Louisville in the NCAA tournament.
Within four days of the loss to his former college coach and boss, Rick Pitino, Masiello agreed to become coach at South Florida. Then it came to light Masiello didn't get a degree from Kentucky and the job offer was rescinded.
Manhattan waited almost a week before revealing the decision to allow Masiello to return to his job.
''After an extensive review of the situation and extenuating circumstances, we determined that Mr. Masiello executed poor judgment but did not intentionally misrepresent himself in applying to the college,'' Manhattan president Brennan O'Donnell said in a statement.
He said Masiello intended to take summer courses after graduating but didn't. Masiello will complete his degree this summer, O'Donnell said.
Masiello said he is ''extremely grateful and humbled by the opportunity'' the school is giving him.