Lynch replaced the late Terry Hoeppner in June and led Indiana to a 7-5 regular season. The Hoosiers are in position to receive their first bowl bid since 1993.

School officials decided Friday to keep Lynch. They made the announcement Monday after players were told during a morning meeting.

The new four-year contract gives Lynch, who was the Big Ten's lowest-paid coach this season, a base salary of about $250,000 plus $300,000 for promotional activities.

The move gives the program some much-needed stability.

Lynch is the fourth coach at Indiana since 2001, following Cam Cameron, Gerry DiNardo and Hoeppner, one of Lynch's closest friends.

It also allows the Hoosiers staff to spend the next several weeks recruiting high school players knowing the answer of who will be leading the team.

"I think that's huge because kids want to know who their coach is going to be," Lynch said. "I think once we got going this year, some of them (other coaches) may have used that uncertainty against us, so it clears that up."

Indiana made Lynch its interim coach June 15, after Hoeppner took a medical leave. Four days later, Hoeppner died from complications of a brain tumor after two years as IU's coach.

Lynch eventually signed a one-year deal to coach the Hoosiers, auditioning for a job the Indiana native said he always dreamed of having.

But he had to do more than win.

Lynch had to keep his young team together in the midst of an emotional loss far greater than players would ever face on the field. Then he had to keep them focused in the midst of a three-game losing streak that nearly derailed their bowl hopes.

Instead, the Hoosiers became bowl eligible with an early November win over Ball State. Two weeks later, they got a 49-yard field goal from Austin Starr with 30 seconds left to beat rival Purdue for win No. 7.

"It's been an incredible year filled with incredible sadness and sorrow, joy and happiness," athletic director Rick Greenspan said.

Lynch was offensive coordinator and assistant head coach during Hoeppner's two years as coach and was the temporary replacement during his medical absences, including two games last season after Hoeppner underwent a second surgery.