A source close to the family tells ET that the actress' daughters, Isabella "Bella" Giannulli and Olivia Jade Giannulli, are embarrassed by the claims against their parents. Loughlin and her husband, Mossimo Giannulli, were among the 50 people charged in the scam. Court documents allege that the couple paid bribes totaling $500,000 to have their kids designated as recruits to the University of Southern California crew team, despite not actually participating in the sport.
“Olivia and Bella are both devastated by what’s happened. It's been mortifying and frightening for them," ET's source says. "They love their parents dearly and realize they only wanted the best for them but they are starting to realize how very serious the charges [against] their parents are at their expense.”
According to the source, Bella, 20, and Olivia, 19, "never expected their parents to be charged for any crime, let alone one related to them." “They’ve always seen themselves as a good, honest family that works hard and follows the rules, but everything has changed overnight," the source says. "The reality of all of this has been devastating.”
ET's source also claims that the pair are "so painfully embarrassed" that they don't want to go outside. Instead, the source says that Olivia and Bella's closest friends have been coming by their house to support them through the situation.
While Olivia -- who has run a successful YouTube channel for years and even had a deal with Sephora before the beauty retailer cut ties with her on Thursday -- is "all about her fashion and her YouTube channel," ET's source says it may be harder for Bella to leave USC.
“Bella had many close friends at USC and had built a life at the school," the source explains. "They are both so worried about their parents and the repercussions. They realize how serious the charges are and feel helpless."
A spokesperson for USC tells ET that both Olivia and Bella are still enrolled at the university. "USC is conducting a case-by-case review for current students and graduates that may be connected to the scheme alleged by the government and will make informed decisions as those reviews are completed."
TMZ, however, reported on Thursday that the two have decided to withdraw from USC out of a fear of bullying -- with their parents' full support. ET has reached out to Loughlin's rep for comment.
The actress' travel was restricted to the United States and Canada, as she had been filming Hallmark's Garage Sale Mysteries in Vancouver. Loughlin actually has projects slated through November, after which the judge has ordered her to surrender her passport on Dec. 19.
In a statement to ET on Thursday, Hallmark said they would no longer be working with Loughlin.
"We are saddened by the recent news surrounding the college admissions allegations," the statement read. "We are no longer working with Lori Loughlin and have stopped development of all productions that air on the Crown Media Family Network channels involving Lori Loughlin including Garage Sale Mysteries, an independent third party production."
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