The school announced Wednesday that the NCAA denied the school's appeal on its Academic Performance Rate (APR).
It's the same criterion that prevented Connecticut from playing in the 2013 postseason.
The APR measures players' graduation rate and academic progress over a four-year period in years prior.
Milwaukee's penalty was based on the APR from 2009-10 through 2012-13.
Milwaukee's most recent aggregate score was 908, falling below the minimum required score of 930. The bar was previously at 900.
"The academic success of our student-athletes will always be the top priority in the Milwaukee athletic department," Milwaukee athletic director Amanda Braun said in a statement. "We are aware that problems did occur in the past, but we have faced them and made changes and are accepting the consequences from the NCAA. Well before we even started the appeals process, we began implementing new processes to help all of our student-athletes have more success in the classroom."
In addition to the exclusion from postseason play, the Milwaukee team members must participate in four hours of "academic activities" in place of four hours of basketball practice next season.
The Panthers won the Horizon League tournament before losing to Villanova in their opening game of the NCAA tournament this year.
They can participate for the regular-season Horizon League title next season, but cannot play in the conference tournament or any postseason event.