teaching - Handling plagiarism as a TA

To give some background, I am a TA at UCLA for a lab class. They submit their assignments to TurnItIn, which you may know highlights any text pulled from another place.

I made it clear that they are not to work together and that no text in their reports should be found "anywhere else in the universe."

After the first week I caught a group of two plagiarizing. I repeated the "your text should not be found anywhere else in the universe" talk. I gave a long speech about academic honesty and such. One of the plagiarizing students dropped the class herself. I didn't take action on the other, besides a stern talking-to.

This week, two more students blatantly copied chunks of the other's paper. Whole paragraphs. I couldn't believe it -- I had just explained to them the week prior how easy it was to spot plagiarism. I brought them outside class one at a time and asked them what happened. I showed them the highlighted TurnItIn gradereport and their reports side-by-side. They each said they worked together, but didn't copy (slim chance. And still against the rules.)

Now the issue:

The professor that oversees my class doesn't have time to talk to me; hence I am here. He has given me two options: do nothing, or report them to the Dean of Students. If I do the latter, the punishment will extend beyond their grade -- they will probably fail the class, or even be suspended.

I want to punish them. But I don't want to ruin their undergraduate lives. Is my professor right -- I only have two options? (I cannot find any school-specific information about this.)

Or is there a better, less obvious way to handle this?

Update:

I talked around. It turns out that this kind of violation is serious, but it's not going to destroy their life. The Dean of Students people tend to be pretty reasonable when it comes to sanctions from what I hear. So I'm reporting it to them.