There ought to be a fairly generous set of circumstances in which a player can transfer and play immediately. Change of coaches, ends up not being a good fit, new recruit takes their spot. I mean it's not the kid's fault another can play at a higher level. If there's a team that can use him where's the harm? Besides the financial, it also puts kids at risk of the 5 to play 4. If the OP's kid breaks his arm at the beginning of next season then he's not going to get to fulfill his college eligibility. Zero tolerance rules very rarely make sense and this is one of them. In a lot of cases the athlete is being punished for something out of their control.
And the whole "the student needs a chance to adjust to their new surroundings". By that way of thinking no incoming freshman should be allowed to play.