No matter what level, D1 - D3 or JC, some students are not mature enough to live away from home and get the academic and athletic work done without having major difficulty.
Totally understandable, but needs to addressed before deciding what the next step is. Staying at the current D3 school is a option if he decides to get the academic portion under control and try it again next year.
D1 most likely require him to sit out a year.
Going to another D2-D3, NAIA, or JC will permit him not to have to sit out a year. D2-D3 will require the use of the one time waiver. If he goes local JUCO, that would permit him to possibly stay home and get it under control and try again after he gets his AA. NAIA is prety much the wild wild west in terms of transfer and play liberal rules.
Your original comment about going to D3 due to grades is a interesting point, many D3 schools are pretty strong academically, though not always the case.
Bottom line, unless the student athlete chooses to get his academic portion under control, going to a JC and getting drafted could be his best option to stay in the game unless he finds a school with his subject interest that sparks his interest to perform in the class room.
There are some specialized types of schools which has a athletic program such as:
Academy of Art University