Withdrawing won't affect his GPA, but failing will... then again, I was told that retaking a failed course offsets the hit the failed course provides, but I don't know how that's possible b/c those three credits from the failed course don't disappear... not that his GPA really matters for much of anything - unless of course he wants a career in his field of study - in which case it matters. I just applied for two internships through the Arsenal and they asked about my freaking HIGH SCHOOL GPA, which is 16 years old... how could that even matter at this point?
Anyhow... I say he should opt for failing... take his GPA hit. Then retake the course whenever and wherever the school will allow him to take it. Be prepared for the school to say no to him taking it elsewhere. If they let him, they have to let everyone, ya know?
Applying for student loans is easy... The FAFSA is a giant pain in the ass b/c it's long and requires you to dig up so much danged information, but it's not impossible to do and since he's been living on his own "independently" for over a year, he'll only need his (and your) tax info for last year to apply, rather than needing to dig up his parents' too. I remember doing my FAFSA when I returned to school - annoying but so worth it in the end when I received that piece of paper that said I was done with school. This is also how they would determine if you're eligible for pell grants (I was not) or other grants. Scholarships can be found on the web pretty easily. I can't remember the name of the site I went to, but if I run across it, I'll share it.