I’d start by reading this BEFORE he goes to the FA office.
https://www.fastweb.com/financial-aid/articles/federal-financial-aid-and-the-independent-student .
I can’t tell from your post whether he could qualify for the last scenario, but if he can this would be the way to go. Read the part about “Changing your status” carefully. He needs to meet with someone who has the power to do this. He should bring some documentation with him–I would start with something in writing from the psych unit, stating the date of admission–so the school and can tell this is a new development and any kind of diagnosis stating what you have here re future employment. (I would NOT ask the hospital to write something new for this until after the meeting with FA, but if you have some kind of documentation, I think that would help. )
Agree he should make an appointment with the FA office.
Poor kid!