Most universities have some provision for temporarily withdrawing your attendance, and freezing your progress as long as you return within their specified timeframe. (In my son’s case, it had to be within 4 years). At his school, you cannot withdraw once you are put on probation, that was important to know. During the two semesters he was out, he took first one, then two online courses that we checked in advance would be transferable credits. His gpa was not (as some schools do) wiped clean or restarted. He lived at home, where we could provide life structure that he was clearly unable to provide himself at that point.
Some universities allow for a medical leave, I’m not sure how that is different. It is also possible that her D’s will still count as progress towards her degree, since not all schools consider that failling; clearly it impacts her GPA. You need permanent access to her grades as a condition of her living there, imho. I continue to caution that things, grade-wise, may be worse than you think.
This is her sophomore year? You have no reason to believe this trend of downward behavior and academic performance is going to stop, or improve. You know that, I can see that you do. It is hard to accept, but it isn’t something you did, or something you didn’t do. It is also not the end of the world at this point, just an all-too-common huge hole in the road.
You need to decide at what point you will ask her to return home to regroup – not as punishment, although she’ll see it that way – but as a path to completing a degree, if that is indeed what she wants. You can’t want that more than she does. Go to her school’s website, and read all about probation. How does it work? Can she withdraw from school while she’s on probation, or does she have to continue and do better? (If you wait until she’s on probation, and she can’t withdraw then, and she can’t pull her grades up, she is then dismissed from the school, period.) When and how is she eligible to be readmitted? What age will she be then, and would she be a different type of student (our school, once you are over 23, you are classed as an adult and policies about most everything varied) What would you do with her in the meantime?