Late withdrawal from individual classes can be requested as an accommodation for a disability like a mental illness, but accommodations are not retroactive (you can’t walk in now with documentation and request profs go back and re-test, re-grade, or re-do anything). But even a late withdrawal may show as a W on the transcript. W’s don’t impact GPA. I honestly don’t know if it looks worse to have W’s or a lot of gaps (semesters not enrolled) on the transcript.
Medical withdrawals usually entail the student completely leaving the institution and dropping all classes as the result of, well, a medical issue. Many times, there will be little record of the student’s attendance outside the fin aid office (loans taken out will still count toward the aggregate limit, etc.) Each school will have its own policies for handling these matters, but expect to have to provide proof from appropriate professionals. Also expect that she will need to sit out for a period of time before returning and may be asked to provide proof that the issue has been treated and the student can once again be successful. The school wants to do right by its students, but needs to protect itself as well. Medical leave can be used for any medical issue, physical or mental, but the bar for returning can’t be set higher for the student with the mental health diagnosis. Watch out for this.
One thing to keep in mind, your daughter would need to be a willing participant in any of these matters. She can register with the disabilities office, but you can’t make her use accommodations. If she doesn’t want to leave school, you’ll have a very difficult time getting her to actively participate in the medical leave process.