Here again I agree that his argument is at best a tenuous one. The Supreme Court has been confining due process cases to three categories: life, liberty and property and his case doesn't seem to trigger any of the these. However, if he has a good lawyer, things might be different and the school may be willing to settle.
On appealling the school's decisions, the critical issue here is whether the school's investigation has adjudicatory effect. Since he would probably end up in Fed. court if he sues, the school is likely to raise res judicada defense. If the school's investigation was conducted in a formal, judicial like way, its decisions may have claim or issue preclusion effect and thus bar him from litigate these issues again.
To sum up, I think he had a cause of action very early on, but unfortunately he messed things up and now it's too late.