simbobs, that's a real shame. My Ds was in a similar boat (but still at home and at school) when he was about 16. He struggled to organise himself and felt under too much pressure but really wouldn't tell anyone. He hated himself for being in a mess and not coping. He had undiagnosed dyspraxia. I'm not saying that's what your DSs friend has, but DS came on leaps and bounds once he knew that there was a reason for being the way he was, he's been able to put in better strategies and we've monitored him more closely. Having less subjects on at a time (with less people hassling him) has definitely helped.
Student support is definitely the way to go but I think i might be tempted to ask friends parents if they've heard from him recently and drop in that your DS mentioned that he thought he was struggling a bit. To be honest though it sounds like they won't be much help.
I take it he got lower loan as they have decent income but their income is already tied up paying debts? I'm not sure how it works in England, but I'm sure in Scotland they can declare themselves independent and not getting parental support and are then able to borrow a bit more. That might be worth looking at. Sounds though as if he just isn't managing income well either. a loaf of bread and some spread & cheese and/or meat will be a lot cheaper for lunches than buying a meal deal every day.
I've done a couple of shopping deliveries to the halls. Even if it's just ready meals/things easy to heat up, that is probably still going to be cheaper than buying every day and living off take-away.