There are many ways for him to continue studying and performing music. He can major in something else and do music privately on and off campus, he can minor, he can double major and some schools offer a double degree.
is the current vocal teacher mentioning merit money? Did your son apply for merit scholarhips anywhere?
Often state universities do offer a range of options for music, including a BM so a state university might be a good choice, with some flexibility after the first year. It’s tough at this age: they change a lot!
We always found this helpful: http://www.peabody.jhu.edu/conservatory/admissions/tips/doubledegree.html
Good luck, don’t be sad, music can be in his life no matter what path he chooses 