Depends on the colleges applied to. Some of the more selective private colleges recommend “4 years” of foreign language*, so having level 3 when a higher level is available to the student** may not be an automatic reject, but will put the student at some disadvantage in admissions.
*“4 years” always includes reaching level 4 or higher; at some colleges, there may be a preference for taking foreign language all 4 years of high school unless the student completes the highest available level earlier in high school.
**The usual reason many private colleges “recommend” instead of “require” high school college prep course work at a higher level is to give themselves flexibility to admit students for whom the “recommended” course work is not available to the student.