Ethically, you should at least talk to him about the situation. He needs to hear you say that it is an uphill battle. If you are willing to go through the work required, let him know. You may have to act as a shield between him and management and possibly a DPE. I would also let the student know that achieving more advanced ratings is not advisable, at least not 141. Part 141 allows for lower training times, but demands constant, controlled training. The flexibility of Part 61 may allow an instructor to tailor the teaching to the student in a way 141 can't do.
That's really shady and lame for management to hold on to the student, knowing he is really struggling. Unethical if you ask me.