Mike, I would say, as a student starting my third year, that the flute
should be fine for him. If he has any inclination to continue with the
flute into college, say in a marching band, or chamber orchestra, or
whatever, even jazz, it will be time enough to upgrade then. If he keeps
this flute in good condition, you'll be able to recover what you spent
initially, and only be out the maintenance that you'd have no matter
what he plays!
Upgrading when he's ready will be a pretty personal thing, depending on
what sound he's looking for. The Yamahas are said to have an "easy to
play, fat sound" which is good in ensemble playing.

That's my humble opinion.
Janey