Yes. You receive one attempt at each year with fees covered, the rest you pay.
So... if he had completed first year and failed second year, then restarted a different course, he would pay for first year (already got it free once) and second year (ditto) but get third and fourth year free (as he had never sat a third and fourth year before).
Technically it has nothing to do with his failing, it's a general rule, one year at each year free (very poor phrasology by me, but hopefully the meaning is clear).