as they are entitled to rely on their instructor's judgment as to whether they have the necessary skills to be released for the flight.
Yes and the student will have the required skills and will have demonstrated them.
The student can be the best you ever had and very competent, they can still pull a blinder out of the hat and do something totally daft. In fact its the students that have sailed through that can pull the biggest blinders.
Usually something like this doesn't happen on the first or even second solo. Its a bit down the line on consolidation flights. The student starts feeling more relaxed, more confident, then when something starts going wrong they don't quite catch it in time or do something daft like put the nose down in the flare while ballooning instead of going around.
I wouldn't blame the instructor in the slightest if it was a one off, these things sometimes happen.
The clue is in the "training center" its a sausage factory. They really don't care what the student experence is or for that matter if they will come back. They are an aircraft down for 2-3 weeks and have now lost 7 hours flying per day as a result. This will knock other students back on thier courses and deprive instructors of pay. It won't be worth the risk of another plane getting stuffed in.