Yeah, the insurance blokes are pretty damn stupid. Well, actually, it's quite the opposite.
They classify the S trim with the XRS simply because the S implies "sport." Believe me, I know. I've seen my $3,000 a year insurance policy. >.<
None the less, a Corolla S is a great starter car. If he's interested in motoring, there are a few simple and cheap mods to keep him occupied between school and, hopefully, work. If not, you at least know he's in one of the safest cars on the road, while keeping him happy because it looks good. More good news is that all 2010 Corollas and later come with traction control standard, so he'll have a hard time throwing it into a ditch being anything other than plain stupid.
I've also noticed that I myself have benefited from having a new car. Being new, I've babied it, while many of my friends have been 'less caring' of their cars. Because of the price and especially the insurance, I hardly ever speed and do my best to obey
every traffic law to avoid risking making my parents (HA! that's a joke...) have to pay any extra. (If you didn't pick up on that, I get to pay my insurance bills if they ever go up.) =P
In short, I say get them a Corolla. Not too powerful that they'll hurt themselves but not so slow they'll catch hell for it from their peers.
It's also fairly cheap to fix... presuming you don't have to replace a door.

I still owe my mom the $900 I promised her for my half of the repair costs.