Issue the student a verbal warning. List specific problems, adequate solutions, and give the student the opportunity to improve his/her work practices.
If the student does not improve issue him/her a written warning (e-mail is perfectly acceptable). List specific problems, adequate solutions, and the ways in which the student has failed to improve since the previous warning. Issue the student a specific timeframe in which to improve. Save a copy of this correspondence for your records.
If the student still does not improve, you are free to terminate the student. He or she must be notified in clear terms that the position is no longer available to him/her, and reminded of the reasons why. Financial aid must be notified of this immediately.