Answer: Under FERPA, in this case the school does need to follow the parent’s wishes, unless there is some court order preventing the parent from exercising those rights. The sister does not have any legal custody or guardianship, she’s just a caregiver and sister, so the parent’s rights are primary and controlling over all others. That is true until the student turns 18, at which time all FERPA rights transfer to him. At that time, he even could refuse to let his parents see his records.
An individual acting as a parent in the absence of a parent or guardian meets the definition of parent in FERPA. 34 CFR §99.3. However, if a parent or legal guardian is present and attempting to exercise FERPA rights, their rights trump others.
The school could give the youth access to his educational records. Although FERPA does not specifically guarantee the rights of unaccompanied youth under 18, the law does permit schools to allow students under age 18 to have access to their education records and provide consent for disclosures, as long as those rights do not supersede the rights of their parents. There is guidance on this point in questions 5 and 6 of this document: https://www2.ed.gov/policy/gen/guid/fpco/pdf/ferpa-disaster-guidance.pdf
Note: Nothing in FERPA changes the student’s McKinney-Vento rights. As an unaccompanied youth, he has the right to choose to remain in his school of origin or attend the school near where he is staying. The district must give priority to his wishes. Those are the McKinney-Vento requirements. The parent of course is welcome to pursue family reunification services from community resources. But the school has to comply with McKinney-Vento. If the parent has refused to let the sister excuse absences and otherwise be involved, then the district can allow the youth to do that on his own.