In my experience with special needs, you would place a child according to ability and accommodate for the disability. This is called Least Restrictive Environment (LRE) under IDEA. Children do not need to be failing or below grade level in order to receive services under IDEA. If your son struggles with the mechanics of writing due to a disability such as dysgraphia then he should be eligible for support services to accommodate the disability and allow him to achieve at his maximum potential. Children who struggle with the mechanics of writing often then have difficulty generating the content of written work. Too much effort is on the mechanics, no cognitive energy left for the thought process. Advocate for the lined paper and whatever other accommodations the special ed staff have suggested.
