My cousin got visitor visa approved 2 years ago on the basis of documents for 5 years. He is now planning to come to US for the first time. His visa is valid until 2018. I assume he can stay for 6 months on the visa.
Will there be any issue at port of entry?

Next, he is planning to apply for F1 while he is here. Can he do this?

He completed his masters from UK a few years. I guess he will have to apply for a second masters degree. Which university/ college is a good and cheap one to apply or any strategy anyone can suggest on this?

What does he need to do? Apply for college and go back to Nepal and apply for F1 visa again with that I-20?

Any suggestion will be highly appreciated.

Thanks!

if that is a valid multiple entry visa marked as M, there should be no issues entering to US. but i dont think he can change his status to f1.

I am not sure about how the immigration works for entering in USA for your cousin, but I know for sure he can apply for a change of status once he is here and has waited certain period of time (I think its 2 months after entering), he has to file a i539 before his duration of stay expires. You need to find a college, get an i20 from college, find sponsor and file for change of status.