What does it mean to be overqualified for a job? Sure, having a Ph.D. might mean you’re too overqualified to become a greeter at Walmart, but what if you took your Ph.D. in Ancient Egyptology? While there are legitimate reasons not to hire someone for being overqualified, you shouldn’t have hired them in the first place.
This person was let go from their job because they exceeded the requirements. They had already worked there for several years at that point, so firing them for being overqualified wouldn’t have made sense at that point. Also, the OP’s friend expressed their desire to continue working there, regardless of their credentials, but that didn’t help their case.