The identity of the released student is not being shared at this time because of concerns for the young man's safety, the source told CNN.
The two other students remain hospitalized, one with a spinal injury that will require long-term care, officials said.
The shooter, identified as Jason J. Eaton, 48, was arrested on Sunday and charged with three counts of attempted second-degree murder. He pleaded not guilty on Monday and is being held without bail.
The shooting victims are Hisham Awartani, a student at Brown University in Rhode Island; Kinnan Abdalhamid, a student at Haverford College in Pennsylvania; and Tahseen Ali Ahmad, a student at Trinity College in Connecticut, according to the Institute for Middle East Understanding.
The motive for the shooting is still under investigation, but authorities said it may have been a hate crime.
"Although we do not yet have evidence to support a hate crime enhancement, I do want to be clear that there is no question, this was a hateful act," Chittenden County State's Attorney Sarah George said Monday.
The three students, who are all of Palestinian descent, were visiting one of their relatives in Burlington for Thanksgiving and were wearing Palestinian scarves when they were shot.
Burlington Police Chief Jon Murad said the shooter did not say anything before firing at least four shots at the students and fleeing the scene.
The families of the victims said in a statement that they believe their sons were attacked for being Palestinian. "We believe a full investigation is likely to show our sons were targeted and violently attacked simply for being Palestinian," the families said.
Several civil rights groups also urged the authorities to examine whether the shooting was driven by hate. The attack came amid a surge in anti-Muslim and anti-Arab incidents in the US since the war between Israel and Hamas in Gaza started on Oct. 7.