Dyer won't play football for the Buffaloes, instead working toward an associate's degree.
Dyer was offensive MVP of the 2011 BCS National Championship Game when he was a freshman. His plan, according to his uncle, is to enroll at a school near his home in Little Rock, Ark.
Dyer wasn't eligible to play this season for the Red Wolves after the NCAA denied his request to play immediately. He transferred to Arkansas State in January after he was suspended indefinitely by Auburn coach Gene Chizik for violating unspecified team rules before the Chick-fil-A Bowl.
"There have been growing pains and bad decisions," Andre Dyer, Michael's uncle, said. "So much attention and so many influences from so many directions. I just want him to be the young man he was when he left Little Rock."
Dyer rushed for more than 1,000 yards in each of his first two seasons, including a 1,093-yard performance as a freshman that broke Bo Jackson's school record of 892 yards set in 1982. Dyer rushed for 1,242 yards and 10 touchdowns last season.
Information from ESPN.com's Joe Schad was used in this report.