Translation:My sister is a university student and my brother is a pupil.
In American English, "student" and "school" can apply to all levels of education, from 1st grade through university. But it you want to specify, you can of course use phrases like "elementary school student", "high school student", "college student", etc., or certain expressions like "middle schooler" or "high schooler". But in my experience (native speaker in the US), "pupil" is rarely if ever used. To me it sounds either old-fashioned (it was used in the US in the 19th century) or as specifically Commonwealth English. (Leaving aside too the anatomical use of "pupil").
Even in Commonwealth English "pupil" is not used in the way it is in this sentence. You don't say someone is "a pupil"; a teacher would call a primary school class "my pupils" but the word isn't used to mean "somebody who goes to an institute of primary or secondary education".
I agree with most of what you say except we would mostly use college and university for higher or adult education and school is for kindergarten through high school. So this may help with the german in that any Shuler usually refers to someone under 18 in school. Germans use 2 different words for student where we really don't you can be a student at any age. So maybe they use pupil in this example to show that there are 2 different german words.
It is like in English for younger people if we said they went to school and they are schoolas or schoolos--female or male. We don't really have anything like this so it's just student, but there is no way to properly translate this into English. Understanding a language is something completely different.
Well in British English, at least in my opinion, it is more natural to say 'my brother is in school' instead of saying 'is a pupil' like you said. The difference being that in British English, being in school means just being stuff under 18. I get why Duo used pupil to avoid this variety in meaning, but I thought it might be helpful to know that over here you would never say you were in school if you were at university. At least in my experience
Duo wants to teach languages without the usual classroom equipment/aid and methods/approaches. But with sentences such as this, where the differentiation is so obscure and even goes without any indication ("my sister is a student and my brother is a student" is correct and accepted), it isn't really achieving that goal.
German does not use an article before jobs or similar roles (such as "doctor" or "student" or "father").
But in English, countable nouns such as "student" must nearly always have some kind of determiner in front of them, such as an article.
So when translating from German to English, we also have to translate from German grammar to English grammar.
Nowadays, youth from preschool to university are more commonly referred to as "students" than "pupils," especially in the US. The term "pupil" generally applies to a student under the direct supervision of a tutor (sense 1) or private instructor. And so, the correct expression should be "He is an MBA student."