Child is grade F student upon age up?

Normal is to start out as Grade C.

Did the Toddler reach level 5 or level 3 in all skills?

Yeah, that's what I found so weird about it

Do you have the Whispering Wishing Well? If a child or teenager wish for better grades when it is in a foul mood grades will be reduced.

I've just tested this and had no issues on mine.

Was it a normal child or a vampire or alien ? Did it happen just once child or more than one ? What was their mood on their birthday  and how did you age them up ?

Normal human sim, the toddler was very hungry and had a very low attention when I did so because for a while the option to add birthday candles wouldn't appear (probably for a few in game hours) and there are other toddlers in the household so the carers had to attend to them. I got her grandmother to make another cake and by then the option to put candles on finally appeared (on the previous cake I had made too). I put the cake on a table and got grandmother to help her blow out candles, but it wasn't working because it was on a coffee table, which I didn't realise, so her needs just kept going down whilst I paid attention to the other toddlers. Eventually I figured out what the problem was and put the cake on a kitchen counter and aged her up immediately. Now that I think about it, this might have happened because I was close to having my toddler taken away or something.

Edit: Her mood was most likely sad or even very sad because her needs were low.

Could you age one of your other toddlers (for testing . don't save - make a backup before) and see if it also happens ?

Tagging @73bb3ee9e874670a

did you age the toddler down as @P4ncaketree says ?

Ahh, this makes sense! When the toddlers update came I used households that I had saved in the gallery to play with them, and I changed the children to toddlers. I must have played with this particular household before I put them in the gallery and forgotten about it. Thanks guys!