My alma mater gave everyone Unix accounts with public www folders by default, but I don't know if that's the case for you guys.
Tell the kids to use FTP, SCP, or whatever is easiest--test it out yourself and get it working. FTP can be quite easy, but make sure you can walk them through whatever workflow you decide on.
Also, you might have better luck talking to the administration over the IT guys. My experience with IT guys has been "the policy must be followed... Unless someone higher up says otherwise".
And I like the web hosting idea. Who are the non-evil web hosts and registrar's nowadays?
Do you think we should just go with one and encourage them to FTP everything?