he is a smart guy, I am sure anything important is truecrypted
you cannot give students laptops to use full time and lock them down. I am not sure it is legal to monitor computer usage at home especially if there is no consent. Since these some of the kids are high school age, they will be able to bypass whatever security you install. It is very likely that the students will be more knowledgeable than the staff at school - when they realize that a ubuntu livecd or a virtual machine is not restricted or monitored they will use it (or they will reformat the machines at home). You should not allow the students to bring the machines home or you should have the students actually own all of the machines. Any restrictions should be in the network hardware at the school and not in the machines or else it will not work.