Even if the policy is fair to the students, which is debatable, what miffs me about this policy is that I like games. Developers don't make games for free, so they need some way to sell them. Copyright is the legal mechanism that allows people to make money off of video games. So this school is collecting a bunch of IP rights to a whole bunch of awesome games and then sitting on it with no intention of commercializing it. That means that the consumer is worse off in the long run and the purpose of copyright ("to promote the advancement of science and the useful arts" -- read as "make money off of video games") is being contravened.
Furthermore, it looks like DigiPen has no good reason for doing this! In FTA there is some vague reference to the fact that they don't know where their students get the code for their projects. I assume what they're worried about is secondary copyright liability (i.e. DigiPen didn't violate copyright itself, but it provided aid and resources to infringers). Putting aside issues of knowledge, which is generally required for secondary copyright infringement, if they are secondarily liable holding the copyrights to the products of the infringement would make them MORE culpable, not less, since then they are also materially benefiting from the infringement by gaining a valuable IP right!
So as a student, I respect your right to agree to DigiPen's policies and even defend it as a fair arrangement in consideration for the education you are receiving. I hope that you respect me, as a consumer of video games, to protest it on the theory that it decreases the number of good games I have access to.
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Yes, we will be going to OSI, Mars, and Pluto, but not necessarily in that order. -- Jeffrey Honig