If the law really does prohibit any student work from being posted publicly, then I would have to wonder aloud about whomever promoted the law and why. And this, I think, is a problem: "Constructionism relies on the fact that the entity being constructed is public. The public nature influences the student’s motivation for doing it and doing it well. If it’s not public, it’s not constructionism. We can no longer have students construct public entities on the Web anymore for education at Georgia Tech. It may be that FERPA demands that no school can use the Web to post student work publicly." Update: Audrey Watters also covers this story.
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