SharePoint Online - Picture library permissions

I would recommend not using folders or permissions. There is a setting on libraries that allow students to edit their own entries only. What you should do is create views, if you want it by student you can group by created by, or date. You could have a default view ordering the photos by create date descending. Adding folders kind of just complicates it.

You could also have default view called "My photos" and filter it by created by = [Me] that way they just see their own, but then supply another page or instruct how to change views to see other photos.