Hide schools Wifi password?

Yes and no. If they are using a PSK (pre-shared key; a.k.a. "a password"), you can see it. End of story. Even if you could hide it in the UI, you can see it where it's stored on disk. This is true of Windows as well (use REGEDIT.EXE), Linux, and cell phones as well. It was your IT department's choice to go with the pre-shared key (simple password), they know that it's stored as plain text on your computer an visible to you.

If they wanted more security than that, they'd use WPA2 enterprise. That's why there's WPA2 enterprise, 802.1x certificates, radius, etc. That eliminates the need of pre-shared keys (passwords). They issue the machine a certificate to connect to the network (probably restricted to the machine's network hardware address), and if they ever think it's compromised, they revoke it at the network and the cert won't work again. A different cert for each machine. They can also provide a per-user cert in addition to the system cert.

So, no, you can't disable the show password checkbox, but there's really no point to it either).

Your administrator, like many, is taking the wrong approach.

If she's that concerned about security, she needs to implement an 802.1X solution.

Just relying upon people not to "spread" the Wi-Fi password is next to useless.

(You should let IT know there are a number of utilities available to "recover" the password from Windows machines, such as this one and a number of others available from less reputable sources.)

Open the terminal window and have her type:

networksetup -setairportnetwork ssid password

... and then close the terminal window. When she leaves, you can go to the network setup preference pane and show the password.