I agree its better to be safe than sorry and if copyright music is within reach, that's fine by all means. But this is for a SCHOOL production that has limited circulation and is not even seen at film festivals, theaters, or other typical distribution mediums.
C'mon guys - Lighten up. I can almost gaurantee you that no one will be caught (In Singapore of all places!) for copyright infringement for a class project. You guys should just pop into Myspace/Youtube/any video hosting site and check out how many copyright violations there are. Millions upon millions. It's not even a question of swimming in an ocean and getting caught - The proliferation of copyright music is so widespread its nearly impossible to curb.
The probability of you getting caught is about the same probability as a hammerhead shark jumping on land, picking up an AK47, and going on drive-by shootings in Sabah against enlightened village elders armed only with pitchforks. Or you could liken it to the same probability as you getting struck by lighting twice (In one sitting); whichever analogy you prefer. I'm not saying it won't happen but the chances that it will are well beyond slim.
Actually, I used to be really paranoid about it when I was back in Singapore (It IS Singapore afterall), similar to the way you guys feel about the topic. It's really quite justified and understandable since I was really creeped out about the pirated movies I bought from JB, the movies I downloaded, and of course the copyright soundtracks I used for school projects. I've been there and done that and I knew many other filmmakers who were just as concerned as I was. Nonetheless, I must admit it is a far cry from my sentiments now.
Having been to actual Hollywood and having met the network executives that control copyrights and patents here in the US, I can honestly tell you with a safe bet that they really really really really really don't care - Especially not if it's for a small-scale school project such as this one. Like the article you mentioned (Which I did read some time ago), they like using periodic scapegoats such to scare the general public into submission. Note also that they are focusing their lawsuit more on the COMPANY that HOSTED them; not the individual violators who put up the content in question in the first place.
Ultimately, it's still better to use copyright and royalty free music - And I always make sure I do for proper productions intended for the film festival circuit. In this case however, it's really not worth it as it's just a friggin' school project which not many other people outside the walls of ACSI are going to see (Sadly enough).
So lighten up guys! Don't be so paranoid and live a bit. I'm not here to say you're wrong and I'm right because it is an inherently ambiguous issue. There's no clear cut answer and we all have our own opinions about the matter so this is my 2 cents!
