The short answer is yes but conditions apply!
According to the Australian Copyright Council (see link below), you can use copyright material for the purpose of research or study provided your use is 'fair.'
The Act deems fair as;
10% the number of pages or 1 chapter from a hard copy edition OR
10% the number of words or 1 chapter for material published in electronic form.
Can students (university or school) use music in videos that they make?
Again another interesting question and one that you need to visit the Australian Copyright Council using the link provided below to get the official response.
The document indicates that most primary and secondary schools have a joint licence agreement that allows them to make certain videos using an audio recordings of music. Provided the use of music in videos is not shown outside the classroom or distributed further, they are permitted use.
Given the recent media attention to this issue, I suggest the school is certain of their rights as the fines of using music without the proper licence are significant.
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