No, they are not unlimited, but you can create quite a few, 75 on the level 1 plan up to a whopping 775 on the level 4 plan. I guess a lot depends on how many students the OP poster is thinking of hosting and what hosting plan they currently have.
Edit: In answer to your question;
.htaccess files can not be used to restrict FTP access at all, since they only affect Apache.
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