I want to start by saying that I registered specifically to reply to this question, because I’m not really sure about where most of the other replies I read came from.
Now, I’m not an artist, nor do I play one on TV (but wouldn’t that be cool if I did?) but I’m dating a man who just graduated from a fine arts school in California, and he was never once asked to draw himself in the nude, or even with “1/3 clothing”. He did do some self-portraits, but they were mostly of his face. He also did a lot of life drawing of live, nude models, and he didn’t have a problem with that, but I think he might have had a problem with drawing himself in the nude and displaying the finished product.
So the fact that your friend doesn’t feel like showing the teacher a nude photograph of herself (or one of her “in her panties”) or putting a huge nude drawing of herself on display doesn’t mean she should drop out of art school.
That being said, my boyfriend did have some teachers who were a little bit off-kilter in terms of what they thought it was acceptable to say and assign to students. So I asked him what he thought of the situation, and what he said was that she can probably work around it and not have her grade penalized. He advised that she do the picture while in her bathing suit, using a modest one-piece, or while wearing a towel (which is generally what I’m wearing when I brush my hair after getting out of the shower, anyway, so a “candid” shot of that sort of thing, at least for me, would include a big fluffy towel) or something of that nature. Other options might include a big tee shirt of the sort that are for sleeping in.
If the teacher has a problem with that, and it’s the sort of problem that’s likely to reflect on her grade, then she should go to the dean or whatever oversight administration there is for the school to raise her concerns. I wouldn’t phrase it in terms of “this teacher is such a perv!”, because that’s not likely to be taken seriously (in my experience dealing with school administration, anyway) but more in terms of “he asked me to show him a picture of myself in my panties for this assignment and I wasn’t comfortable with that, so I tried to compromise with a bathing suit, and he’s told me that he’s going to give me a lower grade because of it. I’m worried about this having a negative effect on my grade.” The administration might just tell him to back off, they might do more, who knows.
The important thing is that she be above reproach in terms of doing the best job that she can do, so that the teacher can’t claim to be giving her a low grade because of a shoddy finished product.
For the record, I agree with her that anyone who feels that this sort of assignment is okay has a screw loose.