You can use an Includepicture field to add photos. The photo file name is
the file number mergefield:

{ INCLUDEPICTURE "C:\\PICTURES\\{ MERGEFIELD FILENUMBER }.jpg" }

However this assumes that all pictures are in one folder ( PICTURES). If the
student folders are all named the same as the file numbers you could try
using the same file number in the path but no idea if it would work:

{ INCLUDEPICTURE "C:\\FILE FOLDER\\{ MERGEFIELD FILENUMBER }\\{ MERGEFIELD
FILENUMBER }.jpg" }

The curly braces are added using CTRL-F9 if hand-typing the above.
Alternatively use insert to insert a linked picture and replace the file
name with your mergefield thus:

"INCLUDEPICTURE "FileName" [Switches ] }
Inserts the specified graphic.

To insert an INCLUDEPICTURE field, point to Picture on the Insert menu,
click From File, click the arrow next to the Insert button, and then click
Link to File"

See http://www.gmayor.com/mail_merge_graphics.htm