I was thinking OP could give everyone their own VM to use as a workstation so they could access the files on the server easily, and/or run programs based on their work

Me, personally? I have multiple VMs for different contexts: my teaching job (super clean, video sharing tools, presentation tools), gaming, media server (has scripts to download stuff off of YouTube), server management (just a regular Debian install), and a fuck around box (I just use it to try new OSs like Fedora, or try breaking OSs like deleting the system32 folder on windows)