When this has happened in the past - I actually tell the professors to have students post the project links to their LMS. On our campus, we use Moodle - so we can use a Moodle Assignment or Forum, and then the professor can see it and grade it, but no one else in the class can see it unless that student shares the link. It's not an ArcGIS-based solution, but it usually works pretty well.
The challenge is that the students need to be part of the AGOL group in order to submit - and there really aren't good visibility settings for that. Once someone has access to the group, they can see everything (even if it's not a shared editing group). You could create a separate AGOL groups and just add one student and the professor - but that might not be super feasible in most situations (unless it's a really small class). And will create an outrageous amount of groups.
Transferring ownership doesn't really work unless you want to give the students a role with higher permissions (most of the time it requires an admin unless it's a custom role). But there may be a way to play around with a custom role to make it easier.
I also try to have a conversation with the professor on the reasoning! Tbh - in my experience, most of the time students don't care. If it's a class where everyone is a beginner to GIS, sometimes it's helpful for those who are not confident in the tech to see other projects. There is definitely a noticeable improvement in the type of projects if students can share their work with the rest of the class. In the 6 years I've worked here, people don't plagiarize other projects, but I have seen people get more confident in the tools because they can see more examples.
However - once in a while we'll get one where students are posting personal things in (we have a digital journaling project), and that is something I would probably tell the professor to use Moodle if someone doesn't want to share it with the class.
