If the Art dept didn't ask for photoshop specifically, it's unlikely that they really want/need it. In the meantime, until they do you could install GIMP across the network for free and see if the kids start using it (they will). GIMP has many, many more tools than students are ever likely to use and they can always write their own tools (brushes, patterns, scripts, etc) as they wish. And if nobody uses it at all, you have lost nothing except the setup time. OTOH, buying photoshop and having nobody use it would be a very expensive futile exercise.
Students are adaptable. Employers want people who can think and work things out for themselves. If students are able to use GIMP/Photoshop, they can work out how to use Photoshop/GIMP. They can use all the basic tools and they can get into more elaborate things if they need to.
OTOH, if you want them to use something that is a little above basic level but is nicely usable, there are a few great ones about - Splashup, Aviary, Photoshop Express spring to mind. No-cost solution anyone? Just get registered and away you go. Get teh Art Department into the Web 2.0 21st Century.