Is there any way?
If you allow this the students are able to perform all actions with files.
Take care: you have to change the standard backup-directory to something out of reach to the course users, outside the coursefolder in the moodledata folder. If you don't, any user could see the logfiles with everything done by anybody on the site.
adminmenu under users->permissions->define roles
Will that allow the student to edit site files, or any file for that matter?
I have a similar need but I want the whole class to be able to edit files, but only in that course. Is there a way to override the manage files permission for a directory in a single course only?
If you change the standardrole via users->permissions->define roles students in any course will be able to edit files (actually they can't edit them, they can delete and upload a new file).
You can do the rolesettings on course level as well. To do this you have to use the adminmenu in the specific course and choose "assign roles". Then top right tab "override permissions". There choose the role you want to override (probably student) and do as described above. This will set the permission only in the specific course.
Thank you for replying so quickly! The course level will work, I don't want to give them access to site files. Do I have to be the Administrator or can I do that as a teacher? I didn't see the override option when I logged in as a teacher but it was there when I logged in as the Administrator. Also is there a way to override it for just a folder or is class level the most restrictive I can make it? I am assuming I can't and that is what the file manager idea is for that you mentioned?
Yes, with the file manager the students should have the possibility to share files when they like. That is one important way collaborative learning works and I'm stunned that moodle doesn't have it since version 2.0 yet to come. There are hacks, but whatever I tried they where quite buggy and I have to give up. I even programmed a filemanager myself in order to facilitate self-determined file sharing. We'll see when Moodle 2.0 is released.