We are also looking for something along these lines. I would like to be able to have a set of security questions that are randomly selected. For higher ed in the US we are looking at more and more federal requirements on authentication for online classes. One solution I have read about is asking a student a security question when they go into a quiz attempt. If you have a set of questions, based on student personal information, it makes it a little tougher for someone else to login as them.
Just putting a password on doesn't really help, because they all have the same password, having proctored tests has issues with remote students, and we do not want to go down the web camera path.