Those are important considerations, yes, but even before you worry about that, the most important thing to consider, right off the top, is the disconnect between the program and the definition, or the spirit, even, of volunteering. Students are receiving non-token payments in compensation for a certain number of volunteer hours.
I've headed several organizations that relied on the support of a large number of volunteers. As others have mentioned today, occasionally, volunteers receive some form of compensation as a token gesture. It might be free coffee, an annual event or something of that nature. Therefore, I would say, even before you look at the program through the legislative lens and the indirect effect of bypassing labour laws, you should consider that compensating people for volunteering is, from the outset, at odds with the principle of volunteering. It doesn't matter that the compensation is in the form of $1,000, $2,000 or $5,000 lump sums.