Categories are generally used to label large topics that describe posts. Grade Level, School, Subject or Class Number would be perfect for Categories.
Tags are used to label smaller topics that describe posts. Applications used, student names, SOL strands, or topics would make great Tags.
Either of these labeling choices can be used as a sidebar or widget, and they are searchable to help the user find what they are looking for more easy. When making a new post, you will have options to add categories and tags to each post.