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I did a little reading, and I found the following article from a paper in Pennsylvania, where Millersville is located.
http://local.lancasteronline.com/4/203653
According to this article, she did not lose her degree and potential for licensure due to the picture posted, she was sited for being unprofessional because she encouraged her high school aged students to visit and interact with her myspace page, even after she was asked to stop. That borders on unprofessional, imho. I'm a teacher, and I know there is a very fine line we need to walk when we interact with our students. Lots of news stories circulate about teachers who allegedly step waaaay over that line, and like it or not we're in a profession that's under very close scrutiny by a whole slew of outsiders. We're allowed to be human, sure, but if this student teacher wanted to keep her personal and professional lives seperate, she needed to do the same.
It's a big news story, so I'm sure there is hyperbole on both sides, but I do think it's beginning to look like maybe the student teacher wasn't quite as maligned as the first news stories implied.