Ah, the old worm and hook routine. To be honest if I was a student I'd probably go for this since it's a pretty sweet toy to have if you're on a low budget. Right now I'd probably decline.
That said, how are they tracking the holder's usage and location? If they are not using anything over and above what's install on a regular smartphone who's to say we're not already being monitored in this fashion? The phorm debacle demonstrates we should not rely on the law or agreements with service providers that this kind of behaviour will not take place.