If an individual wishes to take part in the contest, why should he or she being from the same school as the mentor would matter? They dont sign any contract with their schools saying that they will not participate in any dance reality shows. Even Punit was from TLCDC, and in DID1, Mayuresh was from there too. Then two were from Geeta's team - Altaf and Teena, they were her assistants. Then there were Dharmesh's students trying for DID in both seasons. Eventually we will be seeing contestants coming to DID from earlier contestants turned dance masters... As long as the dance masters dont try to compete against their own students for the title, I think it should be okay!!
i think dharmesh did do this with his student, Meenu, if i remember correctly.