There are two issues here. The first is that as other have said slander isn't protected speech. The second is that the Supreme Court ruled in the late 80s that students were not afforded First Amendment rights. School newspapers, and annuals aren't covered under the First Amendment since they are sponsored by the schools and therefore the principal or school board have the final say as to what gets published and can dole out punishments if something is printed that they don't like.

It's also one thing to disrespect your teacher it's quite another to spread lies about them that could ruin their career and reputation. I think the principal should file a counter suit claiming irrepairable harm to his career and reputation and sue the parents for every dime they will ever think of making.