user permissions and the "nobody" user

I'm having trouble setting up Apache 2 to work with my desired user
permissions. The server is setup for many students who will be
writing php scripts to access the class database. Each student should
be able to only access his user directory (both directly and via the
web server).

However, Apache switches to the "nobody" user and thus requires me to
give everyone read permission on each user directory.

I'm not very familiar with setting up a php script as a cgi-binary.
Yet, I'm aware that this would allow Apache to switch to the correct
user.

However, there seems to be many security issues with this choice.
Also, I want the students to get a feel of how easily php integrates
with html.

I would appreciate any possible solutions.

Thank you very much,
Paul