Most cities have quite a bit of traffic congestion data, which I’ve been coming across from my preliminary searches on Google. I would suggest finding your city’s latest report and seeing if you students could do something similar for their neighborhoods. See what data they are collecting and how they are analyzing it. If they don’t have a report, then find another city’s and do it for yours.
Here are a few other interesting things that I came across that might give you more ideas:
Evaluating urban traffic congestion using OpenStreetMap and sparse public transport data. Perhaps they could give you insight on shows how the student data can be used to
(i) estimate journey times experienced by road users generally, and
(ii) evaluate congestion levels in urban areas and thus provide better information for road users and traffic managers.
City & Regional Planning is the solution side to this. Perhaps your local university could give you a hand.
Why Is Apple Creating Its Own Traffic Database? This uses real-time data from iPhones.
Mythbusters Turning Right Only. This isn’t a traffic congestion problem. It deals with fuel. However, the way they structured the experiment might give you some ideas.