assignemts, grades and students

I am looking for a module or a solution for the following issue.
I am trying to setup a process for our school to deal with assignments in an automated manner and get rid of printed-paper.

I give you a quick overview how it works now so you understand what i am looking for:
For one school year student has to complete a number of competencies. Lets say Competency “A “ has 10 assignments competency “B” has 8 assignments etc and for each competency student will get a grade.
So if the student wants to acquire competency “A”, he needs to complete all the 10 assignments, example: if the assignment is completed his teacher will get it, review it and grade it. And next step student will continue on assignment 2 etc. I hope you get the idea.

For your information: all the assignments are created by teachers as “TXT” documents, in the form of questions; they can be short and long documents, depends on the number of questions.
Our goal is: we want to move from paper work (think about the environment) and automate the process in Drupal.
1. Student logging to the site.
2. Student clicks on competency “A”, choose assignmet-1that he is going to complete.
3. Student writes his answers
4. Student submits the document
Note: only his teacher and he (student) of course can see the answers.
5. Teacher must review (teacher may give written comments as feedback to improve).
6. If everything is OK teacher approves and grades the students for that particular assignment.
Note: teacher can click on one assignment and see all submitted documents that he needs to review or when teacher clicks on the name of one of his student he can also see all pending work of that student.

In order to start this project I have some few questions : for example when the student open the assignment-1 of competency A:
- Where does he write his answers? In the same node or in a new one (what is the best practice to achieve my final goals)?
- When student submits answers, where will it be SAVED?
- How does each teacher see the submitted answers just for his/her group of students?
- How can I make sure that students do not see the other answers of others?

I haven’t started building this yet, because I would like to know if someone has done something similar to this or there is already a module that I can use for this purpose.

I appreciate your answers and suggestions.
Thx a million
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