If you’re thinking about doing something like WithKnown (aka Known, the CMS your post is on), and interested in the WordPress portion, you might consider doing a full/partial Domain of One’s Own program through Reclaim Hosting or even rolling your own. Even if you go small with just a few classes, you might consider adapting the Homebrew Website Club model at your site where you invite students to tinker around, help each other out, and then show off or demonstrate their work. The related IndieWeb wiki and online chat are free to join and can provide a wealth of information and help for students (and educators!) working at owning their own domains.
Incidentally, if you’re unaware, WordPress now has a suite of plugins that will allow it to have a lot of the site-to-site communication capabilities that Known does. I’ve not done it before, but I’m fairly certain you could run it on a multiuser installation of WordPress much the same way you’re using http://janevangalen.com/cms/.
Another interesting option would be to have students try out accounts on micro.blog which are relatively inexpensive, though I suspect if you touched base with Manton Reece and explained what you were doing, he might offer free or significantly reduced hosting for a reasonable period of time. I know he’s given away a year of free hosting to attendees of IndieWebCamps who are starting out with their own domains. If he did then you might be able to use some institutional funds to purchase domains for students to get them started.
By the way, good on you for opening up your planning process for teaching and learning on the open web. It certainly sets a useful example for others who are exploring and following in your footsteps.