To set random, three-letter passwords:
Go to Account > Classes
Select the names of the pupils you wish to change the passwords for
Click the 'Set New Password' button.
To set passwords of your choice:
Go to Account > Classes and select the names of the pupils you wish to change the passwords for. Then click 'Download' > 'Login Spreadsheets'
Open the spreadsheet you've downloaded and change the passwords in the password column, from what they currently are, to the new passwords. Then save the spreadsheet as a CSV file.
Go to the pupil uploader (Account > Classes > Uploader) and upload the spreadsheet using the browse button on the left. Then follow the instructions on the screen, which will lead you through the process of updating the pupils.