By default, when a student clicks a document in Teams (such as a Word document), the document will automatically open in the browser based version of the Office365 application for that file.
However if a student only sees the 'Download File' option, this may indicate that the student is not logged into teams with a valid Office365 account. Please check with the student that they are using their Office365 Microsoft school email.
If the email is correct, the school IT Team needs to verify that the student has been properly assigned a student license.