

I just realized I sound way too paranoid but it’s an interesting question
Nope. Not paranoid enough. If school/work requires such software, that goes onto a separate device only for those purposes, which will then be considered untrustworthy environment like any public computer.
Although perhaps in a sense it is paranoid compared to what others do. Recently I’ve had to get something printed without having own printer. I’ve found out people have no problem logging into their Google or Microsoft account on public PCs.
I brought the PDF on a CD.
There’s a certain small chance that something malicious could be written to a USB, and I don’t know about all the possible vulnerabilities. If mounted, perhaps the automatic media thumbnail generator could be exploited. That is probably paranoid, worrying about random software installed on your own computer is certainly not.
Problem is, some of this software may likely be made to specifically not run in a VM, since it is supposed to keep track of everything the student is doing during exams.