Our students can practice with and wear kagums at green belt, although I have made exceptions - I have one white belt student of great maturity, character, and control whom I let use a kagum while practicing stationary basic cuts and stances.
If they want 'em, they buy 'em. They are not required, and there is no pressure that they 'have' to get one. Any kagum must be approved by me first (I've already nixed swords of plastic, 440 stainless, and aluminum wushu-style), and their use is a privilege, not a right - if someone is operating in an unsafe manner, they must put the new toys away.
I have let students borrow mine ocassionally, for a limited time. I will let them practice whenever they want with my plastic and cardboard tubes - real scabbards are a lot easier (and more expensive) to break.
I usually have white belts do chuck bahl gums (draw/cut/sheath) with my kagum a couple of times to see the more realistic expression of the movements...but just enough to see what it feels like...
I love the cheness iaito's. I think you can't go wrong for the money. Though I also own a federation kagum, and an aluminum kagum with a bohi. I usualy only use the aluminum one for demo's/tournaments/and cutting paper, and the federation kagum is like my work horse...I keep it in my car because it requires no care basicly being a stainless blade, and I can train with it when ever time becomes available. Though for class and solo dojang training it is all about the cheness blade.
Ka gums are not issued or loaned to our students; if they wish to use one, they must purchase it themselves. Use of any steel blade by a student must be approved by the instructor, both the use of the blade and the blade in question. The biggest consideration is the quality and construction of the grip. Cheesy grips with no tang and a foil style nut holding it together are not permited.