It is illegal to remove watermarks from school photos.
Removing watermarks from school photos is considered copyright infringement as the watermark on the school photos signifies that the photo or image is owned by the photographer.
And by removing the watermark from that school photo without permission to use the image would be a violation of copyright law.
If you get caught using the school photo without the watermark you could be sued although some people do get by with removing the watermark.
I've removed watermarks from school photos and have used them for personal use and never had an issue but if you try to sell the photo or use it in other ways you may be caught and get into trouble.
Watermarks are a visual indicator of copyright ownership so removing those watermarks is trying to bypass copyright restrictions.
And depending on the jurisdiction, removing watermarks from school photos and other photos could lead to legal action including fines and other penalties.
If you need a copy of a school photo without the watermark you can contact the photography company and inquire about purchasing a license from them for a photo without the watermark.
Some schools also have specific guidelines regarding the use of school photos, so you should also consult the school about their policies before you make any changes.