Each student could develop a bibliography reflecting his or her work, and a collective bibliography would emerge encompassing all of a faculty member's advisees.
A student's acquired expertise will not completely leave with that student but will remain to help bootstrap new students (and new interests of the faculty member).
The efforts of students working with a faculty member can be known to a wider audience. This would provide publicity and enhanced visibility for the student and that student's lab and major professor.
Students who know how to use tools, such as Microsoft Word's tracking or commenting features, are better prepared for future e-publishing; they can use these tools for future collaboration and mentoring, which should save the faculty member time with the reviews and revisions.