This is simple can get it from google, As you consider as school student given below code to try with your work. It will work as per your requirement..
BufferedReader reader = new BufferedReader(new FileReader("D:/Names.txt"));
String line = null;
while ((line = reader.readLine()) != null)
{
System.out.println(line);
String[] lastName = line.split("\\s");
String firtLetterOfFirstName = lastName[0].substring(0, 1);
System.out.println("Folder Name : "+firtLetterOfFirstName + lastName[1]);
File file = new File("D:\\"+firtLetterOfFirstName + lastName[1]);
if(false== file.exists())
{
file.mkdir();
}
}