<PARAM name="java_arguments" value="-Djava.security.policy=C:\Frustrated.policy">
If it were possible to establish a custom policy through an applet parameter, that would be a (severe) security bug.
As an aside. Given this is for "purely academic reasons" I'll add one of my common advices re. applets and academia.
Why code an applet? If it is due to spec. by teacher, please refer them to Why CS teachers should stop teaching Java applets.