I had two daughters learn on a '93 318iS. It was perfect for the job. Small enough to maneuver and park easily, a great driver. Had enough 'cool' factor for the high school parking lot. Small engine, decent pickup, regular gas, moderate maintenance costs. It was already beat up enough when we got it that there was no worry about dings and such. My oldest drove it for 3 years, then my youngest for 4 years until it got t-boned. Has some real good steel that will take a licking, but ours had only one air bag and I'm very glad there was no passenger when it got hit on that side. I know the later model E36's have passenger air bags, but the early ones only have the one. With the roads the way they are these days you should think about safety long and hard.
We replaced the car with an E46 sedan. Still built tank-like, but has a bunch more air bags and traction control. You can pick these up for not much money now, and for the difference in safety it may well be worth looking into. (make sure you google the subframe issue on the early E46's before you buy.)