Copyright infringement is not a good way to start your adult life.
They say they will donate the proceeds to charity, but that’s not going to save them.
How many ways is this a bad idea? You can see their shirts here. I especially like the one with Big Bird holding a sign that say “Romney just fired my ass.” That should be worth double points in the “How bad will the eventual lawsuit be” sweepstakes. The two Shepard Fairey “Hope” style ones are awesome. How many copyrights were violated there? There’s Big Bird, There’s the use of Shepard Fairey’s iconic poster, and if you remember, Fairey’s poster was a copyright infringement of the original AP photo.
I’m pretty sure that even if they Sesame Street people are happy with the idea (which they won’t be) they have to defend their copyright. If they fail to defend it in this case, the next person who violates it can claim that they’ve abandoned it. Given that Sesame Street is a multimillion dollar property, they’re not going to let a couple of college idiots get away with it.