The point of the large damages isn't to make money from poor students - everyone knows he can't pay and probably couldn't be made to pay, however:
(1) The damages are more a means to warn others against file sharing - sure he may have exactly fuck all to his name but many sharers do have some assets they would rather not lose, like houses, cars and meagre savings. Sure I couldn't pay £400,000 either, but I could lose quite a lot if a similar judgement was made against me.
They want normal people to ask themselves "is stealing that album really worth risking my house for?"
(2) in concert with (1) above there is the threat to parents that they could be held liable for their kid's sharings (dad's computer + dad's broadband = dad's liability) - where this is unlikely to happen it is another stick to make adults prevent their children from sharing.
(3) damages are based on the cost of the "damage" caused not the ability of the damager to pay. If you claim sharing x songs for y time = $Z damage then that is the amount that will be awarded.
(4) Being awarded a large amount here sets the precedent for the future. Remember that the assorted associations (ass. ass.) have 3 main goals regarding filesharing: they want to stop it happening, they want to be given more rights and enforcement powers and they all want to be the first to stick a really big infringement suit on Google so that they can get a huge windfall and then "tax" the interwebs.
This award goes towards all 3 of these
- it will discourage at least some filesharers (or at least make their parents discourage them)
- it will be used as a stick to beat congress into granting more powers (look how much we lost from one guy, we are soooooooo poor, you need to pass laws allowing us to sue anyone with an internet connection for going equipped to steal our music - think of the taxes and political "donations" that will bring in."
-it allows for multi-billion dollar payouts when they finally get a sympathetic judge who deems Google liable for all the infringements on YouTube or found through Google search.