Referencing assignments from past students
I think it is both ethical and within the rules (or at least it is within the rules at my university) as long as the reference is clearly cited.

Furthermore, it should also be fine with current students as long as the work is cited too.

For example for undergraduate experimental lab course I took during my 3rd year, I worked on an experiment with 2 other students working on the same experiment independently. We each had to write a project report on the results we obtained during the experiment.

Only one of us managed to get a particular dataset for a part of the experiment that was sensitive to conditions and difficult to get results on. In that situation we were able to used that student's data so we could discuss their result in our report (as long as we cited the person who actually obtained the dataset, of course).

In a seperate experiment I let someone use a java code I wrote for the analysis. This was also fine, because the person cited me when they used my code in their report.

I think if the handin were supposed to be completely independently written (e.g. a math problem sheet) it would be collusion to reference older (or current) work but that is generally acceptable to cite anything (past student work or otherwise) in work which you would normally expect to see citation (e.g. essay or report).

If you have assessment regulations, there is probably a clear indication of what your university expect in there. That would not be able to tell you the answer to ethics part of this question but otherwise might be able to tell you the rule at your College or University.