Here's why:
* Subject-verb agreement: In Spanish, the verb must agree with the subject in number and person. "Nosotros" is the first-person plural pronoun, meaning "we". The verb "ser" (to be) conjugated for "nosotros" is "somos".
* "Estudiantes" is plural: The word "estudiantes" is plural, meaning "students".
The correct sentence is:
Nosotros somos estudiantes. (We are students.)