"Rest" is one of the words that functions as a partial of a whole. Others in that class are fractions, percentages, and the words some, any, none, part, remainder, etc. These words create a significant exception to the rule that prepositional phrases have no effect on subject-verb agreement.
In most cases, we say "The rest is history" because it refers to the rest of something singular. In your case. the question was about students, plural. The verb is determined by the object of the preposition. And it can change.
The rest of the cake was missing.
The rest of the cakes were missing.
The rest of the students were absent.
The rest of the student was found in another dumpsite.