As far as I am concerned, to most people who are native or non-native speakers, the meaning of the word is understood even if it doesn't exist in English. So, I think it (deriving nouns by adding -ee) is one of those things that the teachers won't like. (I hope my last sentence didn't sound as controversial as it reads :-? )
No problem ;-)
English has for a long time borrowed words from French, ending '-ee', typically with a passive sense: an employ
ee is employed. However, there were two exceptions to this passive sense, deriving from pseudo-reflexives: escapee (someone who
s'est échappée) and refugee (someone who
s'est refugiée - we are all feminine in the world of these borrowings!)
Having recognized this pattern, I assumed (wrongly) when I first heard 'retiree' that it meant 'someone who had
been (involuntarily) retired'. But the pattern just doesn't fit what's happening in the language; 'retiree' was just the first (in my experience) of many new coinings in which this suffix just means 'someone doing something'. I had to come to terms with the word 'attendees' when I worked for an American-owned company; this word is now commonly used in UK industry; ('come to terms with' doesn't mean 'use' - there are always ways round a word that sticks in one's craw. ;-))
But I agree both that it's not advisable to use 'failee' and that - in the linguistic climate that accepts that
<any-verb>+'ee' means
doer - it will be widely understood.
As emsr2d2 said, you could say 'students who failed'. Or, as the heading of a list of students who failed, you could use any of the words 'Failures', 'failed', or 'fail/s'; that 's' might be contentious, but it would be perfectly clear if students in a class of 26, looking at a list on results day, said 'We got 1 Distinction, 2 Merits, 23 passes, and no fails' - a (countable) 'fail' (in my [possibly iconoclastic view ;-)] is a result of 'Fail'.
b