Hi Claudia. Welcome to the Forum. Thanks for asking your question here.
Let's first define our terms: Hip Dysplasia (HD) in adults occurs when the hip socket (acetabulum) is too shallow for the ball (or head) of the femur. The joint is insecure due to this anatomical variation. The indications for HD are pain and/or a limp. Unfortunately, there is no cure for this because it is due to the shape of the bones.
As to your question: is Yin Yoga a good idea for your student? I have no idea! I am not her doctor. Really, her health care team should be the ones providing guidance. How bad is her HD? What is the condition of her cartilage lining the hip socket? Is she in chronic pain, or only while in certain postures? Will she be needing a hip replacement soon?
Generally, my adage is “no pain, no pain,. I don't buy into the idea that pain means you are opening up the body. To me, it means you are hurting the body and the body is asking you to stop! However! These thoughts apply to normal yoga practices. In physical therapy where the body is already damaged, and maybe scar or contracture is limiting mobility, the therapist will move the joint into painful positions, and this could be useful. To break scar tissue hurts! But, that is therapy. Yoga classes are not therapy (unless done one-on-one with a yoga therapist.)
In the case of HD, I would not advise moving into a place of pain. Listen to what the body is trying to tell you. The pain may be due to the cartilage being worn away. We don't want that. Yes, we do want some stress to the cartilage, but not so much that it hurts. We have be like Goldilocks and find the place that is just right.
I would recommend you read the article I wrote about Antifragility
and especially note figure 4. This is your student. Yes, she does need some stress to her hips, but due to her condition, it is easy to go too far. She has to learn to “play her edge, and go to where there is sensation, but not pain. Your guidance can help. Watch her body language, her face, etc to make sure she isn't trying too hard. (Yin is soft, remember! Don't let her turn her yin practice into a yang effort.)
Okay? Let us know how it goes.