School, as it the setting would be a boarding school or something. The characters would be classmates.
Fantasy? Sure :) The first thing that comes to mind is an old story of mine, but it's really complicated. Basically, it's kind of a play off of Avatar (Not the blue-peopled one) with the elemental nations being at war, only with Pure and Dark elements added to the mix. But we can do something else.
What kind of fantasy do you like? Vampires? Werewolves? Pixies and fairies? Merpeople?