Can I respond to this prompt by writing about teaching a student who had a very hard time learning, but eventually did much better?
Discuss any obstacles and/or hardships you have encountered and how you dealt with them.
Mmm… I would consider that to be a challenge or problem rather than an obstacle or a hardship (the fact that he/she can’t learn isn’t really hindering your life or affecting your well-being).
You seem to be confused because they use the word “encounter” they should simply have used the word “experienced”. They don’t mean for you to write about hardships you have observed in others. You should think of a time you had a problem or encountered an obstacle.