It's an amusing paradox and I don't know what the standard solution to it is, but I resolve it easily in my mind by tabooing the word 'surprise', and replacing with "suddenly obtaining certain knowledge of its date". Then it becomes more of a silly game of words.

Assuming the test is certain to take place (it's the law!), the students can't be suprised on Friday, but on Thursday they will either be "surprised" to locate the test on Thursday or "surprised" to locate the test on Friday. The Thursday (or Wednesday or Tuesday or Monday) surprise will therefore be genuine, though no student can be suprised on Friday. They can be "surprised" on Thursday about either a Thursday or a Friday test, though.

The day-by-day progression is a distraction btw. The paradox can be replaced by having five cups, a ball under one of them, lifting them one by one in whatever order. If you've lifted three empty cups, you'll then either be "surprised" to locate the ball under the cup you lift next, or "surprised" to locate it definitively under the cup you haven't lifted. Both of these will be a surprise, a surprise occurring at the next-to-last cup.