my $students="students.txt";
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#!/usr/bin/perl 

use strict;
use warnings;

open(FH, ">students.txt");
    print FH "Perry*Steve*234\nSmith*Jane*456\nJones*Mary*567\n";
close(FH);

my %hash;
my $students = "students.txt";
open(FH, $students) or die("Could not open file!");
while (<FH>) {
     my ($firstname, $lastname, $password) = split (/\*/, $_);
     $hash{"$firstname $lastname"} = $password;
}#while
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#!/usr/bin/perl 

use strict;
use warnings;

open(FH, ">students.txt");
    print FH "Perry|Steve|234\nSmith|Jane|456\nJones|Mary|567\n";
close(FH);

my %hash;
my $students = "students.txt";
open(FH, $students) or die("Could not open file!");
while (<FH>) {
     my ($firstname, $lastname, $password) = split (/\|/, $_);
     $hash{"$firstname $lastname"} = $password;
}#while
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I guess more so of what I am trying to do is give the first name and last name one variable such as $name and its value being the password.
Mainly so later in the script I can have them input their first name then last name, join them and then match them against the $name and give them the password if the $name is found.

That's generally not such a great idea, even if you avoid the badness of having spaces in hash keys. Smashing strings together loses information that you may need later - e.g., you won't know if user "johara" used to be "jo hara" or "j ohara" (contrived, but you see the point.) Once you learn about references, you might want to consider a list of hashes (LoH) or a hash of hashes (HoH) to keep track of this kind of thing - e.g., "$user[0]->{Perry}{Steve} = 234" or "$user{0}{Perry}{Steve} = 234". That way, even if you get another "Perry, Steve", his unique number will keep him distinct from the previous one.

...but I'm wandering far afield. :) If you've just absolutely gotta do it the way you're describing, then at least separate the chunks with a delimiter that's not likely to occur in them - e.g., an underscore. My version of your script follows, with suggested modifications.

#!/usr/bin/perl
use strict;
use warnings;

# Might as well declare this early on and save some typing :)
my $s = "students.txt";

# *Always* check system operations for errors
open Fh, ">", $s or die "$s: $!\n";
print Fh "Perry*Steve*234\nSmith*Jane*456\nJones*Mary*567\n";
close Fh;

my (@bits, %pass);
# Don't guess at the error ahead of time - get the real story with '$!
+'
open Fh, "<", $s or die "$s: $!\n";
while(<Fh>) {
        @bits = split /\*/;
        $pass{join "_", @bits[0,1]} = $bits[2];
}

# Let's see what we got in the hash
printf "%s:\t%d\n", $_, $pass{$_} for sort keys %pass;
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-- 
Human history becomes more and more a race between education and catastrophe. -- HG Wells

By the way, thank you for the quick response!!!