Often Hong Kong teachers make their students learn a fake grammar rule that says: One can never use the (relative pronoun) word that to refer to people. To be fair it is not just Hong Kong teachers. I was taught the same rule and only later realised that it was not true. The English word that is often used instead of who to refer to people in statements, but not questions.
English already uses the word that to refer to people, where the word who can't easily be used. The disagreement is only about using the word that (as a relative pronoun) where the word who can be substituted. These disputed sentences provide a definition, especially one needed for identification.
Examples where that can't be replaced by who:
Who is that?
That is my uncle.
Did you see what that girl did?
Look at the green hair on that boy.
Sometimes the use of that is optional, but still can't be replaced by who.
I thought that Mary was the best singer.
I thought Mary was the best singer.
According to this fake grammar rule, who should always be used instead of that to refer to people.
Consider these two sentences where a definition (Students reading English stories) is provided.
Students that read English stories get higher marks.
Students who read English stories get higher marks.
The fake rule claims that the first sentence is wrong and that the second one is correct. However according to the way English is actually used, both sentences are correct. English is often easier and more flexible than it is taught. Most of the better style guides and dictionaries agree that the word that can be used instead of who in definitions. However there are still many school grammar textbooks that list this fake rule. So we need to examine actual usage to see which books are correct.
A.D. 490. This year Ella and Cissa besieged the city of Andred, and slew all that were therein; nor was one Briton left there afterwards.
The old and respected Anglo-Saxon Chronicle uses "slew all that" and not slew all who. It is only in the past hundred years that English teachers have tried to claim that this use of the word that is wrong. Respectable English authors, including Chaucer and Shakespeare, used the word that to refer to people. Any suggestion that this use of the word that is modern sloppy English can be discarded. The word that has been used in English to refer to people for more than a thousand years. Of course, Chaucer and Shakespeare used a lot of English that is now obsolete; so we need to check modern usage as well.
That's all we need in this place - boys that knock on doors, then run off.
Hassall, Angela (1989) Jubilee wood, Oxford University Press
To check how words are used we can look up the words in a corpus. These are collections of language samples from many sources. The above sentence is one of many from the British National Corpus. The corpus includes many examples of sentences where the word that has been used instead of the word who. The same is true of the Corpus of Contemporary American English. This fake rule is not about British or American English.
A Category or a Person
There is one particular use of that instead of who that is more common. When the sentence refers to a defined category of people that is used more often than who. When I wrote, "Students that read English stories..." I was referring to a group of people rather than an individual person.
The boy that got the highest mark read many English books.
The boy who got the highest mark read many English books.
In these two sentences I am writing about a single boy. In this case the second structure is much more common than the first. Both sentences are still correct, but in this case the word who is the more common style choice instead of the word that.
Using the word that instead of the word who to refer to people is a matter of choice of style. However if you have teachers insisting on this fake rule it is not wrong to write it their way. It is not a grammar error to use either word to refer to defined people. However the word that is a much more standard choice when referring to categories of people. Using the word who is more common when referring to individuals.