RWY INCURSION OCCURS IN A NON ADHERENCE TO ATC CLRNC INSTRUCTION.

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THE STUDENT AND I (THE INSTRUCTOR) WERE PRACTICING TOUCH- AND-GOES IN A R-HAND TFC PATTERN FOR RWY 4L AT CMI. THERE WERE 4 OR 5 ACFT IN THE PATTERN AT THIS TIME. IT WAS VERY HAZY OUT -- BOTH THE PLTS AND THE CTLRS WERE HAVING DIFFICULTIES SEEING PATTERN ACFT. THE STUDENT HAD FORGOTTEN HER HEADSET AND WAS LISTENING TO ATC OVER THE SPEAKER WHILE I HANDLED THE RADIO COMS (SINCE I HAD A HEADSET AND COULD XMIT EASIER). ATC GAVE US 'CLRED TO LAND RWY 4L; HOLD SHORT OF RWY 32L' TO WHICH I REPLIED AND ACKNOWLEDGED THE HOLD SHORT CLRNC. THE STUDENT DID NOT GIVE ANY INDICATION THAT SHE DID NOT HEAR AND/OR UNDERSTAND THE CLRNC. DURING THE LNDG; I WAS CONCENTRATING ON GETTING THE ACFT SAFELY ON THE GND -- THE STUDENT HAD TO BE ASSISTED. NEXT THING I KNEW; WE WERE CLBING ON THE UPWIND LEG WHEN ATC ASKED US TO BE MORE CAREFUL NEXT TIME BECAUSE WE FORGOT TO HOLD SHORT AFTER WE HAD REPLIED THAT WE WOULD. NOTHING FURTHER WAS SAID OVER THE RADIO EITHER BY ATC OR THE LNDG COMMUTER TFC. I DON'T BELIEVE IT CAUSED A CONFLICT BECAUSE WE WERE 75-100 FT (OR MAYBE EVEN HIGHER) AT THE TIME WE WERE XING THE MIDFIELD INTXN OF 4L/32L. WINDS WERE 020 AT 15-20 KTS. DURING THE POST-FLT BRIEFING; THE STUDENT DID NOT REMEMBER THIS RADIO EXCHANGE; ATC REQUEST OR SIT. IT IS OBVIOUSLY A TRAINING ERROR.