According to JKR's inteview answer, it's implied that **Dumbledore was aware**, because he let it continue **on purpose** (pedagogically, not just maintain-Snape's-cover reason):

> **Q**: Why does Professor Dumbledore allow Professor Snape to be so nasty to the students (especially to Harry, Hermione, and Neville)?   
**JKR**: "Dumbledore believes there are **all sorts of lessons in life** ... **horrible teachers like Snape are one of them**!" ([Yahooligans! chat, 2000][1])


  [1]: http://www.accio-quote.org/themes/snape.htm