While I agree with the subject of the response, I disagree with your interpretation of FERPA. Any student who was in that class would have a clear, unambiguous knowledge of the student's identity, and mere 'xxx'ing of the name is a cursory, even illusory attempt at maintaining privacy.
Yes, true but from the standpoint of the public, the professor's action was well-advised. A claim of libel would require that the student's identity become public knowledge, something the obfuscation prevented.
I'm speaking about the general issue of a potential libel action and invasion of privacy, not specifically about FERPA.