this just sounds even less believable: you're in a jursidiction where the amount of data you have to store on students is exactly specified, and you're liable to prosecution for storing any single piece of data less or more? I would appreciate extraordinary evidence for this extraordinary claim.
anyway, even if that's true, you could be using your knowledge to help privacy-conscious students like OP, instead of throwing a rulebook at them and casting aspersions about their motivations. I return to "reconsider your views, and the impact of your job".