Apparently to stay out of FERPA jail with merged courses, we have to follow this step:
"There is a default setting for each student (in People) “this user can view students in any course section.” This needs to be changed to “this user can only view students in their assigned course section(s)”. It has to be manually changed for each student before the semester begins, and afterwards for each student who adds."
However, where do we see the settings for each user? I can get to People and it only tells me grades and activity.