There seems to be two separate issues. I’m no legal expert, but in the US, you cannot sign away legal protections. If law gives you certain rights, they cannot be taken away by contract. So the question is, does the University (or the teacher) have the right to require you make your grades public in order to take the class? If it is a privacy law, then I suspect that it’s intent is to give you the right to keep these record private. If you have the right to keep this information private, then you cannot legally be required to sign consent to release the records (its an illegal contract). The law does provide provisions where records can be released without consent so that aspect of it is covered.
The second part of the issue regards what the schools policy was. If the schools policy was that the records were private, then he violated policy and could be terminated for that alone, regardless of the legal restrictions on releasing the records. His only way out of that would be to show in court that the policy was illegal. I seriously doubt that a policy backed by law would be found to be illegal. Its not the first time a teacher has gone against policy and the law in the US, and like what has happened in the past, the teacher will loose. Thats just my loose interpretation of it anyway. Like I said, I’m no legal expert.