Speaking from the Devil's Advocate side, as I work in Higher Education analytics:
First: this data is, by the vast majority of institutions, used very respectfully in terms of privacy rights and it is ABSOLUTELY never sold. Third part vendors that provide hosted systems are REQUIRED to affirm that they pass nothing on to any other party whatsoever. (I should note that this is the case in public and traditional private non-profit schools. For-profit schools are much less scrupulous and should not be regarded as trustworthy in this respect)
Beyond this, students are apprised of these uses of data with the ability to opt out. This is done as upfront as we can, very "in your face", though the tendency to click "agree" to something without reading, even very short and to the point, is of course always an issue.
Finally, the data collected is extremely useful. I cannot emphasize that enough. Our sole concern and useage profile is directed towards using it to help students be more successful. And it's not used in terms of surveillance. It's used pretty much exclusive in understanding the patterns that coincide with success and those that coincide with failure, dropout, academic struggling, and so on. In short, it is used to proactively intervene with students at risk rather than wait for it to be too late, e.g., final grades are in and no tutoring intervention is possible. A recent use had me using Xgboost to examine patterns of LMS usage to determine students at risk of early drop out. It worked, and we can now identify about one third of early drop outs with practically no effort and almost no false positives and work with those students to address their problems before they go too far. That isn't all about tuition revenue either: often enough it entails helping the student finish out the semester rather than have that time and money wasted at the same time they receive advising on how to transfer to another school that may be better suited to them.
I'm sure privacy maximalists will not be satisfied with the above, but really, within the realm of data comprehensive I idividual data collection, I'm not aware of any business, much less an entire industry, that treats such data as responsibly as this, and that really is concerned with using it only to further the best interests of it's constituents. Obviously I'm biased. That probably means things are not as rosy as I envision. But I think it is nonetheless an important and valid synopsis of the issue.