I'm curious if what you are describing is what I am seeing also. I synced using google classroom. The students signed in. On my khan student roster, their student name is appearing as the first part of their google email address. 

Example

Student Bob Smith has a google email of btsmith54@schoolgoogleemail.org

On my khan student roster, their student name is showing as btsmith54.

Do I have to have students manually go and change their real name? Some students did have it show up as real name though and they swear to me they only signed in like everyone else and didn't make any changes. 

Jamie, yes, that is what happened to mine. Our school set up emails for each student using their ID numbers, no names. I linked them into my Khan classroom and I just have a list of numbers!!  I go on a student's profile but it won't let me change their name.

If you go to your roster, you have the ability to "Edit display name". When you hover over a students' name this option should appear in the spot that I have highlighted:

Generally I would recommend editing names so that they are shown as Last, First if you are taking grades based on their KA work.

I would