There are other ways that the instructor could have conveyed to the students that a "show of gratitude" would be appreciated. Examples might include: a cash tip, giving a gift card (e.g., to the local dive shop, local sporting goods store, local coffee shop), giving a useful piece of dive gear, buying/making lunch, bringing snacks, giving some other thoughtful present, etc.
Telling students to tip the DM $60 is presumptuous, in my opinion.
Most of the DMs here in San Diego get paid a very low wage (minimum wage?) for the hours they are helping out a class. Depending on where they live and the kind of car they drive, it might cover the cost of gas. Essentially, it's volunteer work. Air fills are provided gratis. Their fees for boat dives are comped. If the DM is lucky, his dive shop will give him access to Keyman discounts on dive gear. Sometimes, if the shop likes the DM, he'll be given a discount on instructor training (if that's what he wants to do). The understanding is that, after instructor certification, he will work for the shop.