Chris,
I wanted to share two policies that I know of: a) where I work (an offshore university program), and b) my university department's policy (where I am a student). These are obviously not internal corporate related but in the 'spirit of sharing' as Ken says!
A) Work
I manage our Moodle installation and we run on an 8 week quarter system. The majority of students don't tend to enrol in sessions sequentially although this year has been different from the norm. I'd hazard a guess it has to do with poor market/labour conditions locally. Anyway, we simply reset courses every 8 weeks at the end of the session to clear data and make way for the new session. If students pass, they don't take the class again. If they fail, the may repeat it but this is a minority in practice.
We export grade books and final grades into a separate repository for historical data and record keeping so it isn't necessary to retain this information in Moodle itself. Moodle also complements an on-site program so not all of student work is digital and stored in Moodle. We do sometimes have issues with students wanting to check their final grades after the system has been reset even though I typically do this on the first day of the new session. We simply redirect them to the admin staff that will pull it up from the other repository. We also encourage faculty to keep a record of the course grade book should a student inquire but it isn't mandatory since the admin staff can do this on behalf of the faculty/student. And yes, we are a very small department so there isn't much red tape or bureaucracy to go through.
Another issue is disk space on the server. We have enough to do a number of things, but, we would potentially start running out of space (we have 180Gb total on a VPS, site footprint is around 16Gb on average) if we kept courses archived. It would snowball at some point A site footprint could easily double which then makes the backups double in size and suddenly there's no room left!
B) My Department
Our department keeps Moodle courses archived for a couple of years (I have a feeling it is 2, same as the server space they provide students) which I recently found out this summer. They also use Moodle over Blackboard which is what the rest of the University uses (state contracts blah blah). The time length that they preserve data/records, I'm sure it has to do with accreditation standards. So while they aren't directly accessible to the student after the course has been completed, an admin could go examine the course at a later date within this period, and a student could request something they turned in, for example, had it been lost.