Check site backup preferences/defaults.
Site administration => Courses -> Backups -> General backup defaults
Defaults are normally set to backup everything except logs and histories.
So would do full backup of a course once.
Then reset that course ... checking each setting to assure all student data is removed. End up with a course ready to enroll new students then.
Hiding courses in a hidden category and nothing done to those means everything is there still, but making that an annual practice means site backups will grow, any database queries have much more to look through ... etc. Student accounts in there, BTW, might auto expire if they haven't been used in X amount of time. Moodledata/filedir also grows ... never seems to get smaller.
How much space do you have? Unlimited? Hard to imagine any hosting provider really means 'unlimited' space like we would like to define 'unlimited'. :|
2 cent advice ...
'spirit of sharing', Ken