Does an educational agency or institution have discretion over what education records it decides to create and keep?
Yes. FERPA does not require schools to create education records nor does it require schools to maintain education records, unless there is an outstanding request by a parent or eligible student to inspect and review the records.
Source: 34 CFR § 99.10(e)
K-12 School Officials
Postsecondary School Officials
Parent and Eligible Student Rights