When you deactivate a student they will lose all access to the course and will stop receiving emails from Peergrade about the course, but their data will remain within the course.
To deactivate a student go to the participants page in your course, scroll down to the list of students and find the student(s) you would like to deactivate. Click on the gray pencil to edit the student's information. Find the option to deactivate the student in the bottom left corner of the edit participant box.
To delete a student, select the red trash can icon.