This error occurs because the student already has a graduate status record posted.

Resolution: 

Check the Completion Status code and confirm that the student has the correct data entered.  If a student "graduates" and then returns to the same school in the same year, remove the Graduation Status and Graduation Dates values from the second tab in Student Demographics and enter that information in the Transcript Comment area.  When the student completes the school year and leaves permanently, re-enter the Grad Status and Grad Date.