[Solved] How do I fix a program bypass that is not working?

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You are ANDing your conditions. It seems you want to OR them. Also it seems you have your logic reversed.

I would do it this way…

[...]
   FD  STUDENTS-FILE-IN.
   01  STUDENTS-RECORD-IN.
       05  SOCIAL-SECURITY-NUMBER-FIRST-IN           PIC X(3).
       05  SOCIAL-SECURITY-NUMBER-MIDDLE-IN          PIC X(2).
       05  SOCIAL-SECURITY-NUMBER-LAST-IN            PIC X(4).
       05  STUDENT-NAME-FIRST-IN                     PIC X.
       05  STUDENT-NAME-MIDDLE-IN                    PIC X.
       05  STUDENT-NAME-LAST-IN                      PIC X(9).
       05                                            PIC X(5).
       05  GRADUATION-STATUS-IN                      PIC X.
           88  STUDENT-HAS-GRADUATED                 VALUE 'Y'
       05  CLASS-STANDING-IN                         PIC X.
           88  CLASS-STANDING-TO-SKIP                VALUES '1' '2'.
       05  MAJOR-IN                                  PIC X(3).
           88  MAJOR-TO-SKIP                         VALUES
                                                     'DIG' 'NES' 'PGM'.
       05  CREDIT-HOURS-EARNED-IN                    PIC 9(3).
       05  CREDIT-POINTS-EARNED-IN                   PIC 9(3).

[...]
   120-CHECK-BYPASS.
       IF STUDENT-HAS-GRADUATED
       OR CLASS-STANDING-TO-SKIP
       OR MAJOR-TO-SKIP
           CONTINUE
       ELSE
           PERFORM 200-PROCESS-ONE-RECORD
       END-IF.

This is just freehand, I haven’t tried to compile it.

solved How do I fix a program bypass that is not working?