A Second Chance at Success? Effects of College Grade Forgiveness Policies on Student Outcomes

The increased popularity of college Grade Forgiveness policies, which allow students to retake classes and substitute the new grades for the previous grades in their GPA calculations, is controversial yet understudied. Our paper is the first to ask whether such policies benefit students and how. To answer these questions, we use student-level admissions and transcript data from a four-year public institution in the U.S. that underwent two major changes in its GPA policy. We find that Grade Forgiveness significantly incentivizes students, especially students with the strongest academic preparation, to take STEM courses and challenging courses and to enroll in more credits. The increased variations in within-term grades suggest that students may change their effort allocations between courses taken in the same semester and spend more effort on courses that promise a higher grade in return. We also find that repeaters whose first attempted grades are forgiven are more likely to persist in the failed subject and obtain better grades subsequently. Finally, we see an increase in graduation in STEM majors for students who were intensively exposed to this policy.