The pass/fail grading system is an alternative to a letter grading system in higher education courses. Students who receive a "C" or higher grade typically will pass the course under this system, while those who receive a "D" or "F" will fail. Sometimes only an "F" means failure. Actual scores are not reported on the transcript -- merely a pass or a fail. The score will not affect a student's GPA, but he will receive credit for the course. Some students benefit from this more general approach to scoring, but others become lazier and less focused.
The pass/fail system arguably puts less pressure on students and allows them to relax and study without obsessing about achieving a high letter grade. This also permits students to become more exploratory in the courses they choose to take. With less worry about scoring an actual "A," students might choose more challenging courses they would otherwise avoid.
Some students become less committed to a course when they know they only have to score at an average level to pass it. They might make less of an effort than they would if their actual performance would be reported on their transcripts. Such general marks on a transcript might also be taken less seriously by graduate schools or employers. Pass/fail classes and scores are often considered less competitive.
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