Unintended dynamic effects of the flexible grading policy

While there is extent evidence on the steps K-12 institutions took in response to the COVID-19 pandemic (such as school closures) on student achievement, there has been little exploration about the longer-term consequences of accommodations, such as the flexible grading policies (FGP), which allowed students to exercise the credit/no credit option during Spring and Fall 2020. Using an unbalanced panel of 17,825 academic records spanning from Spring 2018 to Summer 2023 from an urban broad-based undergraduate public college, and event study analyses with individual fixed effects, we find that students who used the FGP, underperformed once the policy was no longer available. FGP users’ Cumulative GPA was 0.11 standard deviations lower in Spring 2021 than in Fall 2019 relative to the change in performance of students who never used the policy. This underperformance persisted over time. Consistent with students’ loss of human capital, we find that most of this effect is driven by students who used the FGP to convert major-core courses, which require a minimum grade of C to pass. After ruling out alternative mechanisms, including students’ pre-pandemic academic performance or economic vulnerability, as well as pandemic-related health, learning, and economic shocks, we estimate that the FGP is associated with a 27 % lower likelihood of on-time graduation by Summer 2023. No such negative effects are found using an earlier placebo period.