Michigan to Drop First-Semester Freshman Grades Starting Fall 2027

The University of Michigan is scrapping traditional letter grades for first-semester freshmen in its largest college, replacing them with pass/no credit marks starting fall 2027. The school is framing the move as a response to a student mental health crisis, not an academic policy tweak.

What is changing

The University of Michigan’s College of Literature, Science, and the Arts (LSA) will stop reporting traditional letter grades on first-semester transcripts for incoming freshmen beginning in Fall 2027, replacing them with “pass” or “no credit” designations as part of a pilot program aimed at reducing student stress and curbing a “mental health crisis”.

The program, set to start in fall 2027, applies to students in the College of Literature, Science, and the Arts, which enrolls about half of Michigan’s roughly 8,000 first-year students.

Grades still exist, just hidden

Students will still earn letter grades and receive instructor feedback in every course. However, those grades will remain internal, will not appear on official transcripts, and will not affect first-semester GPAs.

Under the new policy, university officials will keep students’ first-semester letter grades internally for administrative purposes, including academic advising, potential academic awards and scholarships, internship and other professional applications, athletic eligibility, compliance reporting, degree progress and financial aid determinations.

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The rationale

The university says the pilot program is intended to ease academic pressure, helping freshmen adjust to college and helping them “start strong and curb the mental health crisis unfolding among college-aged individuals.”

Eighteen percent of college students reported severe depression symptoms in the 2024-25 Healthy Minds Study — which is administered by the Healthy Minds Network at Michigan’s flagship university — marking the third straight year of decline.

Not the first school to try it

Michigan notes that institutions such as the Massachusetts Institute of Technology, the California Institute of Technology, Swarthmore College, and Wellesley College have adopted similar first-year grade-covering policies.

All first-year LSA students will be enrolled in the program, with the college noting an “opt-in” program would “defeat the purpose of facilitating students’ transition to campus,” supporting their mental health and motivating them to learn.

Options market and stocks to watch

Higher education policy shifts do not move markets directly, but the mental health and ed-tech complex has adjacent read-throughs. A few tickers worth watching:

• LRN: Watch for flow tied to broader K-12 and post-secondary learning platforms as grading debates spill over.
• COUR: Watch for sentiment around alternative credentialing if traditional transcripts get diluted.
• TWOU: Watch online learning names for any reaction to shifts in how universities package undergraduate outcomes.
• LFMD: Watch telehealth and mental health-adjacent names given the framing of the policy around student well-being.

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