Grades, as conventionally conceived and used, are failing the educational system. There are numerous mistakes made in the computation of grades and grade point averages. They become the end of the educational endeavor instead of an evaluation procedure. They are psychologically damaging to two-thirds of the students because of their inability to get the only two good grades (A & B) and they interfere with a good relationship between teacher and student. Concord High School in Wilmington, Delaware has initiated a criterion-referenced system which eliminates grades, grade point averages, class rank, valedictorian/saluatorian distinctions. This system is based on carefully written performance objectives which allow students to progress at their own rate of speed and completing the course when they have achieved the objectives. There are two basic levels in which a student may choose to operate, sufficiency and proficiency. The former designation is for those meeting basic requirements and the latter is designed for those who have unusual motivation, interest and skills and wish to distinguish themselves. Colleges will accept transcripts devoid of grades, grade point averages and class rankings, if the schools can provide adequate information on what the student knows. Surveys of 180 colleges support this premise. Only 10% report that this kind of transcript might interfere with the student's admission. The only thing preventing change in the grading system is developing a strategy for the change process. (Author)