In "The Zen and Art of Motorcycle Maintenance" (1974), there is an interesting discussion about the idea that removing university grades would provide a better education.
"[A student at a grade-less school would] be a free man. He wouldnt need a lot of discipline to shape him up. In fact, if the instructors were slacking on the job he would be likely to shape them up by asking rude questions. He'd be there to learn something, would be paying to learn something and theyd better come up with it.
Motivation of this sort, once it catches hold, is a ferocious force, and in the gradeless, degreeless institution where our student would find himself, he wouldnt stop with rote engineering information."