Ultimately, this is because employers and grad schools care about the GPA, and schools want to ensure that most of their student body is above the arbitrary thr

Ultimately, this is because employers and grad schools care about the GPA, and schools want to ensure that most of their student body is above the arbitrary thresholds set by those institutions. Otherwise, students and alumni would devalue the university. If Harvard or anyone else wants to maintain a student body with a GPA of 3.5 at the 25th percentile, they will need to either cut students or inflate grades to reach that point. Cutting students was a popular tactic when university was a summers wage - not so much when students are indebting themselves for 10 years to get a degree. Hence we have grade inflation.