The Exam-Free Experiment: What Happened When One University Bet on Group Projects

To promote deeper learning and fairer outcomes, many education systems have moved away from traditional in-class exams toward lower-stakes, more flexible forms of assessment. Yet despite the growing popularity of this shift, we still know little about its long-term consequences. What began as a single in-class exam has evolved into a mix of midterms, finals, take-home tests, re-takes, problem sets, and participation-based grading. In some cases, assessments now depend more on whether students complete their work than how well they perform. This trend has extended beyond the classroom: many U.S. states have discontinued high school exit exams, and a growing number of colleges no longer require standardized test scores for admission.

These changes reflect important goals—reducing stress, promoting equity, and encouraging real-world skills like collaboration, which exams often fail to capture. But a key question remains: if we continue moving in this direction, what do we gain—and what might we lose?

To help answer this, my coauthor and I studied a unique case in Costa Rica. In 2008, ULACIT, one of the country’s top universities, made a bold decision: it eliminated all in-class exams across all degree programs. No more midterms or finals. Every class would instead be graded through group projects. The policy was implemented quickly, with no phased rollout and no student opt-in. It was one of the most sweeping academic reforms of its kind—and it’s still in effect today.

Because we had access to detailed academic and labor market data, we were able to track what happened to graduates before and after the policy took effect—and compare them to students at similar universities that didn’t adopt the change. What we found offers some evidence on how shifting the way we evaluate students can shape their long-term outcomes.

The labor market rewards project-based learning
Graduates who were already enrolled at ULACIT when the no-exam policy was introduced earned 14% higher wages than comparable students evaluated through traditional exams. These gains appear to come through multiple channels. First, the flexibility and design of project-based learning encouraged students to work during college, which helped them transition more easily into the labor market. Second, the collaborative nature of group projects helped students build strong peer connections—networks that later reappeared in the workplace in the form of denser alumni ties within firms.

What about learning? Although Costa Rica lacks a standardized post-college assessment system, the fact that the overall effect on earnings is strongly positive suggests that even if learning were negatively affected, the development of other skills more than compensated for it. In the aggregate, the reform left students better off.

Our research suggests that moving away from exams can improve labor market outcomes—especially for students who might otherwise be overlooked by traditional grading.

Importantly, these benefits were not evenly distributed. Wage gains were significantly larger for male students, even though female students appeared to benefit more from early work experience and alumni networks – suggesting that some gender-specific mechanisms remain unexplained. The effects were especially strong among graduates from public high schools, who gained more from improved career alignment and early job exposure than their peers from private schools. Students with below-median high school GPAs also benefited disproportionately. The new system compressed grade differences – meaning the gap between high and low performers narrowed on transcripts. This leveling effect allowed students with weaker academic records to gain access to better-paying firms that might have previously overlooked them.

In short, the reform didn't just change how students were evaluated. It changed how they prepared for the workforce—and how they were rewarded once they got there.

Not all effects were positive
But the story isn’t entirely one of gains. The reform also brought several unintended consequences. One immediate effect was grade inflation. As exams disappeared, average GPAs rose and academic honors became more common. Whether this reflected real improvements or simply less rigorous evaluation is difficult to determine, but it raised questions about how effectively the system could still distinguish top performers.

The shift also reshaped the faculty. Turnover increased as some instructors opposed the new pedagogical model or found the added workload unsustainable. The faculty who left had a clear profile: they were more likely to be part-time instructors who weren't ULACIT alumni and lacked graduate degrees. This suggests the reform didn't push out the most experienced faculty, but rather those with weaker ties to the institution and less buy-in for project-based teaching. Meanwhile, faculty wages stagnated, and enrollment growth slowed—widening salary gaps between ULACIT and its peer institutions and compounding long-term challenges in recruitment and retention.

What this means for the broader education debate
Education systems worldwide are reassessing the role of exams. From high school classrooms to college admissions offices, the push for more flexible, inclusive, and formative assessments is real—and often well-intentioned. But while these reforms aim to reduce stress and recognize diverse talents, they also come with trade-offs. For all their flaws, exams provide a standardized signal of achievement. Remove exams entirely, and we might replace one problem with another. Instead of favoring students who perform well under pressure, we might favor those who navigate group dynamics well. 

Our research suggests that moving away from exams can improve labor market outcomes—especially for students who might otherwise be overlooked by traditional grading. The latter is particularly important, as it suggests that the skills an exam-centered system tends to overlook are materially valuable—and, in our context, can more than compensate for any loss in test-based skills. As prof. Kirabo Jackson (2018) has argued in related work, what exams miss may matter just as much as what they measure.

Ultimately, there’s no one-size-fits-all answer. But as education continues to evolve, we must ask not only what feels fairer or more modern, but what actually delivers better outcomes—for students, for teachers, and for society. The path away from exams may offer promise, but it is not without its pitfalls. And we are only beginning to understand where it leads.