This study investigated the effects of different grading policies (lenient vs. strict) on engineering students' cumulative grade point averages (CGPAs) in Pakistan. A sample of 1578 students was analyzed, with around half graded under a lenient policy with 5 letter grades and the other half under a strict policy with 7 letter grades. Results showed that students graded under the strict policy had statistically higher CGPAs on average compared to those under the lenient policy. Low-performing students benefited more from the strict policy in terms of improved CGPA. The study provides evidence that stricter grading policies can positively motivate students to achieve higher performance levels.