Findings of a study that examined the effect of the reforms mandated by South Carolina's Educational Improvement Act of 1984 on student outcomes are presented in this paper. Specifically, the study sought to determine the impact of higher standards for grade promotion and graduation on retention rates, the proportions of students overage for their grade, different demographic groups, and student achievement between the years 1985-86 and 1989-90. Methodology involved analysis of statewide testing and demographic data and school policy reports submitted to the state department of education. Findings indicate that the stricter requirements created a high stakes testing environment. The data suggest modest gains in achievement but no improvement in the dropout rate and school holding power. In addition, student retention in grade increased, with differential effects on students with different demographic characteristics. A conclusion is that despite the modest improvement in achievement, the higher standards have had deleterious effects for some groups, particularly nonwhite males. Four figures and eight tables are included. (Contains 11 references.) (LMI)