Research was undertaken to determine whether comparable grading standards are used in evaluating student performance at two-year community colleges and four-year universities. Examination of academic records of 417 students who took college level math at the University of Tennessee at Chattanooga in fall 2009 compared the performance of those who had previously taken intermediate (high school level) algebra at a community college with those who had taken intermediate algebra at a four-year institution. Although students who transferred intermediate algebra from a community college had earned significantly higher grades in that course, on average, than those who took the course at a four-year university, their subsequent performance in college-level math courses was substantially poorer. This suggests that grade inflation at the community college level may ultimately result in lower graduation rates for students who transfer to four year universities with inadequate preparation for courses in the general education or major curriculum. As states seek to create incentives for four-year institutions to increase graduation rates and as they reduce subsidies to higher education by encouraging more students to begin at a less expensive community college and then transfer to a four-year university, the public policy implications of the results of this research become increasingly important. (Contains 2 tables and 5 footnotes.)