A study was conducted at Passaic County Community College (PCCC) to investigate the operation of a grading system which utilized an asterisk (*) grade to indicate progress in a course until a letter grade was assigned. The study sought to determine the persistence of students receiving the "*" grade, the incidence of cases of students receiving multiple "*" grades in a course and the passing rates of students who received one "*" grade compared to those who received two or more. All students in academic foundation courses (AFC's) who obtained an "*" grade in fall 1980 were followed through the next three semesters. Study findings, based on final grade sheets, student transcripts, and enrollment data, included the following: (1) 565 "*" grades were assigned in fall 1980, representing 18.8% of grades given in AFC courses; (2) in 13.8% of these cases, students earned an A, B, or C in the following semester, while 12.9% received another "*" grade; (3) 46.6% of the students who received two "*" grades did not return to PCCC in fall 1981, while 9.6% received a third "*" grade; (4) in fall 1980, 286 (50.6%) of the "*" grades were assigned to first-time students, and only 50 (17.5%) of these resulted in a passing grade in the three succeeding semesters; and (5) of the passing grades received subsequent to an "*" grade, 96% were earned in the first semester following the assignment of the "*" grade. Based on the study, it was recommended that only one "*" grade be allowed in any AFC course. (HB)