Kyoko Loetscher was crying. The Princeton lecturer had just told her 20 top Japanese students that only seven of them--down from more than half the previous year--would get A's. "This is absurd and unfair," she said. Actually, it's Princeton in the new age of "grade deflation."

THE POLICY: In 2003, 65 percent of Princetonians graduated with a B-plus or better. But last April, the faculty voted to limit A-range grades to 35 percent per department.

THE BACKLASH: Students received their first "deflated" report cards last week. In Loetscher's class, 95.3 percent was A-territory; 95.2 percent was not. One engineering department slashed its A allotment by 12 percent. Panic set in--mostly about job prospects. Recently, Dean Nancy Malkiel sent letters to 3,000 employers and grad schools, but her efforts have done little to quell fears--perhaps with good reason. "A 3.0 is a 3.0," says alum Alex Rosenfeld, a recruiter for a major investment bank. "That resume is going to end up in the shredder."

THE FUTURE: Malkiel won't review '04-'05 data until next fall, and contrary to expectations, other colleges aren't following suit. But at Princeton, as Prof. Eileen Reeves puts it, "the B is back--with a vengeance."