Modest correlations between teacher-assigned grades and external assessments of academic achievement (r = 0.40-0.60) have led many educational stakeholders to deem grades subjective and unreliable. However, theoretical and methodological challenges, such as construct misalignment, data unavailability and sample unrepresentativeness, limit the generalisability of previous findings. We overcome these challenges by exploiting rich, population-wide data from the National Registries in Norway (n = 511,858), where state regulations require close construct alignment between grades and external exams. Correlations between lower-secondary education final grades and external exam results (r = 0.64-0.86) suggest that grades are better measures of academic achievement than previously acknowledged. Dominance analyses and multivariate regression analyses indicate that external exam results are the best predictor of grades in the same subject. However, our results also indicate that state regulations and quality assurance systems cannot completely eradicate potential sources of discrepancy.