Academic institutions worldwide, from primary schools to universities, use grades or marks as a fundamental sorting and signaling mechanism for students. The grades awarded to students should be indicative of learning outcomes. However, do the grades awarded today accurately reflect student achievement in the classroom? Grade inflation has become a widespread phenomenon within the education system in the past thirty years, garnering massive condemnation among educators, researchers and the public. Some people even view grade inflation as a scandal, an injustice and a violation of student trust. Nevertheless, there are some academic institutions that find it convenient to ignore this problem and, in some cases, encourage the practice. In this paper, we examine the various factors that can contribute to grade inflation. Additionally, we assess how grade inflation can create problems for students, faculty, and society as a whole. Finally, we provide some suggestions and recommendations to solve the problems of grade inflation.