A professor at IU has decided to not give grades, but you need to level up your avatar to pass the class.
"Games and real life are colliding in unique ways. One professor at Indiana University, Lee Sheldon, doesn't give grades. Rather, students start as a level one avatar and level up through the class based on attendance and performance, like in a role-playing game. And the students' performance in class seems to indicate that the system works."Interesting idea.