Dive Brief:
- A new study looking at Michigan student data found that flagging 3rd graders for retention — regardless of whether they’re actually held back a year — still led to small but impactful improvement in reading scores the following year.
- The study from the National Bureau of Economic Research examined test scores and school progress outcomes for 3rd grade cohorts in the 2020-2021 and 2021-22 school years to measure the impact of a retention policy law in Michigan. Researchers found that being flagged for retention raised students’ reading scores in the next school year by 0.045 standard deviations.
- As of 2025, 14 states have a 3rd grade retention law in effect based on standardized test results, according to a state-by-state analysis by ExcelinEd. Four other states have recently passed retention laws that will take effect over the next few years.
Dive Insight:
Michigan implemented Public Act 306, informally known as the "Read by Grade Three Law," in 2016. The law mandated that 3rd grade students must be retained if they scored more than one grade level behind on the state’s standardized English language arts test.
However, the law allowed for “good cause exemptions” based on a variety of factors including if students are English learners, have an individualized education program or have been enrolled in public school for less than two years. Students may also be exempted if a parent requests it or if the student provides a portfolio showing they’ve mastered the required skills.
The report highlighted that local educators held negative views about Michigan’s retention policy, and most district superintendents indicated that they planned to utilize good cause exemptions heavily, resulting in only about 6.8% of 3rd graders in the 2020-21 and 2021-22 cohorts being held back.
“We can't actually say that retention had no effect, but I think we can say that for the kids at the end of 3rd grade who were subject to this retention policy, retention was not the driver of the impacts we're seeing,” said Jordy Berne, one of the NBER report's authors.
The Michigan legislature amended the original law in 2023 and removed the retention component for cohorts beginning in 2023-24.
Retention is not a popular approach to improving literacy, the report said. It’s expensive from an administrative standpoint because of the costs of having a child in the public school system for an additional year, and it can also be logistically difficult to figure out classroom sizes and teacher allocations.
From a developmental standpoint, there are also concerns about how retention affects children’s social-emotional development — particularly in later grades — and the potential stigma it could create.
Flagging students at risk of retention without holding them back could help address some of these concerns.
“I do think that being flagged for retention is much less observable to your peers in your class or grade than actually being retained. So it could be a way to potentially avoid some of the social difficulties and social stigma that come with being retained,” said Berne.
Beyond the law itself, however, Berne said that how schools and parents respond to flagged students can also have a positive impact. He explained that when a student is identified as being at risk of retention, parents might become more involved and look for outside tutoring help. Similarly, teachers might provide tailored and additional support to students they know were identified as at risk.
Berne added that it is “very possible” that because there is a high-stakes retention policy, people are more motivated to provide these services and try to get students reading at grade level. But if that is removed, some other components of the law might not be as effective.
