Teri on facebook asked this question: How to compete with the 5 pt grading scale in public school...they take a college credit type class and it's weighted at 5 pts vs 4pts for an A then their GPA can be higher than 4.0 overall. A friend told me that some exclusive/ivy league colleges aren't even looking at kids unless their GPA is near 5 or at least over 4.
Each college is unique. Always do as your favorite college asks. That is why it is important to get to know the college. Many colleges will remove weighted grades and others will include them, but there is no agreed standard of how to weight grades. So, if you discover they do want them, it is very important to ask them how they want them weighted. Don't assume or do it based on internet advice.
FWIW, I followed your advice, unweighted all grades and have "Unweighted GPA: x.x" on the transcript. My student and I called the admissions counselor at her first choice school about merit scholarships. Her answer surprised us: based on 2 things: SAT/ACT scores and gpa. The surprising part was her example student had a 4.2. Confused I asked and she explained this school WANTS weighted GPA's for the purpose of merit aid as they recognize kids who take more rigorous work should be recognized for such. She went on to say honors gets an extra 0.5 and true AP (courses approved by the College Board, not courses with just an add on AP exam) get a full extra 1.0. So, yes, it is very important to call and ask specific schools. She did add that it was probably a good idea to publish both the weighted and unweighted GPA on the transcript.
Weighted grades are for honors classes, college courses, AP classes, etc. Since these course are more rigorous, they have a greater GPA value than other high school courses, so receive a 1-point increase in their numeric value. Use the higher value for that course and then calculate the GPA as usual.
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