<p>The residuals are still subject to interpretation. Does an institution have a higher-than-expected graduation rate because of lower grading standards or because of better teaching, or some other reason? Caltech usually has a lower than expected grad rate. The question is why.</p>
<p>The residual analysis is related to the US News over- and under-performance.</p>
<p>Sometimes individual students with lower SATs still do well because of good work habits. That is true. But, when the average grad rate is higher for an entire freshman class it means than individual students have a better chance of graduating although it is hard to predict which ones, specifically, will graduate.</p>