Life is tough, deadlines are strict, and failures are costly. But reality usually is not black and white. One can try again and one can improve oneself in real life.
It is different with university courses. If I pass an exam with a low, but passing grade, then this grade sticks for the rest of my life and I can do nothing about it. It can ruin my prospects of an academic career.
Why is such a strict rule common?
If universities allow infinite resits for all students for free, it creates infinite workload for staff, which is unsustainable. Even if funding were not an issue, preparing and marking the re-examinations is a tedious task which would lead to staff burnout if not managed properly.
Asking students to pay for their re-examinations allows financial inequality to penetrate further into the system of academic success, and ultimately leads to furthering systemic inequality. This goes against the mission of many universities, which aim to provide fair opportunities to all students.
The effects of allowing improving grades may somewhat depend on the academic system, in particular how much these grades are valued and what failure rates are considered acceptable (see, e.g., this question). However let me give you some perspective from a system that does allow it (Germany, STEM fields):
For most written exams, our university gives students one attempt to re-take a passed exam when they have taken the course for the first time. In that event, the better of the two grades counts. I consider it good that this opportunity exists since it can cover some edge cases, where the exam was broken or the student had a bad day, but still passed. The main positive effect however is that students do not intentionally fail the exam in hope to get a better grade at the next attempt, causing more work and possibly regretting it later.
The most relevant aspect to your question however is this, in particular in light of Dmitry Savostyanov’s answer: Most students do not use this opportunity. Some rough statistics from personal experience:
So, in our system, the additional correction effort is small, and I would guess that it is fully compensated by the additional effort caused by students intentionally failing.
Now, back to your question: While I do think that allowing grade improvements is good, the reasons for this are not immediately apparent. Look at it from the perspective of another university evaluating our experience to make a decision: The statistics you would naïvely look at (students who substantially improve their grades) suggests that this rule does not make a relevant difference, while the main benefit (students not intentionally failing) may not be obvious and is not easily quantifiable. Add to that the fear that students overuse this (even though our data suggests otherwise). You might thus decide that you may as well spare yourself the administrative effort of establishing it.
I would like to push back on several misconceptions in this question.
Life is tough, deadlines are strict, and failures are costly. But reality usually is not black and white. One can try again and one can improve oneself in real life.
Your premise contradicts the last part. Life is tough, deadlines are strict. This immediately implies that in many cases you will not have a chance for a re-do. Clients impose project deadlines, products need to be rolled out to market, and collaborations often depend on you completing your tasks on time.
An academic career will fill your life with many strict deadlines. Papers have to be submitted by a certain time, grant proposals have deadlines, your grad students will need to propose/graduate by a certain deadline, your tenure case will be evaluated at a certain time and so on.
If I pass an exam with a low, but passing grade, then this grade sticks for the rest of my life and I can do nothing about it. It can ruin my prospects of an academic career.
Again, not necessarily true twice: first of all, there is almost always something you can do about it. You can often talk to the instructor to see if there's an option for extra credit, a lot of universities offer retakes (as others mention), and you can also simply retake the class (or even request for it to be potentially dropped from your transcript).
These things take time and effort on your part - but that's the point! You are an adult and need to take ownership of your failures.
Secondly, a single bad grade usually won't preclude you from graduate school, especially if you show excellence in other aspects: doing a research project, excelling in extracurriculars, or community outreach activities are all looked at.
Finally, this may be unpleasant to hear, but if you have consistently bad grades in some field, this is usually a sign that you may not be a good fit for an academic career in that field.
Why is such a strict rule common?
Several technical reasons: allowing students to retake exams takes time, effort and money. It also interferes with a lot of downstream university processes.
Someone needs to invigilate these exams, those people need to be paid.
Exams happen in study halls that could be used for other things (e.g. renting them out for events which often happen during semester breaks, or for winter/summer classes).
Instructors need to write additional exams, and their difficulty needs to be calibrated with those of the first exam. This is not easy to do fairly.
One could question whether final exams are an effective method of assessment altogether. This is an excellent question in itself with lots of different answers. I personally try to avoid them, but that is only because I usually teach small classes. In large classes, final exams are one of the few methods of impartial large-scale assessment with less potential for cheating. We do see some movement towards more continuous assessment methods, but these are also problematic, e.g. they can be biased based on how much an instructor likes/dislikes a student, they're time consuming and (at least from my limited observations) tend to disadvantage first-gen college students.
In addition to the other answers, I'd like to highlight another reason for not allowing retaking exams to improve low grades: when you know you have only one chance, you approach the exam more seriously and responsibly. In many life situations, there's only one opportunity, and the university is, in a way, preparing you for that. If you anticipate the option to retake the exam for a better grade, there's a likelihood that you might treat your first attempt as a trial and invest more deeply in learning the material only if the initial attempt falls short.
There are different rules in different places. In some places, even at different universities in the same country, the rules will leave you with a grade on your official transcript that can't be changed. In other places it is possible to take the course again and in some of those (not all) the new grade will replace the old grade. But that might not be in a student's best interest. It takes time that might be better spent on other things.
If you get a bad grade in one or two courses (US focus) it might not affect your future career at all. It would depend on the courses. Advanced courses in the major have more impact than early courses or general education courses.
Moreover, if you get accepted to a graduate program, then how you do there will cover for any negatives in the undergraduate program. It is expected that people aren't perfect and that they can grow.
But, if you had options along the way that you didn't take, then it isn't the fault of the system that holds you back. And your career is most likely determined by things other than just the grades you get. In many places letters recommending you have at least as much weight as grades, though poor grades in advanced courses can be an issue.
As to the question of why isn't a more permissive policy common is that universities consider the judgements of professors to be valid at the end of a course. In rare instances those judgements, usually and hopefully based on data, can be questioned. But for most situations the grade is the grade. Full Stop.
How many Es and Fs become As or Bs after a repeat exam ? Few, I would think.
Those students scoring highly in the repeat exam would usually have a sound reason for this like being sick/absent for much of the course when first taught - or maybe overcoming by themselves (or with assistance from personal tuition) the handicap of a mental block on a foundation element caused by poor original teaching.
By and large, students fail due to the subject - even when competently taught - being "difficult" for them. That is to say it's not aligned with their natural aptitudes - so it's "hard" - or with their ultimate goals - so they don't work hard to get at least a decent competence in it. Hence those who score a C in the first exam and want to retake it will struggle to get it up to a B, let alone an A.
Others have alluded to how certain students, whose ambitiousness may be out of proportion to their merit, making full use of strictly unnecessary exam resits while students of naturally better ability who do not do so would be ultimately leaving with a seemingly inferior degree class. This has to be guarded against by all standards-conscious universities: resits are for those who truly need them - not for those who just want to use them.
Your main concern seems to be how low grades affect your prospects of an academic career. If you gather enough low grades at an early stage of a 4 year undergrad course then yes it will be arithmetically impossible to pick up the first-class or upper second-class degree demanded for "straight through" admission to graduate school, although a strong final year project could overturn this for 2.2 candidates. There are also sometimes more MSc or PhD studentships in a particular research area than normally qualified candidates and thus the entry level may be dropped to 2.2 so as to fill the positions.
But be aware too that some years of post-university experience , e.g in industry, government, consultancy, etc, may make graduate school admission easier - as well as broadening the outlook and minset of these applicants. It's a longer drive but it may be more negotiable for some would-be academics.
Overall I feel that you have to be realistic about your academic ambitions. In that way, while you work towards them, you remain clear that it is a highly competitive arena and one where many excellent students, many committed teachers and many very sincere people do not gain a permanent appointment due to the strong competition for positions and many universities' emphasis on quality research on trendy topics.
One of the problems with retaking an exam is that there is a bias. People who take two exams on a subject tend to do better on the second exam, even when they didn't do much work improving their knowledge of the material.
Some of this bias comes from just being exposed to the exam. If the second exam isn't heavily rewritten, then a student with a decent memory who did poorly can remember the questions they struggled on and select a different answer. This is especially true for multiple choice questions, where you are effectively cancelling one of the possible answers.
Should you be an enterprising professor that completely rewrites the second exam, then you get into arguments on whether the second exam is the equivalent of the first exam. It is possible to design the second exam to be the equivalent of the first, but generally such efforts must be undertaken at the beginning of the exam design (for example, selecting at random 100 questions out of a pool of 500 equally difficult questions). Trying to post-design an equivalent exam is very difficult.
And while these items are technical in nature, the real issues come up with the countless hours lost in argument by student over the merits of the first exam vs the retake.
Finally, it is important to remember that Professors are not really paid or retained due to their teaching. It is a task assigned to them in addition to their primary duties, which typically is to obtain research funding and advance the university's status.
Most Universities take about half of all research funding from the grant awards as overhead for running the schools. A successful professor can earn far more in grants than they can in their three or four hours of tuition. Putting an even greater burden on the professors in ways that don't advance their career or the university's continued existence is frowned upon by everyone (except the student).
Actually, a lot of professors do allow this. I have seen many courses where the instructors allows students to take, say, 4 exams and drops the lowest from the final calculation. Also, some professors are willing to give you extra homework to boost your grade if you approach them.
Also, some schools allow retaking the whole course if you finished with a low, but passing grade, as if you failed. In mine, they allowed retaking courses if you got lower than a C. Usually, people would retake these in the summer semester where you had to pay 10x in tuition per credit hour, and also instructors got paid extra for teaching summer courses. Anyways, it's possible to, if you don't feel confident, deliberately fail an exam or even not attend, and then either ask for a make up or simply retake the course after failing it. So in this sense, they all "allow" it, just not as conveniently as you imagine.
With that, what you're really asking can be interpreted as:
1 has an obvious answer: Ask them. I'll try a realistic take on 2.
I don't think because the compassionate administration wishes to spare the poor grad student from burdensome work. I don't think it's realistic to claim that academic administration as a whole has much compassion for TAs. They have terrible work conditions and mostly accept it (maybe with some grumbling), grading exams even without retakes is already a huge amount of busywork depending on the course. Also, if a school gets a reputation for working its TAs too hard, it doesn't really impact it in a material way. Academia has a culture of glorifying overwork, and this may even be seen as evidence of how rigorous and excellent the school is.
While I'm not in university administration, I would assume that administrators (people who make the rules like "no retakes") mostly care about their school's (and their own) reputation with other high status academic administrators, high level government bureaucrats, wealthy donors and captains of industry. It is not hard to imagine how a university, and its administration, would be harmed by displeasing these groups.
If a university allowed infinite retakes, the obvious consequence would be that students would be able to get higher grades compared to other institutions with the same amount of effort and talent. The institution would get a reputation for inflated grades. This would devalue its diplomas to employers, and devalue the school's academic achievements to administrators and bureaucrats. Donors might see this as falling standards. For alumni, there might be some element of "I had to suffer, so the new generation should too". I think this is the compelling reason why retakes are not more common.
Arguing grade inflation does have a hole - other forms of grade inflation are reportedly common in top institutions these days. The first question is whether it's perceived or real - indeed, it's possible for "consumers" of graduates to rationalize it as the students just being smarter and studying harder. Such rationalization is more difficult with a school that allows retakes. Moreover, the familiar forms of grade inflation is normalized, so perhaps schools feel secure in allowing them because "everyone else does it too". With retakes, whoever does it first would be unprecedented, so they probably perceive the risk as greater.
I don't know if this is convincing, and it's hard to fairly treat grade inflation in a (not so) short StackExchange answer. But ultimately the main reason discouraging administrations from retakes is that it would give them a reputation for grade inflation.
I have worked in the UK university system, and now I am in Italy. In the UK (at least where I was) it wasn't possible to retake a passed exam, unless you could claim extenuating circumstances. Who failed an exam has just one chance to retake it, and the mark was capped at the pass mark. This means that somebody who failed the exam in the first attempt wouldn't have an advantage over somebody who passed with a low grade, as it was impossible to achieve a good grade in the retake.
In Italy (at least where I am) there are several exam sessions in the year, and students can decline a pass mark in order to improve.
If I compare the systems, there are pros and cons of both. I do think that students tend to learn something if they can try to improve their result, so this possibility, having the experience from a first exam attempt when potentially preparing for a second one, overall helps students' learning (even though this doesn't hold for all students, particularly if they don't take the exams seriously enough because they think that later they can improve anyway).
Another advantage of the Italian system is that there is no need for an extenuating circumstances procedure. I don't need to be interested in the reason why students don't do well, and they are not encouraged to make up something in order to have extenuating circumstances accepted. I just tell them "try again next time" and that is that. I was in an extenuating circumstances commission in the UK and I hated it. You basically knew that some requests were very real and some weren't, but very often the documentation wouldn't allow us to tell them apart, particularly (but not only) where the reason was psychological.
That said there is awareness in Italy that allowing retakes for improvement of the result creates work, and many of the academic staff don't like it. Of course one can argue that exam retakes are necessary anyway for the students who fail and those who make themselves fail in order to retake, but in the UK system that I know, it doesn't make sense to fail on purpose, and catering for the failed students just required one retake exam (in fact because of extenuating circumstances there was a procedure in place for a second retake exam, but that was organised in a low level manner, would often not be used, and required very little work overall). And then communicating to the students in an unambiguous manner that the first exam counts will encourage them to fully focus on it.
In my department in Italy there have been initiatives to reduce the number of offered exam sittings for retakes in order to reduce the workload, and in order to encourage the students more to concentrate on the first exam and to do things as quickly as possible. Obviously retaking several exams can also to some extent compromise work on other courses and exams. By and large I think we're moving in the direction of a good compromise between offering lots of resits and allowing unlimited retakes, creating lots of work and delay in student "careers", and the very harsh British approach where one bad day can leave a bad mark on the student's transcript. In fact I can accept taking an exam twice even if passed as a factor in helping the students to learn, and I'd support that. However my experience is that who didn't achieve a good result in two attempts will normally not achieve a good result later, so this shouldn't be encouraged.
Retaking an exam to improve a low, but passing grade. Why do universities not allow this?
My experience is that this is not a university policy, but a policy which an individual professor may choose or not choose to implement. Where I taught, my grading was, what some might interpret as "harsh". I had seen other professors giving partial credit for "attempts", and felt that students were getting high grades even though they were actually not competent in the field. I believe that giving honest grades, teaches students that they must learn how to actually solve the problems which are presented to them if they are to get passing grades. But just as I graded harshly, I also gave students unlimited opportunities to retake tests (except the final) (with variations to prevent cheating) so that they would not be penalized if they learned the material by the end of the semester. There were some semesters in which all students got A's, and only in a few semesters did anyone actually fail.
With regard to the work required of the professor to allow test retaking, it is the job of the professor to provide education to the students. In my opinion, my method worked, and I was happy to do the work that made it successful.
The marks represent how well a student picks up a topic. Take a math curriculum, it starts with basic linear algebra and analysis. Later it becomes more advanced and the first courses are taken for granted. Re-taking these basic exams two years later is pointless, as anybody would score great, they are using the basics routinely.
Same is true for at least to some extend for Physics, Law, Computer Sciences, Engineering.
The rules exist because they're the right thing for 95% of people. But then what happens to the remaining 5%? They have to live by the same rules because everybody thinks they are in that 5%.
What would be considered a low passing grade? You can have the case that some neurotic straight-A's kid wants to retake the exam just bc they got an A-. If you set a threshold, you leave the door open to arguments of unfairness, especially in this age of delicate flowers.
