Why? What benefit is there to the world to making students flunk out of a school when that same student would have passed with flying colors elsewhere? "Sorry, you've got a great grasp of engineering that any firm would benefit from, but you'll work at McDonalds now, because Bob got one more question right. Thanks for the $100k and four years of your life!"
The goal of education is to educate, not to flunk a certain percentage of people.