This indicator identifies students as on-track if they earn at least five full-year course credits and no more than one semester F in their first year of high school. On-track students are more than three and one-half times more likely to graduate from high school in four years than off-track students. The indicator is a more accurate predictor of graduation than students' previous achievement test scores or their background characteristics. Perhaps the most important finding from this report is that failures during the first year of high school make a student much less likely to graduate. Based on their findings, the authors believe that parents and teachers should carefully monitor students' grades, especially in the first semester of freshman year, when there are still many opportunities to improve grades. Helping students make a successful transition to high school during the first semester could make students more likely to graduate. This report also finds that on-track students are not necessarily the students with the highest achievement test scores. Many students with strong achievement fail to graduate, and many students who have demonstrated weaker achievement succeed in graduating. Finally, this report concludes that the particular school a student attends plays a large role in whether the student is on-track. While we expect schools to have students with differing levels of preparation for high school, differences in the number of students on-track at each school remained even when the authors controlled for students' eighth-grade test scores and socioeconomic status. This suggests that school climate and structure play a significant role in whether students succeed in high school. Schools can use the on-track indicator, which makes use of readily available data on course credits and failures, to understand what aspects of the school may be leading students to drop out.