Kelly has a nice write-up about how her physics students are starting to see the benefits of standards-based grading through utilizing test corrections.  She really hits the nail on the head, re: preparing students for the "real world."

What about college? aka “They won’t be graded this way in college.”
I hear that objection occasionally, and it even came up again at our science department meeting this week. Honestly, it is a bit of a nonsense statement/question.
Moving beyond the idea that it does not make sense to do each year what people will eventually do one day in the future (should 8th grade look like college? How about 4rd grade? 1st?) and that the more important questions are about how a choice in teaching will benefit them this year, we can ask instead, “What are students taking with them from having this experience?”
So, in addition to learning physics better, increasing their confidence as a student, seeing themselves improve with a challenging skill over time, they are also rather specifically learning how to milk the benefits from making mistakes, what to do when they aren’t immediately successful, and how the best students have been succeeding in school all this time.
In workshops I've done in the past, I use an example that's a bit more over the top when someone asks about the implications of standards-based grading on higher education.  It goes something like this:
I attended a small private college here in Iowa during my undergraduate years.  The largest class I had was Intro. to Psychology.  We had 80 students in a lecture hall.  Take away that single lecture hall experience and all of my classes were a lot like high school (and graduate school!) with 35 students or less.  Class was fairly interactive and we all knew each other my first name.  I hear that down in Iowa City at the University of Iowa, lecture halls are the norm, at least in the introductory courses.  It's not uncommon for freshmen to sit in a room of 200-300 students and take notes.  (I usually then pause and ask someone in the room to confirm this to be true...which so far, has always happened)  Would we ever consider doing this in K-12?  "Okay, kindergartners...let's put all 100 of you in a room for 60 minutes and see if you can learn a few sight words" or "Hey 7th graders, let's see if we can all learn about the states in capitals in the gym where all of us can fit!  You know, this is what it's going to be like in college."  No way.  We know that some educational practices are better than others.  All of us try to do what's best for our students and that often involves providing them with an experience that we know will be contrary to what they might experience in higher education.  If we can all agree that standards-based grading is better for our students, let's not worry about what some universities are doing in lecture halls or with grading practices. 
Confession - I like Kelly's rationale better than my own.  Get over there and give her the pat on the back she deserves for taking on this difficult issue.  You'll read about how her new grading practices are catching on with her students, too.  You won't be disappointed.