It doesn’t waive test passing entirely, just allows other factors to be considered. This *could* be a good thing to do- two people of equal qualification might have different results on a given evaluation, so providing alternative options, or some sort of weighting instead of an all or nothing system, should get more people the diploma they deserve.
That said, I’m not sold on this particular way of doing it, though the inclusion of college entrance exams as a potential mitigating factor for graduation test failure is promising. If nothing else, that can indicate the student just had an off day when they took the graduation test, and failing to graduate because of one off day after four years would be bullshit.
It would probably be better to overhaul the entire testing/graduation regime. Say “You need 70 graduation points out of 100. Class performance counts for 75% of your graduation score, the final tests 25%” or something like that.
Rather than all or nothing the whole thing, or patch over weaknesses of the testing system, rebuild from the ground up with all of this cleanly integrated. I’m not advocating these specific numbers, they serve merely to illustrate my point- attendance could probably be worked in, college entrance exams, etc. The exact numbers should be chosen after a lot of research and analysis on what best predicts future performance.