Here is another well-kept secret: Grades _are_ always subjective. By unfair (but legally sound) correction, you can massively change grades. I have experimentally done it (not for actual grades but with actual exams) just to see how large my responsibility to be fair really is. It is huge. I now mix exams after correcting each question and I make sure not to look at the names, just to remain impartial and fair.
Incidentally, the same is possible for automatic grading. How? You have a look at the exercises. Then you can design questions so that some specific participants fail and others pass. This can also be done without really realizing it.
Hence grades are _already_ very subjective. There is no way around that. Fairness in tests is a complete illusion. The only fairness students can get is from an examiner that tries very hard to be fair and really looks at the person and whether they are fit to be in a field of study and whether they are "just barely", "solid average" or "very good". That is about how precise things really get, anything beyond that is an illusion.
Given the economic opportunities that grades open up, I don't think it is fair to say "they are only cheating themselves." They are cheating others out of work and/or scholarship money, too.
Well, maybe. It really depends on how much the grades count. But yes, that is also a factor, agreed.