The purpose of this mixed-method study was to examine whether contract grading is an effective intervention for mitigating equity gaps among underrepresented student populations in light of AB-705 and the Student-Centered Funding Formula. Equity gaps were measured by course retention, success, and grade; concurrent and subsequent term GPA’s; term-to-term persistence, and academic probation. The first research question examined whether contract grading correlated with, and predicted, equity markers for underrepresented student populations (e.g., racial minorities, females, foster youth, veterans, first generation students, Pell recipients, and returning students). The second research question examined how students experienced contract grading. The quantitative analysis included institutional disaggregated data for 1687 students enrolled in the participating merit- and contract-graded courses. The researcher also conducted 5 student focus groups to explore their experiences in contract-graded classes. Quantitatively, contract-graded Latinx, Black, and Middle Eastern students were retained and successful in their English class at comparable rates to White students. Contract-graded Black and Middle Eastern students were also predicted to earn comparable course grades, concurrent GPA’s, and subsequent term 1 and 2 GPA’s as White students. Qualitatively, students expressed appreciation for clear expectations and feedback, felt validated because they didn’t fear failure, felt more confident and safer in the classroom environment, experienced a heightened sense of motivation, engagement, and classroom community, and expressed a shift in motivation from external (i.e. grades) to internal (i.e. writing improvement). The researcher recommends that faculty adopt tenets of contract grading in order to validate students, promote equity, and decolonize the classroom.