Bryan Caplan, an economics professor at George Mason, spells out my philosophy on grading:
More students than I care to remember have argued with me about their grades. But there is one argument that I always dismiss out of hand: "You should raise my grade because I NEED a higher grade!" I don't do pity grading.
The reasons I've heard for pity grading run the gamut: "I'll lose my scholarship." "I won't get this job." "My parents will kick me out of the house." Etc. etc. etc. When I hear these stories, I feel bad, but I will not do pity grading.