Is it permissible to give students in class a passing grade out of leniency, or is it not allowed?

Cheating is religiously forbidden, and its perpetrator is not considered one of the Muslims. Deceit and trickery lead to Hellfire. It is not permissible to assist colleagues in cheating on exams to appease them, for appeasing people should not involve committing forbidden acts. And whoever seeks Allah's pleasure, even if it incurs people's displeasure, Allah will suffice him against their trouble.