Celestia's School for Gifted Unicorns, as the most prestigious academy in all of Equestria providing the most outstanding education, ends up being incredibly tough on its young students, with its high standards and rigorous exams. With one obvious exception: Twilight Sparkle, personal protegé of the Princess, exemplary student, and the overall incarnation of excellence and inquisitiveness.
But even a Twilight Sparkle isn't immune to failure. One bad report card and one bad grade can be enough to shatter her already fragile self-esteem.
Of course all of this could just be a mistake. There's just no other way. Surely, it had to be a mistake. And mistakes can always be fixed, right? Right?