We use SP (Satisfactory Progress) or NP (No Progress) until the very final semester, in which a grade of S is given. SP and NP are permanent final grades. This institution used to do what you describe, but it was causing problems for students on federal financial aid b/c they had so many credits that weren’t final grades. At my previous institution, thesis and dissertation grades were S and U every semester. The department I was a faculty member in used thesis and dissertation contracts, where, every semester, we would set expectations with our students as to what progress was expected, and not meeting those goals resulted in a U. This was so that there was a clear basis for the grade.