From the Social Science Statistics Blog:
The Achievement Index is a way of calculating GPA that takes into account not only how well one performs in a class, but also how hard the class is relative to others in the institution…
The model, which is Bayesian, calculates “achievement index” scores for each student as latent variables that best explain the grade cutoffs for each class in the university. As a result, it captures several phenomena: (a) if a class is hard and full of very good students, then a high grade is more indicative of ability (and a low grade less indicative of lack of ability); (b) if a class is easy and full of poor students, then a high grade doesn’t mean much; (c) if a certain instructor always gives As then the grade isn’t that meaningful — though it’s more meaningful if the only people who take the class in the first place are the extremely bright, hard-working students. Your “achievement index” score thus reflects your actual grades as well as the difficulty level of the classes you have chosen.