Why is B or B− the minimum passing grade for most graduate courses in US? I was recently told that in many schools in the US (maybe other countries too), the minimum grade for a graduate course is B or B−. Meaning that B is considered as a passing score. I would like to know whether this is true. Why should it be the case? Does this mean that grading in graduate school is easier?
In some sense grading may be "easier", but it's also just that the effective grading range is compressed, and that grades per se matter less than in undergraduate classes.

In many graduate programs, getting a grade lower than B (or even A-) is considered a warning that you need to seriously knuckle down and start doing better.  To take a random example, UIUC has a campuswide minimum GPA of 2.75 (B-), but most departments set higher minimums (as high as 3.25, or B+) Here's a relevant quote from an old grad school blog post:


  My first semester in grad school, my M.A. advisor laid it out for to me: "If you get a B in a grad school class, you should ask the professor whether you should consider dropping out of the program. If you get a C, don't bother asking."


What this means is that the range of grades in grad school is effectively compressed, going from A to C instead of A to F.  Getting a C in a grad school class is, in many cases, practically equivalent to getting an F in an undergraduate class.  This grade inflation probably has historical roots in a sort of academic politeness in which it became considered more and more insulting or embarrassing to give someone low grades.

However, it's not as significant as it may seem, because grades are typically much less important in grad school than in undergrad.  In grad school (especially PhD programs) you are working much more closely with faculty and they monitor your progress at a much finer grain.  It's not just about getting a good grade, but about conducting research, making progress on your degree milestones (e.g., writing an MA thesis or PhD dissertation), and so forth.

In grad school, your class grades are meant to be not just an evaluation of your performance in that class, but a signal as to whether you are developing the skills necessary to succeed in the program as a whole.  It would be unusual (probably unthinkable) for a grad program to suddenly give someone the boot simply because their GPA dropped too low; rather, a series of low grades will lead to increasing concern from the faculty, with meetings, emails, etc., gradually escalating from "Is everything ok?" to "You need to start working harder" to "Get your act together or else".

I've known grad students who received multiple grades in the B range, and this is what happened to them; they were subjected to increasing pressure from the faculty, with increasingly more explicit suggestions that they could be kicked out of the program if they didn't improve their performance.

That said, it is true that in some cases grading in grad school can be "easier" than in undergrad.  My personal experience has been that in some cases faculty members are willing to be somewhat more flexible on grades as related to the actual course content, as long as they are satisfied that you got what you personally needed from the class.  For instance, if you are specializing in Topic X and you take a requred class in Topic Y intended to broaden your background, the professor may give you an A even if your paper in the class is only adequate, if the professor understands that that is not your specialization and you don't need to fully master it in order to succeed.  The flip side of this is that if you take a class in Topic X (your specialty), the professor may hold you to a far more exacting standard, knowing that you really must be on top of that material.