Universities do encourage close cooperation between students and faculty. However, how does one prevent close working or personal relationships from affecting grading, so that it can be carried out fairly and uniformly? Is there a method of avoiding "playing favorites" with students a faculty member has a "closer" relationship with than others?
Where possible, exams and courseworks should be anonymised before grading. But otherwise, we have to depend on the professionalism of academics, a strategy I think is sometimes undervalued. Academics are professionals, and one part of many professions is striving to be objective.
Of course, psychologically it is impossible not to be influenced by knowledge, but it shouldn't be assumed that academics can't compensate for this adequately to give fair marks. Some people may actually overcompensate and mark students they know harder, not easier, but hopefully the experience of learning from working with faculty makes up for this risk.
The ultimate academic "grade", a PhD, is entirely assessed by letters written by people who know the holder both personally and professionally. Again, the same is true in other industries.