How to set the threshold below which students get a failing grade in a university-level course?
My classes are typically curved to the median.  To grade, I first set what I think should be the median grade, based on my assessment of the class as a whole.  Then one half of a standard deviation away from the median is one half-letter grade (e.g. if the standard deviation is 10 raw points out of 100, then 5 points would move an A- to a B+).

Using this scale, an F is simply someone who is a certain number of standard deviations below the median.

Several points:


I explain my general scheme to students on the first day of class,
    so that expectations are clear up front. There is some wriggle room
    at the letter grade borders.
I typically look for clean breaks
    between student performers (i.e. if one cluster is 2 points above
    another cluster, then it makes sense to separate their grades).