#how does it work

They're aligned in nice little columns of 10 trainees

For which I assembled a nice little diagram to showcases this

You can see that in the third column there are two boxes with both an X and a check mark, this is because they're inconsistently placed on the screenshot (it's marked differently in that box screenshot to screenshot). Only two are ever shown to have failed in that column at a time though so we're gonna stick with that

This means that of the 40, 32 passed and 8 failed.

Yet only 16 attend "graduation"

According to the "Who in the World is Carmen Sandiego" book, there were actually two graduation ceremonies. One in the assembly hall, a celebratory event in which VILE was still referred to as "Valuable Imports, Lavish Exports"

It's only in the in the second graduation, "Senior Seminar" as it's called in the book, that the true name of VILE comes to light. The operatives there were completely unaware of what this seminar would entail. They were chosen for their "willingness to go to any necessary extremes".

This seemingly separates the graduates into two groups

Group 1: Has the skills but not the drive

Group 2: Has the skills and the drive

Group 1 presumably never finds out that VILE is the Villains International League of Evil. What the hell happens to them? They've got plenty skills but they don't have what it takes to truly be a VILE operative. Do they become the guards we see stationed at VILE facilities, are they disposed of in some other way?

And the people who didn't graduate too, what about them? Are they mind wiped and sent back out into the world? Do they retake the course? Is it dependent on their allegiance to VILE, like if they're mentally ready just not practically?

Carmen was the exception because she lived there BUT I NEED TO KNOW