Euphemism for Poor Performance

Your student Does not meet expectations. Also, anytime a performance is deemed unacceptable, there is bound to be some damage to self-esteem. It may be unavoidable.

Your peers are doing better than you.

"This is a great Learning Opportunity"

Is it possible to be specific about the way(s) in which the student fails to meet an objective standard?

Rather than trying to cushion a blow by vagueness, why not turn the feedback into a teaching opportunity?

“Has yet to achieve his full potential”

Of courses he may have already achieved it, but let’s pretend.

My kids' school uses developing for your purpose in grades K-5 (ages 5-11).

Joey is still developing his strategies for multiplication.

The antonym is secure.

However, Joey's knowledge of simple fractions is secure.

Developing is a good solution for poor or unsatisfactory performance. However, "unacceptable" performance should be stated without euphemisms, containing explicit examples.

You could say they're "not on track," that they're "not on track to reach X by Y," or that there's "room for improvement." You could reframe it collaboratively as "we aren't on track," or "we have room for improvement."

The trick with most of these will be focusing on the desired outcome and how to reach it, bringing up undesired behavior only to promote growth and make those goals attainable.

A successful euphemism has to accomplish two things at the same time: it has to preserve the decorum and the dignity of everyone concerned and it has to accurately convey the unpleasant truth. An expression that fails the first condition is not a euphemism, but a crude, insulting statement; an expression that satisfies the first condition but fails the second is not a euphemism, but an obfuscation, or an outright lie.

Now, to accomplish both these things, an expression has to be generally known as a euphemism in one's intended audience. An attempt to use some expression as a euphemism will fail to convey the intended information if the audience does not recognise the expression as a euphemism, but takes it at face value instead. Restroom, for example, works well as a euphemism in the United States, where everybody knows what it's a euphemism for, but it may cause confusion elsewhere, where those who hear it, not recognising it as a euphemism, may think that it refers to a room that people use to actually rest in.

Now, the formulations that are regularly used as euphemisms in student evaluations tend to differ from country to country, from one level of education to another, and, at higher levels, also from one academic discipline to another. The best answer that can be given to somebody in the OP's position is thus: look around at what's used by other people in your educational community, and use whatever terms they use. Using the same euphemisms as others in the same community makes it likely that they will be recognised as euphemisms, and so accomplish their purposes. Following the suggestions of people from outside the community, clever and creative as they may well be, creates a considerable risk of confusion.