You seem to not understand how logical statements work. Your line is defined as:
while letter_grade!="A" or "B+" or "B" or "C+" or "C" or "D" or "F":
This always returns true since it does not mean what you want it to be. You wanted to use something like that:
while letter_grade!="A" and letter_grade!="B+" and letter_grade!="B": #etc
But for readability, I would recommend that code :
letter_grade=input("What is your letter grade(please use capitlization): ")
possible_grades = {"A","B+","B","C+","C","D","F"}
while letter_grade not in possible_grades:
print ("Enter a valid letter")
letter_grade=input("What is your letter grade(please use capitlization): ")
Note that using a set will allow faster lookup.