As the squad gains experience, they advance in level. All members of the squad level up together. At each level, characters gain Talent Points. Press [ U ] to access the squad menu. Here you can spend Talent Points to improve the squad's abilities. Remember to level up ALL of your squad members!
On the right side of the screen, you will see a list of Talents available to the currently selected character, with rows of "blocks" that tint green to indicate their current level of skill. Below the list is a number indicating the amount of Talent Points available to spend. To spend points, mouse over the Talent and click on it.
Moving your mouse over a Talent will highlight it and display its description. While your mouse is over a Talent, it will highlight, and display a description of it. By moving the mouse over the individual blocks that represent Talent levels, you can see the effects of each point of improvement. Blocks with icons in the unlock combat Powers or additional Talents.
If you don't want to select your Talents point by point, click the [ Auto Level Up ] button to automatically spend points on Talents appropriate to the character's class. If you are not satisfied with any changes, click the [ Undo Talent Points ] button to revert all changes. Note: once you exit the Squad Menu, you can no longer Undo.
On Shepard's page of the Squad Menu, you will see two meters on either side of the character portrait. These track Shepard's Paragon and Renegade reputations. If you act as a force for the betterment of all, you gain Paragon reputation. If you accomplish goals by any means necessary, you gain Renegade reputation.
Shepard's maximum level of persuasion skills is initially limited, but improves as you gain levels and cultivate a reputation.