How Much Higher Can GMATs Possibly Go?

Going hand-in-hand with the increase in test prep services is the belief that test taking is important. “Gen y, which already had its work cut out to secure a place in college given the sheer numbers, understands that test scores matter,” says Matt Symonds, a director at Fortuna Admissions. “Many have grown up with tutors, technology and tiger moms to support their studies, and putting in the time to study for the GMAT will be second nature to them. Graduates of the Indian IITs or Chinese universities like Tsinghua have already competed with tens if not hundreds of thousands for a place in undergrad – so why let a three-hour standardized test like the GMAT stand in their way?”

TOP MBA PROGRAMS ARE DRAWING BETTER APPLICANTS THAN EVER

The general consensus is that business schools today are drawing better applicants than ever. “Twenty years ago, many elite graduates went to law school and that was a “ticket” that was of equal or possibly even greater value than an MBA,” says Jeremy Shinewald, founder and CEO of mbaMission, a leading MBA admissions consulting firm. “Now, the MBA is the “ticket,” with law school slumping, so applicants are shifting to the MBA and the quality of applicants is simply better.”

Another factor, he believes, is that the process of applying to a highly selective school has become more transparent and, therefore, more competitive. “Technology has brought transparency to the application process and that transparency has bred competition in all parts of the application, which has created a spinoff effect for the GMAT. As applicants have learned more about how competitive it is to get into a top school, they have strived to drive GMATs higher, because it is the only truly standard piece of the puzzle, with which they can measure their competitiveness. Because of this, many applicants keep trying to push their scores higher so that they can feel better about their scores and thus their chances. All in all – there are a lot of factors.”

Last year, 52,472 applications were sent to the Top Ten admission offices for 5,304 seats, roughly ten candidates for every available class seat. Of course, many of those were duplicates because most applicants applly to three or four MBA programs. One thing is for sure. The number of seats available has increased by only 10.6% in the past 20 years fto 5,304 from 4,794 in 1996, but the number of applications to these highly ranked schools has outpaced the growth in spots available.

40,000+ TEST TAKERS SCORING 700 OR ABOVE COMPETING FOR 5,304 SEATS?

Ok. So you know that all the schools want higher GMAT scores today than they did two decades ago. What would it take to earn you one of those seats in a Top Ten program? In the latest testing year for which data is available ending June 30th, 2015, some 247,000 GMAT exams were taken, up from 243,000. Typically, 20% of those tests are taken by those who had already sat for the test and are trying to improve their scores. That percentage, however, increased because since December of 2014 test takers could actually cancel their scores at the test centers if they were unsatisfied with them without a business school knowing the score was cancelled.

“We’re seeing more score cancellations, a drop in score sending (to schools), and a very high rate of retaking,” says Rich D’Amato, a spokesperson for the Graduate Management Admission Council (GMAC). “People now go to take the test, see how they do, and decide whether to keep the score or cancel it. You now have people who are looking to gain comfort with the test. Behavior has changed.”

Crunch all the numbers and here is what you get. If you assume that the percentage of test takers who are now retaking the exam has risen to 25%, it essentially means that in the last test-taking year there were slightly more than 185,000 unique test takers. How many of them scored a 720 or above, the 94th percentile, to be in the average range for a Top Ten school? That’s just over 11,000 people. Because GMAT scores are good for five full years, it’s a safe bet to assume that you can double those 94th percentile scorers to 22,000—for 5,304 available seats.

If you bring those numbers up to 700 and above, a score that would put a test taker in the 89th percentile and widely considered to be at least a competiive score, there were an estimated 20,378, or more than 40,000 people, competing for those 5,304 seats in Top Ten programs.