Could U.S. News Kill The GMAT Exam?

You had to read the obscure footnotes in U.S. News‘ release of its online MBA and business master’s rankings yesterday to discover news as noteworthy as which business school topped the latest 2022 list. But in the dense language of the methodology for how U.S. News cranks out its ranking was arguably the most important news of all: For the first time, the ranking powerhouse removed GMAT and GRE scores from its ranking process.

For decades, business school deans and admission directors have obsessed about those standardized test scores, more often than not because of U.S. News rankings. Sure, a score can give an admissions official confidence that a candidate can do the quant work in an MBA or graduate business degree program. But no school needs a 700 score to know that. In all likelihood, a score of 600 would be sufficient to know that an applicant can handle the quantitative parts of the core curriculum in a rigorous MBA course.

The change was buried in the 25th paragraph on page four of U.S. News‘ explanation for how it ranks Online MBA and other master’s degrees in business:

A revision to this edition’s methodology is that new entrants’ GMAT and GRE scores were not incorporated in the calculations. In the previous edition, the indicator using these exams comprised 40% of each school’s student excellence score. That weight has been redistributed to the other admissions data as outlined below.

WHAT IF U.S. NEWS DECIDES TO ABANDON THE GMAT AND GRE FOR ITS FULL-TIME MBA RANKING?

Instead of giving standardized test scores that 40% weight in its “student excellence” category, the website doubled the importance of undergraduate grade point averages in its ranking, hiking the weight to 50% from 25% of the category. It also increased the weight it gives a program’s acceptance rate to 25% form 15% and boosted the importance of “experience” to 25% from 20%.

Could U.S. News follow suit with its forthcoming full-time MBA ranking in March? The ranking organization is mum. “U.S. News does not make announcements about future rankings and methodologies this far in advance,” says a spokesperson. But if it did, the move would likely have a major impact on admissions policies and the administrators of both the GMAT and the GRE.

After all, standardized tests are a significant hurdle for many applicants to business school. They prevent many highly qualified candidates from applying. And the tests are heavily weighed in admission decisions, partly or largely because of the U.S. News ranking which gives those scores more importance than they deserve.

If you want to know how obsessive schools are about their GMAT and GRE scores, you only have to read the recent headlines on the conviction of the former dean of Temple University’s Fox School of Business. He was found guilty in federal court of leading a conspiracy to cheat on these very same online MBA rankings by inflating the numbers of students who had taken the GMAT along with the average score of an incoming cohort to game the rankings. For his sly handiwork, Dean Moshe Porat was able to get Fox’s online MBA program ranked first in the nation by U.S. News for four straight years.

While the vast majority of online MBA programs do not require standardized test scores and those that do often waive them for candidates, the change will have little impact on the ranking itself or the lucrative business of test taking. Even schools that ask for standardized tests for admission to their online degree programs have significantly relaxed that requirement in recent years. Just 2% of the latest cohort of students to join the online MBA program at the University of North Carolina’s Kenan-Flagler Business School submitted a GMAT for entry; another 2% handed over a GRE score. At Indiana University’s Kelley School of Business, just 19% of the latest Online MBA cohort took a GMAT test, while 9% sat for the GRE.

TEST OPTIONAL ADMISSION POLICIES ARE CAUSING BIG DECLINES IN TEST TAKING

And as the pandemic hit, the vast majority of full-time MBA programs began dropping their standardized test requirements or began to actively promote waiver policies on the tests. Largely due to COVID-caused closures of tst centers and concerns over the at-home versions of the GMAT and the GRE, the vast majority of the top 100 full-time MBA programs in the U.S. began waiving standardized tests for admission in early 2021. A Poets&Quants survey then found that 67 of the top 100 had gone fully test-optional or were actively promoting test waiver policies.

Two years ago, the University of Virginia’s Darden School of Business was among the first to go test optional. After receiving more than 1,300 requests for a test waiver from potential applicants last year and enrolling roughly 13% of its entering MBA cohort with an approved test waiver, the school is maintaining its test optional policies. It’s te same story at the University of Michigan’s Ross School of Business this year. Soojin Kwon, managing director of full-time MBA admissions and program at Ross, extended its more liberal waiver policy after being pleased with the quality of candidates in the previous cycle who applied to the school without a GMAT or GRE. “Test waivers were at the top of the team’s annual process review discussion,” she wrote in announcing the move. “We found that many incredible applicants applied using a test waiver. Whether it was prior coursework, work experience, or professional certifications, they demonstrated their ability to handle the rigor of the MBA program without a standardized test.”

The impact of these changes on the Graduate Management Admission Council which administers the GMAT have been dramatic. In the past five years alone, GMAT tests taken in the U.S. have plunged by 65% to just 38,905 in testing year 2021 from more than 109,000 GMAT tests in 2016 (see below). And that number would include test takers who have sat for the exam multiple times.

International test takers could not offset the falloff. In testing year 2021, only 156,453 GMAT tests were taken worldwide, a decline of 45% in the past five years. In testing year 2016, test takers sat for more more than 260,000 exams (see below). Some of the decline, of course, reflects the increasing popularity of the GRE as a rival test for business school admission decisions. GRE has been taking marketshare away from the GMAT for several years now.

'SCHOOLS WANT TO CREATE OR MAINTAIN A PERCEPTION OF HAVING THE HIGHEST STUDENT QUALITY'

What would happen to the GMAT if U.S. News no longer weighed standardized test scores its full-time MBA ranking? While it's hard to say for certain, it would not help the Graduate Management Admission Council reverse the downward trend. If anything, it could make the GMAT exam--the still dominant test For MBA admissions--vulnerable.

Jeremy Shinewald, founder and CEO of mbaMission, a leading MBA admissions consulting firm, begs to differ. He believes a decision by U.S. News to abandon standardized test scores in its methodology would not have much impact at all. "We would like to believe that the programs are only beholden to sky high GMAT averages for superficial ranking purposes -- and that they would free themselves from the rankings trap if they could," he says. "However, unfortunately, they probably care as much about keeping their averages up to put some polish on their class profiles, creating or maintaining a perception of having the 'highest' student quality.

"So, even if there were no implications for rankings, my guess is that HBS would still be quite reluctant to drop its GMAT average ten points below that of the Stanford GSB, even if they felt that they were getting better all around students. I find it ironic that programs that teach leadership just can't break free from this test."

DON'T MISS: GMAT AVERAGES REBOUND BIG TIME AT THE TOP 50 MBA PROGRAMS or  SHOULD MBA PROGRAMS MAKE THE GMAT & GRE OPTIONAL?