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GRE vs. GMAT

October 28, 2008

The Educational Testing Service, which had and lost the lucrative market for admissions testing for those aspiring to earn M.B.A.'s, is increasing its efforts to gain back a good share of that business.

In 2003, ETS lost the contract to manage the Graduate Management Admission Test to ACT and a division of Pearson. In the last year, ETS has been quietly and not so quietly urging business schools and students to consider using the Graduate Record Examinations instead of the GMAT. Now ETS is upping the ante, with a more formal campaign and by unveiling a table that compares GRE and GMAT scores in terms of predictive validity for business-school performance. The lack of such comparative data has discouraged business schools from considering using the GRE, since some worry about considering GMAT scores for some applicants and GRE scores for others.

The reason that the GMAT can be challenged in this way is that it is a test of verbal, mathematical and writing skills (as is the GRE). The GMAT does not focus on finance or accounting or business strategy. It's also more expensive than the GRE ($250 vs. $140 in the United States). And with nearly 250,000 tests given in the testing year that ended June 30, it's a testing market others eye.

David Payne, executive director of the GRE, said that the additional information "levels the playing field" and "changes the game in encouraging students to submit" the GRE. In the last year, he noted, as ETS has started publicizing the option, 35 additional M.B.A. programs have said that they will accept GRE scores, bringing the total to 125 -- a fraction of those that accept the GMAT, but a notable increase. Payne noted that testing inroads take some time and require some critical mass, and that the addition of the comparison scoring will allow that critical mass to form.

He stressed that the research ETS used was not based on paying people to take both the GRE and the GMAT. Rather, ETS identified GRE-takers who also took the GMAT within the last two years, so the scores used for comparisons were all based on test-taking by people who did not think they were being studied, and who were taking the test for admissions purposes. He said that the research demonstrates a clear correlation, such that admissions officers could comfortably determine the equivalent score.

At that point, he said, students will be attracted by the price of the GRE. Business schools, he said, may be attracted by a variety of factors. Some of the business schools that have started accepting the GRE report that they believe they attract applicants who aren't sure if they want to seek an M.B.A. and may be considering master's degree or doctorate in another field, and who then explore M.B.A. options. In addition, he noted that the GRE will add new, non-cognitive features next year -- an optional testing component that has been the subject of extensive ETS work in recent years and that some experts believe will help minority applicants earn higher scores.

In many ways, business schools have become a prime focus of competition in the testing business. Not only is there the GMAT-GRE fight, but the Graduate Management Admission Council, which runs the GMAT, is working with Pearson to create a new test for foreign students to use to demonstrate competence in English -- in competition with the Test of English as a Foreign Language, an ETS product.

The Graduate Management Admission Council is disputing the ETS claims about the GRE as an alternative to the GMAT.

"At this point, there is only one valid predictor of success in in an M.B.A. program: It is the GMAT," said David A. Wilson, president of GMAC. He said that whatever comparisons ETS is making can't equal the long-term validity studies conducted by his organization showing a clear relationship between certain scores and success in business school.

He also said that there is no evidence that people are looking for an alternative to the GMAT. More than 1,800 business schools accept the test, and this year's total of 247,000 test takers is up from 219,000 the year before. In 2007, Wilson said, the GMAT was offered somewhere in the world every day but Christmas. "We're hitting volumes that we've never seen before," he said.

What ETS is doing, he added, isn't about filling an educational need but a business need. "The M.B.A. market is a very rich market. It's a very strong market," he said, and ETS "owns an instrument that it wants to put in that market."

Chad Troutwine, CEO and co-founder of Veritas Prep, a high-end test-prep service for the GMAT, said that the the news from ETS could be significant. Troutwine said that ETS has faced "two big liabilities" in trying to promote the GRE. One has been a fear that minority test takers do not perform as well as white students -- something that is expected to change with next year's addition of the non-cognitive tests. The second problem was the lack of "hard data that the GRE was as predictive as the GMAT," Troutwine said.

If the ETS data stand up, he said, many business schools are likely to be "agnostic" on the two tests, seeing the flexibility as a "costless way" to attract more applicants. "The tests are very similar," he said. "This could be very big news."

At the same time, Troutwine said that the key question is whether business schools accept the ETS comparisons as valid: "Will the business schools accept that calibration? It's one thing for ETS to say that a score on the GRE equates to a score on the GMAT, but will the business schools accept that in the same way ETS does?"

 

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