In this podcast episode of Business Casual, our hosts discuss the recent updates to the GRE and GMAT exams and explore the considerations for prospective business school applicants. They delve into the disparities between average GMAT and GRE scores at various schools, speculating that the GRE’s ability to attract a more diverse pool of candidates contributes to the lower average percentiles. They also raise questions about the validity of the exams in light of the race to shorten test duration and eliminate sections, emphasizing the importance of monitoring the correlation between test scores and academic performance. 

Overall, this episode provides valuable insights for individuals navigating the dynamic landscape of standardized testing in business school admissions and aids in making informed decisions regarding which test to take.

Episode Transcript

[00:00:07.050] – John

Hello, everyone. This is John Byrne with Poets and Quants. You are listening to Business Casual, our weekly podcast with my co hosts Maria Wich Vila and Caroline Diarte Edwards yes, indeed, there will be a new GRE. Last week we predicted it, and lo and behold, it is out. You can register for it today and take it as early as September 22, which means that it beats the newly revamped GMAT, which you can’t register for until August 29 and won’t be able to take until sometime in the fourth quarter. We don’t really know when. The really big news is that the GRE was almost cut in half in terms of time to 1 hour and 58 minutes. That’s 17 minutes shorter for those counting against the new GMAT exam. Of course, the reason why this is happening is because more and more programs have become test optional and more programs are more generously granting waivers and standardized testing overall is on the decline, particularly the SAT for undergraduate programs and the act as well. And add to that the declining application numbers, and you have a situation where both testing organizations for graduate management education are believing that the test itself has become a friction point, a hurdle that some would be applicants don’t want to jump over to go to a business school.

[00:01:53.370] – John

I’m going to ask both Maria and Caroline, how do you even decide which of these newly revamped tests to take? Caroline, you have some overall guideposts.

[00:02:05.350] – Caroline

Well, I think if you haven’t started preparing for either test, then I would suggest reviewing both tests and ideally take a practice test in both and see where you do best. Some people have a natural inclination to one test and do better with one test than the other, and therefore that would be the best test to focus on. I know that some people just focus on the GMAT because they think that that is perhaps the preferred test for schools, but that’s not really the case. I think schools genuinely are pretty agnostic about which test you take. And so I think it’s really worth considering up front which trying both out and seeing which suits you, because you really could cut down your prep time. If you feel that one test suits you better, perhaps you better prepared. You’ve got less material that is sort of fresh and unknown for you in one test than another. I was talking to a candidate yesterday who is preparing for business school, and she’d taken the GRE a few years back, so she asked, which test should I take? Well, of course take the GRE, right? You’ve done it before.

[00:03:16.370] – Caroline

So it’s going to be much easier totally to refresh and take the GRE again than to start all over with a brand new test and get up to speed on the GMAT. So really I would encourage people to take whichever test is best for them. Don’t do what my daughter has done with her standardized test, which is start preparing for one test SAT, sit that, and then decide, oh, well, I’m not crazy about that. So now I’ll try the act, prepare for that, and then sit there and sort of go back and forth between two and sit both tests multiple times. Yeah, that’s not the best strategy, right.

[00:04:00.350] – John

To take a couple of practice tests, see which one you feel a little bit better about, and then go and study for that and sit for the exam and see what happens. Now, Maria, you’ve done some interesting research on class profiles for schools that have announced the median or the average GMAP versus the GRE scores of admitted actually enrolled candidates. What did you discover there?

[00:04:26.120] – Maria

Yeah, I’ve discovered that there’s a lot more forgiveness when it comes to the GRE. In other words, if all else is equal, and if somebody is not a super strong test taker, that’s not where they really shine. I do advise that people take the GRE because I think that there is, for a number of reasons, intuitively. I always sort of felt that when I worked with people who submitted GRE scores that were perhaps less than glowing, or certainly not at the stratospherically High levels as the GMAT solid scores. Right. We’re not saying test optional doesn’t mean brain optional. Right. As I say, ad nauseam. So you still need a strong score, but you don’t need the nosebleed high stratospherically High score for the GRE to get into a competitive program that otherwise might need more of a stronger GMAT score. And the data that I looked at, when I looked at the schools, as you mentioned, they do publish. Okay. Of the students who enrolled, what were their average GMAT scores? What were their average GRE scores? And when you try to back into what percentile that score is, for example, the average GMAT score at Stanford Business School for the students who submitted GMAT scores was in the 97th percentile.

[00:05:43.060] – Maria

Right. So that means you were in the top 3% of test takers. But for the students who submitted GRE scores, that average GRE score was in the top 1580 5th percentile. So you were in the top 15% of test takers. Now, obviously, being in the top 15% of test takers for the GRE is still really hard, but it’s not quite as hard as being in the top 3% for sure takers. So I think there are a number of reasons why this is the case. I think a lot of it has to do with rankings. I think it has to do with the GMAT having been the de facto standardized test for business school. And so that’s the score that we all intuitively have learned to assess over the decades that we’ve been in this field. The GRE is more of the dark horse newcomer, and so I don’t think we’ve developed quite the same intuition. I even have perhaps a somewhat weird idea around. The GMAT score moves up in increments of ten versus the GRE moves up in increments of one. So if you say a 750 versus a 720, that feels like a really big difference versus a 163 versus a 162, even though from a performance level those might be the same thing.

[00:06:46.640] – Maria

They’re like, oh, the average at Harvard is a 163 and you got a 162, you’re fine, versus if we were to translate that into GMAT terms, there might be a 20 or 30 point gap versus a one point gap. And so I think there’s like a psychological it’s like whenever retail stores price their things at 999 a month INSEAD of $10 a month, there’s just something psychological about having that $0.01 difference. Literally. The scoring scale is one of the other reasons why I think that the GRE, sorry, has more forgiveness associated with it. So in all else being equal, if you can get a really strong GMAT score, I do think that because it is the score that the press and the ecosystem tends to fixate on, I do think that schools are more willing to purchase. Not purchase, but to give an incentive to students who have strong GMAT scores to give them incentives via scholarship money. I do think that if you can get a really strong GMAT score and if getting a merit based scholarship matters to you, then I would advise taking the GMAT because I do think that you’re more likely to get a scholarship.

[00:07:56.580] – Maria

However, if acceptance, interesting, is your goal, which I think is the primary goal for most people, all else being equal, I would advise taking the GRE instead. And also, can we just give a big sort of shout out and pat on the back to the people at ETS. I mean they have been first of all, the fact that the GRE has taken so much market share over in such a pretty short amount of time the past several years. And so the GMAT announced, well, here’s our sort of GRE slayer. Ha. Tough luck GRE. Take that ETS. And now ETS is like a month later, they’re like, oh yeah, well guess what? Boom. Ours is shorter, ours is faster, ours is available sooner. I got to hand it to ETS. They have innovated and they have been resourceful and they have been scrappy. And I don’t love standardized tests in general, but I admire them for how they are sticking it to they are really putting the pedal to the metal and competing and it’s kind of cool to see.

[00:08:57.630] – John

Yeah, that’s really true. And over the years of this competition, they more likely than GMAT have introduced different innovations that make the test friendlier to take and then GMAT has had to follow in the, in their footsteps. But it’s been GRE that’s been really fueling the innovation in the test taking. In the graduate management education space. Some of the differences in scores are fairly dramatic in your examination, Maria. Like Michigan Ross, the average GMAT is in the six percentile, meaning you have to be in the top 6% to hit that average. For the GRE, it’s 24 24th percentile. That’s a big difference. And there’s a big difference at Duke where you need to be in the top 10% of the scores for the GMAP, but in the 29th percentile for the GRE. And I looked at this years ago, and it was true then, there is definitely a differential here. And one wonder is what’s really behind it? Is it possible because this was one of the calling cards of the GRE, let’s face it, that you would get more diversified candidates. So if more women who score lower on the GMAT than men, even though they have better grades, undergraduate and graduate level, than men, are taking the GRE and more underrepresented minorities are taking the GRE, that could be part of the reason why there’s as big a differential in these numbers as there seems to be.

[00:10:45.330] – John

What do you make of that, Maria?

[00:10:47.870] – Maria

Regarding diversity, I would also say that it, I think, leads to more undergraduate academic major diversity. So, for example, someone may have studied engineering and they may have taken the GRE their senior year of college, or they may have studied sociology and taken because the GRE is the standard general graduate school test. I think a lot of people from literally, probably every major, every academic discipline is more likely to have taken the GRE at some point. And therefore, when they then look to apply to business school, if they already have that existing score in their pocket from a few years ago, maybe they wanted to do a PhD in anthropology, or they wanted to go to mechanical engineering, grad school or whatever it was. There’s a chance that they already had that GRE in the pocket versus having to start over fresh with a brand new test. So I think the diversity element is also there from that perspective as well.

[00:11:40.130] – John

Right? Yes. Now, another interesting thing here, and I’m going to ask Caroline this because you are former admissions director, I wonder if this race between GMAT and GRE to shorten the test and eliminate questions and sections has been done in a way that could affect the actual validity of the test themselves. In other words, there are a lot of critics of standardized tests that say, sure, there’s a correlation between a test score and how well a student will perform in an academic program, in particular the core. But that correlation isn’t as strong as you would think it should be according to the critics. And then when you shorten these tests and you’re involved in a competitive race to shorten them, I wonder if an admissions director would naturally wonder if the correlation between an academic performance and a test score has been lessened. What do you think?

[00:12:42.820] – Caroline

Well, I’m sure that the test administrators have prepared data to reassure the schools on this because that’s going to be a key concern from the admissions officers. So I’m sure that they have been, or I would hope, but I would expect that they have been communicating with the schools to reassure them that that correlation remains. And for sure the schools will be tracking it very carefully. Right. So they will be monitoring those new test scores and they will be monitoring academic outcomes and seeing if there is any change and see if there’s any shift over time. What else can they do? But I’m not sure that it’s essential to have a three or four hour test. I think it’s an interesting experiment to try. 2 hours is probably I think it probably is sufficient. But the schools will be measuring the data very carefully and monitoring it carefully. Just one thing on the debate about GRE versus GMAT, you’re absolutely right that one of the key reasons the schools began accepting the GRE was to diversify the pool. But that also I think that is also a reason why those averages are a bit lower because with the GMAT you’re more likely to have the management consultants and the investment bankers and so on who have taken the GMAT and you’re more likely to have those nontraditional candidates that Maria was describing taking the GRE.

[00:14:26.730] – Caroline

And therefore those nontraditional candidates may have lower scores on average. And we know that nontraditional candidates often don’t have quite as stellar test scores as those more traditional feeder profiles and also don’t necessarily need to be as academically talented as sort of superstar status because there’s so many of the investment bankers and management consultants and so on applying to business school, that they have to prove themselves often to an even higher level than somebody who has a less common profile. And I think that is also a reason why we see that difference between the average GMAT and the average GRE people entering school, that there is a difference in the profile of those of those candidates. And therefore I think for some candidates it could be a bit risky to say for that you can get away with a lower GRE than you could with the GMAT because it depends which bucket they’re in.

[00:15:32.170] – Maria

Right?

[00:15:32.410] – Caroline

If they’re in that very competitive bucket of management consultants, of finance, of engineers, then the schools will be expecting them to most likely score highly on those standardized tests regardless of whether it’s the G match or the GRE. Now, maybe that there is a bit more of margin room for maneuver on the GRE, but I’m not sure that it’s as big as those numbers suggest because I think that you’re looking at two different pools when you compare the GMAT pool to the GRE pool.

[00:16:08.590] – John

True. Yeah, good point. The process of streamlining the test required that the folks that do these things had to make some choices. And one of the choices made by GMAT was to eliminate the writing section of the test in the newly revamped GRE. GRE cut the writing portion of the test in half, but still requires one essay which takes 30 minutes, or you’re allowed 30 minutes to complete. Why that’s interesting to me is because I think there’s overall concern in admissions today about the use of chat, GPT Four and other upgrades to be deployed in writing essay questions or your initial draft. So if there is a concern there and admissions officials are saying they may discount to some degree the importance of an essay and increase the importance on interviews and other aspects of your application, having a written example under pressure in a test environment would seem to have a lot of value. So there’s one data point that kind of, I think, favors the GRE revamp for admission directors. On the other hand, one of the things that GMet did, which I thought was brilliant, was to add a whole new section called Data Insights.

[00:17:41.730] – John

And this section of the test kind of addresses the increased emphasis that schools are placing on data analytics and harnessing the overwhelming amounts of data that companies are collecting for smart decision making. So they have that addition. Maria, what do you make of those two changes and how they may even affect which test you take?

[00:18:04.040] – Maria

It’s interesting, right? Because as Caroline was pointing out, it becomes almost a self fulfilling or self selecting prophecy, where the really competitive candidates, like the bankers and the consultants, they tend to take the GMAT. They tend to do really well at it. It’s interesting to me that those are people, especially the engineers, were the ones, actually that she mentioned that I remember. And I think stereotypically engineers don’t like writing. And so that actually might be a reason to take the GMAT. If you are someone who is very good at selecting a multiple choice verbal answer and identifying a sentence, I think they’re actually getting rid of sentence correction. But whatever it is that they’re reading comprehension or whatever those standardized verbal things are, if you’re good at that, but your writing skills are pretty terrible, then maybe you should take the GMAT. It was an interesting I don’t know about if gamble is quite the right word, but gamble is the word that’s coming to my mind for the GMAT to completely eliminate all writing, because I do think it’s interesting because you can’t I’m not saying that it’s easy to game a standardized test, but there are definitely patterns, right?

[00:19:13.710] – Maria

You can definitely learn the tricks and the tips for the test. And if you see this kind of a passage, then you know that this is probably the sort of question you’re going to get, whereas the writing obviously can be more open ended in terms of expressing who you are and expressing how you think. And so that’s an interesting I wonder if the GMAT did that on purpose to try to win back a certain section of the test takers for whom written and verbal expression is not their strong suit. But, yeah, it does beg the question if I’m not going to be able to access a writing sample. I mean, I don’t think admissions directors have the time necessarily to access the writing samples. Caroline, I would love to hear if that intuition, is it’s true? Yeah.

[00:19:59.410] – Caroline

And they don’t pay much. Honestly, they have not paid much attention to those essays. So I am not surprised in that context. If GMAP was looking to cut the time, that that would be the first thing to eliminate, because to admissions directors, until now, that has been the least important part of the test. But that was until now, until the age of AI, right? So maybe now they’ve just eliminated it and now it actually becomes valuable, which would be rather unfortunate.

[00:20:31.450] – John

In fact, I should just go over very quickly. How do they squeeze out so much time? Because the GRE currently takes 3 hours and 45 minutes, and the new one is going to take 1 hour and 58 minutes. It’s pretty dramatic. Okay, so we mentioned before that they’re going to cut the essay section to one. So that used to take 60 minutes for two essays. Now it will take 30 minutes for one. In quantitative reasoning, they used to ask, or currently ask 40 questions and give you an hour to do those 40 questions. Now they’re bringing it down to 27 questions and giving you 47 minutes. And then for verbal reasoning, they used to give you 40 questions and provide 70 minutes to answer them. Now it is down to 27 minutes. Sorry, 27 questions. And let me see here 40 BUP BUP bum. 41 minutes. Here’s another thing that I didn’t realize, that GRE used to throw in test questions that they weren’t scoring to see how people would respond to new questions. And the amount of time that they did, that varied. But in the new test, they’re not going to do that anymore.

[00:21:55.510] – John

So they’re not going to use test takers as guinea pigs for their new questions. And that actually squeezes out a little bit more time that wasn’t even accounted for in the 3 hours and 45 minutes it currently takes to take the GRE. One other little interesting little tidbit here is because of all these changes, you actually have a little more time per question on the GMAT than you now have with the GRE. It’s not a whole lot, but for someone who may be struggling with a particular question or two, that could in fact matter because the shorter amount of time may mean that there’s a little bit more pressure on you. So, for example, the GMAT allows test takers a little over two minutes to answer a question. In the Quant section, the new GRE allows 1.7 minutes. So that’s another difference. If you were to take a test today to get into business school. Maria, which one would it be? GRE or the GMAP?

[00:23:03.370] – Maria

I personally would take the GMAP, but that’s only because that’s because test taking is something that I am good at. I do not have other academic strengths. I will be the first to admit that I have several other academic weaknesses, but thankfully, test taking isn’t one of them. And because I actually had a lower than average GPA when I was applying, I knew that I had to do well on the standardized test. So because I am a strong test taker at those little games and those little tricks that I mentioned before, I would personally take the GMAT. But I think for many people, I would advise them to, as Caroline said, the best thing to, because they both have verbal sections, they both have quant sections, but they’re not exactly the same verbal, they’re not exactly the same quant. And it’s not until you take a practice test, as Caroline suggested, that you’re going to really get a sense of it. I think the GRE, for example, might have things like it will test more your knowledge of somewhat obscure vocabulary versus I don’t think the GMAT in my recollection has a vocabulary. They don’t call it vocabulary, but it’ll be like analogies.

[00:24:06.170] – Maria

For example, this word is to that word as some other word is to some other word. And usually, sometimes in the harder questions, those might be words where you’re like, oh, gosh, I have to remember my Latin roots from 10th grade, 10th grade literature class. If you’re someone who is very good at that sort of a thing, then you might do better on the verbal section. Versus if you’re more of a logic and rules driven person, then maybe some of the more grammatically focused questions on the GMAT. So anyway, point is, I think just take the practice test and see which one you feel more comfortable with. And if test taking isn’t your thing, all else being equal, I would say take the GRE. There does seem to be a smidge more leniency with it. And so that would be my advice.

[00:24:49.670] – John

And Carolyn, if you had to do it over again, would you do the GMAT or the GRE?

[00:24:56.510] – Caroline

Well, it’s a good question. I think that GRE has really stolen GMAT’s thunder here. And as Maria said, I think that ETS has done a great job. And GMAT are probably crying into their coffee over the announcement for GRE because, hey, GMAT has not announced exactly when you can register for this new test right when it’s going to be launched. I think there’s a lot of uncertainty about the new GMAT right now, so that would concern me as a candidate. So I think that actually more people are going to shift to the GRE right now because it’s much clearer what the transition is. I think that GRE has managed this much better. They’ve been much clearer about what is happening and when it’s happening. It’s very vague as regards to GMAT. Otherwise, I actually, in a very nerdy way, quite enjoyed GMAT prep in a very sad, pathetic, kind of nerdy way. So I didn’t mind doing the GMAT. But frankly, I think that GMAT has really kind of failed here in comparison to the GRE. And I think that we will see, potentially. Maria talked about that shift in market share towards GRE. I wouldn’t be surprised if this change now with these two new shorter tests.

[00:26:25.280] – Caroline

And seemingly right now, it looks like it’s being better managed by GRE than GMAT. So that could mean another bump in market share for GRE, right?

[00:26:36.370] – John

And the GMAT cost 275 to take the GRE 220. Although when you’re spending so much money on an MBA, that difference is inconsequential, for sure. But for some people, it could be consequential, particularly if you’re going to take the test a number of times as many applicants do. All right, there you have it. The new GRE is coming out. You can actually sit for it on September 22. You can register for it right now. The GMAT is coming out in the fourth quarter. We don’t know exactly when you can, in fact, register beginning August 29. But that’s a long way off. And I think you’re right, Caroline. I think a lot of people are going to just register now for the GRE when they can. And after all, if the test is shorter, it would require less prep time. I mean, that’s a natural consequence of a shorter test. And both GRE and GMAT are making that part of their marketing pitch to would be applicants. Well, good luck whatever test you take. And when I asked Caroline and Maria what test they would take, I would go for a test optional program because I’m miserable at standardized test.

[00:27:54.210] – John

But there you have it. All right, you’ve been listening to Business Casual, our weekly podcast at Poets and Quants. Thanks for listening.