Deciding Whether to Take the GMAT in a Test-Optional World

I'm hearing this question a lot these days: All of my target business schools made the test optional, so should I take the GMAT?

And here's the true answer: Only if there's a really good reason to take it. 

Not expecting that answer from someone who works for a test prep company? But it's true! It costs time and money to get ready for a standardized test so, as with anything in life, make sure the investment is worth it. There are two broad reasons why taking the GMAT might be worth it: to improve the chances that your MBA application is successful and to reduce your tuition costs.

There are also potential costs associated with preparing for a standardized test. Deciding whether to take the GMAT is a classic cost-benefit analysis – a concept you need to use during your MBA program anyway, so you might as well learn how to do a cost-benefit analysis right now.

Should I take the GMAT? A cost-benefit analysis

First, define the potential benefits.

There are two possible reasons to take the GMAT even in a test-optional world:

• To improve your chances of getting admitted to a higher-ranked school
• To get a better financial package for your graduate program

Let's set up a scenario to analyze both of these points. First, most people apply to multiple MBA programs; we can classify those programs in one of three ways:

• Safety: You're all-but-certain to get admitted.
• Regular: You have a good chance to be admitted, but it's not a guarantee.
• Reach: The odds are a lot lower, but why not try? Stranger things have happened!

First, let's say that you're only applying to schools that are test-optional. (If any of your schools do require a standardized test, then of course you'll need to take one.)

And let's say that your test scores are well above the average GMAT scores for students admitted to your safety school, around or a bit above the average for your regular school, and somewhat below the average test scores for your reach school.

In this case, report your GMAT scores to your safety and regular schools, but not to your reach school.

Congratulations! You've just improved your chances of gaining admission to the regular school. In fact, the higher you are above that school's average, the more you've improved your chances. An above-average GMAT score helps admissions officers to increase their overall average GMAT score – and that can help the business school to increase its ranking.

You already had a strong chance of being admitted to the safety school, so how do your scores help in this scenario? Here's where the admissions process gets seriously interesting.

Taking the GMAT can help you pay for business school 

You probably knew about financial aid when getting your undergrad degree – but financial aid for MBA programs is really more like a financial package to encourage you to choose this school. (I actually think of it more as a signing bonus.) 

If business schools really want you to attend their program, they're going to try to entice you with a good financial package – grants, fellowships, scholarships, and other awards that amount to a discount on your tuition. You can even negotiate, using an offer from one b-school program as leverage in order to encourage another program to improve their offer. 

So, even though you’d probably have been accepted to your safety schools without the score, submitting a good GMAT score can significantly change the financial calculus. (And, since this is a safety school for you, chances are you're the kind of prospective student the admissions team really wants to recruit.) You might be offered a financial package that amounts to 25%, 50%, or more of your tuition costs, significantly lowering the monetary investment you’d need to make to earn your Master’s degree. You do, of course, have to invest the time and money to get good test scores in the first place, but the cost to prep for a standardized test is measured in the hundreds or low thousands – not nearly on the same scale as typical tuition charged by many business schools.

💲 Read more: How to Negotiate a Larger MBA Scholarship

So... should I take the GMAT?

Now, it's time to weigh the costs and risks against your possible benefits. 

Costs/risks:

• Money spent on GMAT study materials (hundreds) and maybe a class (low thousands)
• Money to take the exam (~$300 each time, plan to take it twice just in case)
• Time and mental energy to study (dozens of hours over a 3 to 6 month period)
• No guarantee that I'll get to my goal score

Potential benefits:

• Increase my chances of getting into certain schools
• Get a better financial package / reduce my school costs
• (One more) Get comfortable with various math and data analysis concepts before business school starts

Only you can decide whether the potential benefits outweigh the costs/risks. In some cases, the answer will be “Nope, I'm not going to take the test.” In others, the potential benefits (getting into a higher-ranked business school, saving money on tuition) are well worth it.

Use this framework to help weigh the pros and cons and figure out the best plan for yourself. Good luck – and have fun in b-school!