Deciding whether to take the GMAT in a test-optional world

I’m hearing this question a lot these days: All of my 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. That’s 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 are 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!

Also, let's assume that you are 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 GMAT scores are:

• Well above the average GMAT score for students admitted to your ‘safety’ school
• Around or just above the average for your ‘regular’ school
• Somewhat below the average test score 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 have improved your chances. An above-average GMAT score helps admissions officers increase their school’s overall average GMAT score, which can increase its ranking.

You already had a strong chance of being admitted to the safety school even without submitting strong GMAT scores, so how does including 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 you were getting your undergraduate degree, but financial aid for MBA programs is really more like a financial package to encourage you to choose a school. (I actually think of it more as a signing-on bonus.) 

If a school really wants you to attend its program, it is 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 these, using an offer from one b-school program as leverage in order to encourage another program to improve its package. 

Even though you already had a great chance of gaining admission to your safety school without submitting a GMAT score, submitting a strong score can significantly change the financial situation. You might be offered a financial package that amounts to 25 percent, 50 percent, or more of your tuition costs, significantly lowering the monetary investment you’d need to make in order to earn your master’s degree. 

You do, of course, have to invest the time and money to get a good score in the first place, but the cost of preparing for a test is measured in the hundreds or low thousands—not nearly on the same scale as typical business-school tuition.

💲 Read more: 5 Ways To Ace Your Business School Scholarship Negotiation

So... should I take the GMAT?

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

Costs/risks:

• Money spent on GMAT study materials (hundreds of dollars) or a comprehensive class (low thousands)
• Money to take the exam (around $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 you will achieve your goal score

Potential benefits:

• Increase your chance of getting into certain schools
• Get a better financial package / reduce your school costs
• 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 chance of gaining admission to a higher-ranked business school or saving significant money on tuition is 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!