Test-optional led to more options for students and revenue losses for Big Test
Big Test — the companies that administer standardized tests for prospective college students — is losing revenue after a record number of colleges made standardized tests optional during the coronavirus pandemic.
"It will likely take many years for us to fully understand the implications of recent changes to admissions policies, including the expansion of test-optional admission policies, on ACT test-taking patterns," ACT Chief Financial Officer Curt D. Yedlik said in a statement to Yahoo Finance.
As of September 30, 2020, the Educational Testing Service, which administers the SAT, saw operating revenue fall 22% from nearly $1.36 million to $1.05 million. The College Board, which created the SAT, saw operating revenue fall by 27% from nearly $1.06 million to roughly $770,800 as of December 31, 2020. The nonprofit saw a big drop in fees from programs and services.
The ACT also saw red: As of August 31, 2020, Act Inc. reported in its Form 990 first obtained by the Chronicle of Higher Education that its total revenue fell by 20%, from $302 million to $240 million.
“What happened was our entire applicant pool didn't have access to SAT tests or ACT tests, so we moved away,” Colgate President Brian Casey recently told Yahoo Finance. “I don't see us moving back for a while, and I don't see elite institutions moving back to the SAT or ACT for the short term. I think we're all gonna stay where we are for a short period.”
Data compiled by FairTest showed that the number of students taking the ACT and SAT has dropped considerably over the last two years.
Both the ACT and the College Board said their tests go beyond just serving as indicators of a student's academic performance.
"Nearly all colleges and universities value and use the information the ACT provides to inform admissions, course placements, and merit scholarships, and to identify what supports may be needed to help students succeed," ACT's Yedlik said. "We expect this will continue in the wake of the coronavirus pandemic."
“As colleges have introduced more flexibility and choice into the admissions process, some students may decide their application is stronger without test scores, while others will benefit from sending them, including the many thousands of underrepresented students whose SAT scores strengthen their college applications," Priscilla Rodriguez, VP of College Readiness Assessments at the College Board, told Yahoo Finance. "As we emerge from the pandemic, the SAT will remain one of the most accessible and affordable ways for students to distinguish themselves. Preserving a student’s choice to submit scores is important.”
ACT seemed to fare a little worse, given that College Board saw line item investments rise by 13% in 2020. Losses at the ACT were more pronounced, according to one expert, because of how the business is structured.
“The ACT is more like a one-trick pony, in which the ACT test has been their primary revenue driver,” Bob Schaeffer, executive director at FairTest, told Yahoo Finance.
Unlike the ACT, the College Board received sizable revenue from their Advanced Placement (AP) exams when testing centers were shuttered due to the pandemic.
Last year, more than 4.75 million AP exams were administered by the College Board. In the spring of 2021, that number stayed mostly steady at 4.56 million.
Test-optional has 'opened the doors' to many colleges
While standardized testing is down, total college applications are up.
Early data from Common App, an application used by hundreds of schools, revealed that applications submitted as of October 25 surged by nearly 30% in the 2021-22 period. Many schools will continue accepting applications in the upcoming months.
Around 91% of colleges and universities on the Common App are test-optional. Many students, now being able to apply to colleges without test scores, applied to more schools on average — 3.2 in 2019-20 versus 3.7 in 2020-21 — according to Common App’s data, and this was exceptionally significant for some groups.
For instance, there was also a surge among first-generation college students, who submitted 46% more applications.
“One of the things that Common App focuses every day on is how do we reduce the barriers to access to college, particularly for those students most underrepresented in higher education,” Jenny Rickard, president and CEO of Common App, told Yahoo Finance. “And one of the things that we saw last year was that testing is a barrier for students, particularly those underrepresented in higher education.”
She added that going test-optional has really “opened the doors to colleges in the minds of students to applying to institutions that they might not have considered before.”
Critics of standardized testing, like FairTest's Schaeffer, heralded the surge as a testament to ending tests for students.
“That is precisely what we've long said happened in a test-optional environment,” Schaeffer said. “And it was very gratifying to see both the increase in applications and especially the increase of admission at selective institutions.”
Rickard also noted that removing tests was especially important for underrepresented groups. Based on last year’s data, those students were less likely to self-report their own test scores on Common App as compared to other students.
Test-optional forever?
Schaeffer said that based on his analysis of the schools going test-optional, “at least 60%” will continue to be test-optional through fall 2023.
Cornell, for instance, has suspended test requirements for graduating high schoolers seeking undergraduate admission through 2024. The University of California system has permanently decided to ditch SAT and ACT test scores when making admissions decisions.
But some colleges have reversed that trend already. Georgetown University, for example, requires applicants to take either the SAT or ACT.
That policy could backfire, so “if a school were to reinstate a testing policy, that would put them at a competitive disadvantage,” Schaeffer stated.
Meanwhile, ACT is trying a different tact amid the pandemic to boost its revenues: While it had previously appealed to prospective students directly, it’s now pushing to enter school districts by providing testing during the school day in students’ own classrooms, according to a blog post.
"Twenty-three state departments of education currently provide their students the opportunity to take the ACT in their own classrooms during regular school hours on a weekday," ACT's Yedlik said. "This has greatly expanded access to educational opportunity for all students, especially for students from low-income families, those who would be the first in their families to go to college, and students in rural areas..."
Yedlik noted that more than 1.3 million students have taken ACT tests through the state and district testing program in 2020-2021, which was "more than in any previous year of the ACT’s existence."
The College Board is also doing the same by offering weekday testing to juniors and seniors.
According to the company, nearly 1.1 million students in the class of 2020 took the SAT on a school day — which was about 49% of all SAT takers. For the class of 2021, nearly a million students took the SAT on a school day.
But the bottom line is that going test-optional has given students more choice in terms of applications.
“I think that led to students applying to more schools just to cover their bases, but also be opportunistic at the same time,” Rickard said, “which I think led to students applying for more colleges per student than they did last year.”
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