GRE Eyes GMAT's Testing Turf

Can an alternative entrance exam break the GMAT monopoly at top business schools? The group behind the GRE is giving it a try

by Jane Porter

Josh Cincinnati is a member of a fairly new breed of business school student—one who has never taken the Graduate Management Admissions Test, better known as the GMAT. Cincinnati, who graduated from the University of Virginia last May, knew he wanted to go to graduate school, but wasn't sure what for. In a few years, he figured, he would apply to business school, but for now he kept his options open and took the Graduate Record Exam (GRE) instead of the GMAT. Much to his surprise, the 23-year-old discovered he could apply to Stanford Graduate School of Business with only his GRE scores, allowing him also to consider programs in politics and economics.

"It was a nice option to be able to apply to multiple programs at the same time," Cincinnati says. The Stanford application was a shot in the dark, but he got in.

While taking the GMAT, which is produced by the Graduate Management Admission Council (GMAC), is a time-honored rite of passage for virtually all students seeking admission to top business schools, the Educational Testing Service (ETS), which administers the GRE, is taking aim at the lucrative business school market by pitching the GRE, which is used by a wider range of graduate schools, as an alternative to the GMAT. In September, ETS began placing advertisements in publications such as The Chronicle of Higher Education with the message that MBA can stand for "More Business School Applicants" should B-schools choose to use the GRE.

ETS points out a handful of benefits to using the GRE: It has more test centers around the world, making the exam more accessible than the GMAT; it's cheaper—$140 vs. the $250 GMAT fee that brought in a total of close to $80 million in revenue last year to GMAC; and its status as the general standardized test for other graduate programs could attract more of the applicants business schools are clamoring for—women, minorities, and candidates with liberal arts backgrounds.

Fishing in the GRE Pond

"Once they realize that they don't have to take another test to apply to business school, they are going to hedge their bets and explore both opportunities," says David Payne, head of the GRE program for ETS.

GMAC, which has positioned the GMAT as the primary standardized MBA admission test since 1954, doesn't see it that way. GMAC President David Wilson acknowledges allowing the GRE for business school admission would likely expand the applicant pool, but a larger pool is not necessarily a better one, he points out. "If time were limitless, then the larger the sample, the better. But if time is a constraint, then you want to be sure you are fishing in a pond where there are fish you can eat," Wilson says. "Are some schools fishing in the GRE pond? Sure. We haven't seen results. We still believe we offer a stronger, better test."

It's not clear how many schools are accepting the GRE or considering it; the ETS says it doesn't track that statistic. Among those already fishing in that GRE pond are some top-tier business programs—namely Stanford and MIT's Sloan School of Management, both of which in 2006 announced they would begin accepting either test with student applications. But GMAC's near monopoly on the market has complicated the process. The council's membership policy states "requiring the GMAT exam as part of its admission process" is part of the minimum criteria for every GMAC member school, including Stanford and MIT.