Do Test-Optional Admissions Policies Help or Hurt Disadvantaged Students?
A recent study investigates how test-optional admissions policies influence applicant reporting choices and acceptance rates across different socioeconomic groups at an elite university.
Takeaway: Optional standardized testing policies in selective college admissions can unintentionally lower acceptance rates for high-achieving, low-income applicants who withhold strong scores due to a misunderstanding of how admissions offices evaluate scores in context.
Key Points
Misaligned Reporting Behavior: High-achieving applicants from lower-income families or under-resourced high schools frequently choose not to submit test scores, even when reporting those scores would substantially increase their likelihood of admission.
Contextual Evaluation: Elite admissions offices evaluate test scores relative to an applicant's high school and neighborhood environment, making a solid test score a critical positive signal for students from lesser-known schools.
Predictive Value: Standardized test scores remain a strong predictor of first-year college performance across all demographic and income groups, offering predictive power beyond high school grades alone.
When many selective colleges adopted test-optional admissions policies during the COVID-19 pandemic, the shift was widely seen as a step toward leveling the playing field. Critics of standardized testing argued that tests disproportionately benefit wealthy families who can afford expensive test preparation and private tutoring.
However, an essential question emerged: Does making test scores optional actually expand opportunities for disadvantaged applicants?
This topic directly impacts students choosing whether to submit test scores, high school counselors advising applicants, and university administrators aiming to create fair admissions processes.
Understanding how admissions officers interpret application components helps ensure that applicants do not unintentionally withhold information that could strengthen their applications.
To examine this question, the researchers analyzed applicant and enrollment data from Dartmouth College, comparing traditional test-required admissions cycles with test-optional cycles. By analyzing a dataset that included "hidden" test scores—results available to researchers for applicants who requested that admissions officers not view them—the authors were able to compare admission outcomes between students who reported their scores and those with identical scores who opted out of reporting.
Findings
The study revealed that applicants from less-advantaged backgrounds submit test scores at similar rates to their more privileged peers across equivalent test score levels. For example, applicants scoring around a 1400 on the SAT submitted their scores roughly half the time, regardless of family income or high school characteristics.
However, the optimal strategy for submitting scores differs greatly based on a student's background. Selective admissions offices routinely evaluate scores within local context—considering high school averages and neighborhood resources. A score of 1400 represents a exceptionally strong achievement for a student from a rural or under-resourced high school where average scores are much lower.
Because applicants generally lack detailed insight into how admissions offices operationalize contextual scoring, high-achieving disadvantaged students frequently withhold scores that would have significantly helped their applications. The authors estimated that reporting scores of 1420 or higher more than doubled the admission probability for disadvantaged applicants compared to withholding those same scores.
In contrast, score reporting decisions had little impact on admission probabilities for applicants from highly advantaged backgrounds. Admissions officers already possess extensive context regarding well-known, high-resource high schools, making standardized tests less critical for evaluating those transcripts. Additionally, the study confirmed that test scores consistently predict first-year college grades equally well across all socioeconomic and demographic groups.
Limitations and Broader Context
The authors emphasize several limitations to their analysis. The study focuses on data from a single, highly selective private institution, meaning the findings may not apply equally to public flagship universities or less selective colleges. Furthermore, the analysis relies on statistical weighting methods to account for non-reporting applicants whose hidden scores could be observed by researchers.
Despite these limitations, the practical implications for policymakers and admissions officers are clear: without transparent guidance regarding how scores are evaluated in context, test-optional policies can inadvertently harm social mobility by leading high-achieving, lower-income applicants to withhold valuable credentials.
Learn More
Paper Title: How Test-Optional Policies in College Admissions Disproportionately Harm High-Achieving Applicants from Disadvantaged Backgrounds
Authors: Bruce Sacerdote, Douglas O. Staiger, and Michele Tine
Journal: AER: Insights
Publication Year: 2026
URL: https://www.aeaweb.org/articles?id=10.1257/aeri.20250177
Econ Today Explains
Economic Concept: Asymmetric Information and Signaling
Asymmetric information occurs when one party in an economic transaction holds more or better information than the other. In higher education admissions, applicants know their own dedication and potential, but university admissions committees must infer these traits from limited documentation.
To bridge this information gap, applicants use credentials—such as standardized test scores—as a "signal" of their academic readiness. When an institution makes a key signal optional without clearly explaining how that signal will be interpreted, job seekers or college applicants may misjudge whether transmitting the signal benefits them. This can lead to market inefficiencies where qualified individuals accidentally hide their strengths, leading to unintended outcomes for both applicants and decision-makers.
This article was written by AI but reviewed by a real human.
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