The Future Of Standardized Testing
ApplicantLab |
February 12, 2026

The future of standardized testing is facing a seismic shift as the Educational Testing Service (ETS) seeks buyers for the GRE and TOEFL exams. John Byrne, Maria Wich-Vila, and Caroline Diarte Edwards dive into the details, revealing a surprising decline in test-taker numbers. With the GRE dropping from 350,000 candidates in 2020-2021 to under 200,000 in 2024-2025, the podcast highlights the financial challenges faced by testing organizations. The economic burden of maintaining widespread test availability amidst such declines is immense, raising questions about the sustainability of these exams.

John underscores that the Graduate Management Admission Council (GMAC), responsible for the GMAT, has also experienced consistent losses, saved only by investment income. The recurring financial struggles signify a broader trend of declining reliance on traditional standardized tests. Maria is particularly shocked by the parallel decline in GRE numbers, especially as its presence in business schools seemed to be rising. The introduction of test-optional programs and online degrees may be contributing to this trend, challenging the future role of standardized exams.

The hosts ponder the implications of these changes. While standardized tests have traditionally served as a critical metric for business schools, their declining prominence prompts a reevaluation of their purpose and existence. For MBA applicants and business education enthusiasts, the discussion signals a potential transformation in how academic readiness and potential are assessed, advocating for an adaptive approach to the evolving landscape of business education.

Episode Transcript

Note: This transcript was generated by AI and may contain minor inaccuracies.

[00:00:06] – John

Well, hello everyone. This is John Byrne with Poets & Quants. Welcome to business Casual, our weekly podcast at Poets & Quants with our co-host, Maria Wich-Vila and Caroline Diarte Edwards. A couple of things in the news this past week. One is a new survey of MBA students, which shows, not surprisingly, that they want AI in the core curriculum. They want a heavier dose of digital strategy, automation, and digital technology, which is completely understandable. Maybe the bigger surprise is that only 41% of those responding said that their program teaches emerging skills very well. So there seems to be a disconnect there. Talk about disconnects. Another big piece of news is that Educational Testing Service is trying to sell the GRE and the TOEFL exams. They hope to get $500 million for those two exams. And the Wall Street Journal is reporting that there are three private equity firms, among others, who seem to be interested in buying the GRE and TOEFL. We’re going to have a conversation about what does that all mean for standardized testing. In fact, we may as well go there first because we had earlier reported that GMAC had lost money in six the last seven years, primarily due to the decline in test taking of the GMAT exam.

[00:01:37] – John

Some of the numbers that have been revealed in this disclosure that ETS is selling of the GRE and TOEFL are quite dramatic as well. Caroline, what do you make of the decline in test taking of the GRE? You might just give the numbers that are floating out there.

[00:01:55] – Caroline

It has been quite a dramatic decline. I hadn’t realized quite the extent of the drop in test taking until I read your article here, John. So you report that in 2020 to 2021, there were 350,000 candidates who took the JRE. Then And then four years later, in 2024 to ’25, that figure is down to below 200,000. So the volume is almost halved in four years, which is quite extraordinary. So It’s easy to understand how they are making losses in that environment because it’s a huge operation to produce a test like that and to offer it around the world. And the GRE is offered in a huge number of locations across countries and cities. I think it’s more accessible than the GMAT in terms of availability in different locations. So a very high running cost, I would imagine, and very difficult to continue operating that with such a dramatic decline in such a short period.

[00:03:07] – John

Yeah, and it’s not only the ETS that is suffering. We had written earlier about the latest numbers from the Graduate Management Admission Council, which, of course, is the administrator of the GMAT, which still remains, I would say, the dominant test for highly selected business schools. We reported that they had a loss of 6. 8 million, which is actually much better than the 10. 2 million in red ink they had the year before. This was the sixth loss in the last seven years. The losses would have been far more significant, if not for investment income on their income statement, which is just remarkable, really. Again, it’s a function of declining test taking. So GMAC lost money in 2019, 2020, 2022, 2023, 2024. It seems almost like red ink is an annual thing at GMAT. I would say the ETS, although they declared a slight profit, it’s coming off a significant loss in the previous year as well. They’ve had losses that are far in excess of what GMAT has had in the recent past. You wonder, what does it mean for standardized test-taking? Will it exist in 5 or 10 years or will it just disappear?

[00:04:44] – John

Maria, what do you think?

[00:04:46] – Maria

Yeah, this is really shocking. I echo what Caroline said, because I had seen that the GMAT has been falling for years. It has been losing a lot of ground to the GRE within the business school ecosystem. So many years ago, the GRE was maybe 5% of test takers, and now it’s approaching, I think, 50% at some of the top schools. So it has definitely become 30%, 40%. It’s really becoming one of the Almost on par with the GMAT. So I expected to see the GMAT numbers going down, but I was shocked to see that GRE numbers were also going down because I guess because we are so focused on the business school landscape, I had just assumed that things must be going gangbusters over at But I think that your observation that with the rise of a lot of these online programs or specialty masters, maybe many of them are test optional. So your question is, okay, what does that mean for tests in the future? It’s very alarming, I think, for me, just because I feel like these standardized tests serve such a strong purpose. I don’t think that they exist, although applicants might disagree with me in the moment, but they don’t exist merely to torture applicants.

[00:06:00] – Maria

They’re not simply a hoop that has been invented by some sadist somewhere. I’m going to force people to give up months of their life to study for this test. They actually serve a significant positive purpose, both for the school, for the students, it helps very intelligent students stand out more if they might have other markers that might not… If their undergraduate records weren’t as strong, for example. But I think also it helps a school determine, Look, if we’re going to teach reach at a certain base level, if our material is going to move at a certain pace and go into a certain depth, we just need to make sure that everyone’s going to be able to comfortably keep up. So I do feel that these tests serve a really significant purpose, and I’ll be really sad to see if they start to go. However, if I were running admissions for a school and if my applicant numbers are down, going test optional is a great way to suddenly get a a whole bunch of applicants interested in lobbying in an application. I can understand why schools might say, at least publicly, that they’re test optional, so that might be leading to this overall decline.

[00:07:12] – Maria

I think perhaps this trend will not reverse. I was thinking, because on the undergraduate level, I know that a bunch of the previously test optional undergraduate colleges have been reversing over the past couple of years. Yes, true. I was thinking, well, in the post-pandemic, now that we’re clearly out of the pandemic, I think some of the other MBA programs that were test optional during the pandemic are now no longer test option. I thought that the tide was turning the other way. But maybe test optional is here to stay. I don’t know, man. I feel like it is such a valuable thing that you have to, at a certain level, be able to assess if somebody’s ready to handle the academics in your classroom. Maybe the schools will come out with a lighter version of the test, a friendlier version of the test. But at the end of the day, business school is still school. You have to be able to understand how to do things like algebra. There are things like numbers involved in business school. I need some level of confidence that if I put a balance sheet in front of you, that you’re not going to run away screaming.

[00:08:19] – John

The other thing, Maria, that’s happening here is that remember that both the GRE and the GMAT significantly shortened their exams a few years ago. In the hopes of addressing the friction that schools said these exam posed for applicants. There were innovations or maybe concessions that both ETS and GMAT made to make it easier for people to take the test and yet still have a decent recording of where their skills are for business school. And yet even that has not stemmed the dramatic decline in test taking.

[00:08:58] – Maria

No, it hasn’t. I’d be I’m fascinated to see. I mean, this data always takes several years to compile, but it’d be really interesting to see in a couple of years as this newer generation of the test optional MBA candidates goes through the process, as people with the new GMAT versus the old GMAT, the new GRE, short of GRE versus the old GRE. I wonder if there will start to be some changes in terms of what those outcomes are, in terms of how well do they do once they’re on campus, how successful are they in the recruiting process. If employers start complaining, I don’t want to make the automatic assumption that a test optional candidate is an academically weaker candidate. But at the same time, if you’re good at school and you’re good at test taking, why wouldn’t you jump in and take this test that helps you look so good? If I’m a corporate recruiter and I start noticing a difference in, Look, I came to the school to recruit talent, and half of them didn’t have a test score, and they were noticeably underperforming in the case interview that I gave them or in whatever exercise it was that I asked them to do, at the end of the day, if the corporate recruiters aren’t happy with the people that they’re seeing on the other end of this process, then I do think the schools might have to recalibrate this.

[00:10:12] – John

Yeah, true. It is true, too, that among the most highly selective MBA programs, they all still require a standardized test. They may have, broaden it to allow a few more tests to be accepted, but pretty Pretty much they want to see that number because I guess it does have value. I’m thinking when you’re at NCI, Caroline, you saw great value in looking at those scores that students submitted with their applications.

[00:10:46] – Caroline

Yes, definitely. There’s a clear correlation between the GMAT and how NCI students perform academically on the program. So it does serve a clear purpose. I am quite sure that the admissions offices at a lot of the schools where the test is optional would actually rather that it was required. It would make their job much easier if everybody took the test. And I think it’s pressure from leadership that has shifted the policy to make it optional because they are, in many cases, struggling to attract enough applicants. And of course, that’s just going to be worse in the current environment where fewer international applicants are coming to the US for graduate school. So I would think that the schools, in many cases, would much rather require the test. As Maria has explained, it does validate whether you have those academic skills that are essential. And if you’re bringing in students where it’s not clear whether they have those skills or not, It could be very difficult. It’s very difficult for the student, right? It’s horrible to be on a graduate program and to struggle with the core requirements and to fail exams and have to retake exams.

[00:12:14] – Caroline

It’s extremely stressful for the students. And it’s a mess for the school. They want to admit candidates who are going to succeed academically and flourish and do well. And the professors don’t like having students who don’t do well. It’s difficult for program management because they have to spend a lot of time supporting these students and so on. I think it’s better for everybody if you have a test which is by its nature standardized, and where you have a diverse applicant pool, it is one data point that everybody has in common. And of course, it’s only one data point, and the academics are only one part of what you bring to the table. But nevertheless, as As Maria said, it’s an academic program. You’re going to school, so the academics are important. I also think that in an age of AI, where candidates can, to a certain extent, gain their application of aspects of their application with AI, or at least they think they can. And so schools are probably seeing more standardized, canned applications, and therefore, perhaps less variability in the quality of the written application compared to what they used to see, that standardized test where you don’t have AI to support you in taking that test, it actually has even more value.

[00:13:45] – John

Yeah, true. You got to wonder, okay, if a private equity firm gets its hands on the Jury and the TOEFL, you might assume a few things based on the history of PE firms and how they run the companies that they acquire. There. One is, prices will go up. Two is that they’ll invest less money in updating the tests and keeping them modern. Key part of both these tests and why schools trust them is the integrity of them. There are expensive safeguards that are employed by both GMAC and ETS to ensure that people can’t come in and take the test for someone else or simply cheat on the test. You could see that some of those investments might just go away, which, of course, would have the effect of business goals having less trust in the GRE and maybe more trust in the GMAP because it’s not owned by a private equity company. This is pure speculation on my part, but I think it’s informed speculation. Maria, don’t you think that if a private equity firm bought the GRE, we’re going to see obviously changes because they’re going to operate to increase profitability and toward a liquidity event.

[00:15:15] – Maria

Well, they’re certainly not going to buy it as a charity.

[00:15:18] – John

Yes.

[00:15:20] – Maria

Which is a nonprofit now. I didn’t take any of the private equity electives when I was in business school, but I don’t seem to recall them being nonprofits themselves. So if they buy it, it’s going to be because they’re going to try to realize value through increasing prices, decreasing costs. I do think that your article talked about the really low level of profit. I think it went from $800 million. The revenue from 2018 to 2024 went down 50%. It was cut in half, but the actual earnings afterwards were It was a huge decline in profitability. They’re almost certainly going to raise the price. They’re probably going to cut a lot of staff. They’re going to try to find probably some ancillary products. I wouldn’t be surprised if they try to find ancillary revenue streams that are related to the GRE to try to bolster that top line, but who knows?

[00:16:27] – John

The other interesting story we’re running is on a A survey of MBA students. It’s a nationwide survey. It was conducted for the Arkansas State University, and they had 181 MBA students from across the US talk about what they really want to most see in an MBA curriculum. No surprise here, they want AI in the core, they want automation in the core, data strategy, digital technology. After all, it is the major topic everywhere, meaning the deployment of AI and what it really means. And yet many of them think they’re not getting it. 41% said their programs teach emerging skills very well, only 41%, which is something of a surprise because I can tell you that at Poets and Quants, every other day we’re writing about what a school is doing with AI in the curriculum. But I think a lot of this has happened only in the past year, and much of it has been either piloting ideas or experimenting ideas because the schools also have been finding their ways. Essentially, this survey would have looked in the past. If you’re a second-year MBA in a program, you’re only able to say what’s happened in the past.

[00:17:55] – John

In the core is the first year. We’re looking at two years two-year-old data in a way. So it may not even be reflective entirely what’s going on today. Yet it’s still somewhat surprising. Caroline, is that your take?

[00:18:11] – Caroline

Yes. It’s It’s very difficult for business schools to change the curriculum from one day to the next, and the pace of change has just been extraordinary with AI. And inevitably, there is some lag time between when schools and everybody realizes that education needs to change, and something new means that they have to completely revamp much of the curriculum for many of the courses, and they need to do that thoughtfully and carefully and strategically, right? And it’s a bit like turning a battleship. You can’t just pull a lever and whiz around. And honestly, educational institutions are not the fastest change most nimble institutions. And so whilst I’m sure they realize very quickly the need for change, I’m also sure that it took them quite some time to figure out exactly what they wanted to do and to implement that. And so inevitably, there is a cohort of MBA students who are going through the program when the school is still working on their plans and they haven’t yet executed on those plans. And of course, there’s a lot of concern among students in terms of how AI is going to impact recruitment opportunities, and They, of course, want to be…

[00:19:46] – Caroline

Naturally, they want to be at the cutting edge. And so I’m sure that there is a cohort of students, one or two classes, where they will feel that their class, the curriculum, was not at the cutting edge and where they would have liked it to be. But as you say, certainly at the top schools that you write about, there has been an incredible array of courses and announcements coming out about how the schools are tackling AI and integrating it fundamentally into the programs. So I think that if you ran a survey today and you focused on the top schools, I think the picture might be a little bit different. We don’t know which schools were included in this survey. I think it’s about 180 students across… It looks like probably quite a wide range of schools. So it may be that some schools have done a better job than others at tackling this quickly.

[00:20:46] – John

True. To me, the bigger surprise is what an MBA student would say should be reduced to make room for emerging topics. The number one subject that they would reduce, according this study, organizational behavior, which is a real shocker because many professors say there’s a need to double down on the soft skills, which is the core part of OBE, in part because AI isn’t great at soft skills. Maria, isn’t that surprising to you?

[00:21:20] – Maria

Yeah, I feel like this was the most surprising thing of this survey was that when asked, which traditional MBA subject would you reduce to make room for emerging topics, the top two were organizational behavior followed by marketing. I think the main thing that AI is not yet very good at is that very first thing is organizational behavior. I can put a bunch of numbers into an AI and have it crunch a spreadsheet within moments. But if I were to ask it something that requires the nuance of psychology and emotional intelligence, those are all things that AI cannot yet do. I was really surprised that that was the first one, and the second one being marketing, because there is often such a creative element of marketing. I think if you have a person do a financial spreadsheet and you have an AI do the financial spreadsheet, the end result may not be. You can’t really tell what was done by the machine, what was done by the person. But I think if everyone starts using AI for marketing, now every marketing campaign is going to look the same. If anything, you’re now going to need marketing people and talent who can outthink the AI, create advertising campaigns that stand out, and what’s going to be a sea of AI generated slop.

[00:22:39] – Maria

Those two, if you were to say to me, what are the two subjects that absolutely need to be kept in an age of AI. Those are the two I would have picked. But I also admit that I don’t have my finger on the pulse of AI as much as these young, strappy young people with a spring in their steps. So they I understand more about technology than I do. But to me, that was like, what? I thought it should be revert, honestly.

[00:23:10] – John

Yeah, me too. Absolutely. Carole, I would imagine you would agree as well.

[00:23:15] – Caroline

Yeah. I mean, a big challenge with AI is implementation. And so change management is a core part of organizational behavior. So I would have thought that that is an incredibly valuable skill to bring to an employer right now. Yet that was at the top of their list of things they would cut. I agree, it’s quite odd.

[00:23:35] – John

All right. If you want to read more about that, the story on our survey is called MBA Students One AI in the Core. In many say their programs aren’t delivering. Check it out. In terms of the GRE and the TOEFL, the headline is ETS Malls Selling its crown jewels. Gre and TOEFL could be worth 500 million. Those stories are at Poets & Quants. Check them out. Meantime, thanks for listening. This is John Byrne with Poets and Quants.

P&Q Podcast "Business Casual"
The Future Of Standardized Testing
ApplicantLab |
February 12, 2026

Video transcript, for you skimmers out there: 

I love the fact that they. Report on this metric, right? The salary percentage increase, I think is an incredibly valuable metric because there are so many business schools out there that are great for so many people. And at the end of the day, these programs are in fact able to do what a lot of business school applicants are hoping for.

They are in fact able to provide a real change in the trajectory of someone’s career. They are, in fact, able to help people leapfrog. Into a higher career stratum than they would’ve otherwise been able to be in. So from that perspective, I love the fact that the FT reports on the salary percentage increase.

So valuable. I think it helps, when sometimes I talk to people at the beginning of the business school journey, I will frequently hear something like, well, it’s M seven or bust, you know, it’s Harvard, Stanford, Wharton, or bust.

And I’m often like, look, slow your roll, man. There are so many programs out there that are going to get you. They might not be the first ones that you think [00:01:00] of, but wow, does that even matter? I mean, whew. Look at some of these numbers. $170,000. That is nothing to sneeze at, especially if it’s one and a half times more than what you were making before business school.

I mean, wow. , That is life changing. , And these schools can really change people’s lives. And I think it’s important to have this metric available because I think it helps open people’s eyes. To, To be a little bit more open-minded. , And I think that’s wonderful.

Where my little quibble is. Is that I believe this is an important metric to report upon. However, I do not believe that it is a metric that should have significant amount of weight in the rankings because if we think about what is the purpose of a ranking, it is meant to be some sort of a representation of relative quality.

Now rankings. The entire concept of them is flawed the entire, for me, the entire concept of an ordinal ranking is ridiculous. Like school versus two versus four, versus seven versus six . You know, like, there, there’s sort of [00:02:00] these tiny miniature marginal differences. I think that school rankings should instead be in buckets.

Like, here is the top bucket, and then here is the also very good, but just underneath the top bucket, the next bucket. Um, but no one, no one listens to me. Uh, but so anyway, to the extent that a ranking. Is intended to be some sort of a measure of a program’s quality. I don’t think that this metric is one that should be included in the weighting.

Look, again, . Life-changing levels of improvements in salary. But when I look at, okay, so these were the top five programs by the salary percentage increase, but now when I look at it by the weighted salary, right, the top five US programs, by weighted salary, it’s not entirely accurate to say that.

Well, these programs, you start with people who have lower incoming salaries and they end up in the same place as the other programs. The numbers do not [00:03:00] really, , the numbers would tell a slightly different story. So if you look at the weighted salary a few years out for the top five programs by salary,

we’re talking about a $70,000 a year difference, roughly 240 a year versus 170 a year. That’s about a 40% difference, which I don’t think is a small, you know, if we were talking 5%, even 10%, I’d be like, yeah, 10%, that’s nothing. It’s, you know, nothing but 40% I do think is a pretty, I think it’s a pretty significant difference, uh, that is worth noting.

And so. Your point about like, well, they were letting in the people who were already on a, you know, if you were making, let’s see if we can, if we figure out, okay, so if we take this, these numbers, then we can sort of back into what’s an implied pre MBA salary, you know, that would indicate maybe something in the mid sixties before MBA versus, you know, one 10 something, [00:04:00] 1, 1 10, 1 15, for these other programs.

I get your argument. Your argument is like, look, these people were already clearly high achievers prior to business school, and so, mm-hmm. Is it not true then that the business school, like they would’ve continued to be high achievers And in fact, this is true, some of the most successful, financially successful people I know skipped business school altogether and they didn’t need it.

, However, I think GMAC often does, polls or surveys of MBA graduates, and I think the vast majority of them, at a minimum say that they’re glad that they went to business school, that they do feel that it was worth, their time. So. How much of this is,, nature versus nurture.

We, we will never know. , But I would gently push back on the fact that I, because these numbers essentially to the extent that they’re lower than say these numbers, it effectively penalizes thes e schools in this ranking. And for that reason, I don’t think that it should be part of the ranking because you’re penalizing a school for letting in more successful people.

But there’s a benefit. [00:05:00] To attending. Like, first of all, if you are a more successful person, think of the opportunity cost that you’re giving up. So the fact that these schools are able to lure away people to give up two years of their salary, in order to go to business school in the first place, I think is a pretty good indicator of the desirability or the perceived desirability of those programs.

Also, I do think that there is merit to thinking about like, who are my peers going to be in a business school? and. If a school is attracting people who were more successful prior to business school, I actually think that that is an indicator of the quality of the school, not only because it shows the people that are willing to give up those two years of salary, but also think about who the peer group is once someone is in the school.

Right? That means that if you are attending one of these schools. This percentage isn’t as high, but you’re surrounded by people who, prior to business school, were already achieving on a different level. And also after they graduate, they continue to achieve on a different level. True. The slope is not as sharp.

Right. But the.

[00:06:00] Result is a larger number. So I think that this implies that perhaps at the school itself, you might be surrounded by people who are driven. some people might say more competitive, which might not be everyone’s cup of tea, but people who are more driven and also after they graduate, they continue to be driven.

And so I think that also implies something pretty powerful about the ultimate benefit of the network because business school isn’t just the two years you go there and it’s not just that first job you get out of school or that third job you have five years out of school.

it’s also who’s your network gonna be and, and who are you gonna call 10, 15, 20 years after graduation? To invest in your company or to partner with your company or to start a company with. so I do think that there is value to attending a school and to have your peers during school and after school be people who were, for lack of a better term, high performers.

[00:07:00] I don’t think that this should be punished because I do think that this does yield a better business school. Experience and a better result in the long term. And so my quibble, again, I love this metric. I think this is an amazing metric to provide, but my quibble is that this should not be given honestly, any weight at all, and certainly not the high level of weight that it’s given, because again, you’re punishing the schools that, you know, you’re basically indicating that I, what I would say is an indication of quality.

An indirect indication of quality, but an indication of quality all the same. You’re basically punishing the schools that have sort of higher quality, quote unquote, coming in. And, and that to me is. Counterintuitive and kind of wrong. And so that’s why I continue to think that this should not be, uh, reported upon.

Absolutely. Tell us. It’s important. I think it’s great to know. I love using this information, but I don’t think it should be used in terms of like, let’s figure out which programs are the , [00:08:00] quote unquote highest quality programs. But what do you think? What did I miss? let me know. Thanks.

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