Abstract
As of 2019, about 250 four-year colleges and universities had adopted a test-optional application procedure that allowed students to apply for admission without submitting an SAT or ACT score. Many schools adopted this procedure to encourage greater racial and socioeconomic diversity among admitted students. Unfortunately, we know little about the impact of test-optional policies. In this paper, I use a difference-in-differences design to examine the impact of this reform on schools that adopted the policies between 2006 and 2014. Compared to schools that did not switch, test-optional schools witnessed around a 15 percent increase in the number of Black, Native American/Alaskan Native, and Hispanic enrollments and around a 7 percent increase in the number of Pell Grant students. I also show that test-optional policies affect financial aid disbursements. After switching, schools experienced an increase in the number of students receiving institutional grant aid, but decreases in the average aid granted. Schools offset the decrease in grant aid by increasing the availability of institutional loans. Institutions interested in adopting these policies should consider these possible unintended consequences.
Note: This paper was previously circulated under the title “Do the SAT and ACT Limit Enrollment? Evidence from the Test-Optional Movement”
Brianna Felegi
Assistant Professor of Economics
My name is Brianna Felegi and I am an Assistant Professor of Economics at Virginia Tech. I completed my Ph.D. in Economics at the University of Notre Dame in May 2023. My primary field is Applied Microeconomics with an emphasis on the Economics of Education and Labor Economics. My current research agenda focuses on evaluating policies intended to increase access to schooling, but I also have work examining how labor market shocks impact the adoption of immigration policy.