Examining Key Impacts of the Test-Optional Movement for Early Adopters

By 2019, about 250 postsecondary institutions adopted a test-optional policy. This paper uses a difference-in-difference design to examine the impact of this reform on schools that switched policies between 2006 and 2014. I find that adopting a test-optional policy increased the share of Black, Native American, and Hispanic students as well as Pell Grant recipients. I also show that adopting a test-optional policy did not affect the academic performance of enrolled cohorts but did affect financial aid disbursements. These findings are important considering that several institutions that switched policies during the COVID-19 pandemic have since returned to requiring test scores.