Same Policy, No Standardized Outcome: How Admissions Values and Institutional Priorities Shape the Effect of Test-Optional Policies on Campus Diversity

Standardized tests were introduced to U.S. higher education as systematic, neutral measures of students’ intellect. Over time, they became central gatekeeping tools in the college admissions process. However, these tests have faced growing criticism for reinforcing inequality and privileging structurally advantaged students, leading many colleges to eliminate them as admissions requirements. In this study, we extend insights from institutional theory and the study of higher education to develop a novel theory of how the potential diversity benefits of test-optional admissions are contingent upon institutional definitions of merit and competing financial priorities. More specifically, we argue that admissions offices’ claims regarding which criteria are most important to thinking about and evaluating merit can shape the outcomes of test-optional policies in systematic ways. Using data from several sources, including the National Center for Education Statistics’ Integrated Postsecondary Education System and the College Board’s Annual Survey of Colleges, we find that, while eliminating requirements generally leads to an increase in enrollment of underrepresented minority students, this effect is significantly reduced at institutions that continue to strongly value quantitative academic metrics in evaluations of merit. Moreover, when alternative institutional priorities such as financial pressures rise, diversity increases from test-optional policies tend to decline. These findings are especially salient in 2025, as institutions face mounting legal and political restrictions on diversity-related practices. Our findings suggest that the impact of policies like test-optional admissions—once viewed as viable alternatives to race-conscious practices—may be limited unless accompanied by shifts in how institutions define and reward merit.