It's no secret that colleges are businesses. They need to make money to keep the lights on and their professors paid. One way they do this is by charging application fees. And while most students (and their parents) pay these fees without a second thought, what they may not realize is that colleges actually make a profit off of them. In fact, colleges have found a way to profit even more by making their admissions process "test optional."

How It Works

When colleges allow you to apply without an SAT or ACT score, they're encouraging students with weak academic credentials to apply even if they know they have no intention of admitting those students. The colleges charge $75 per application sent whether they admit a student or not, and if a majority are "quick rejections" that's just free money for the college. So why would they want to discourage any applications?

Follow the Money

To be clear, there are some perfectly legitimate reasons for a college to go test optional. For example, during COVID lockdowns, it was impossible to take the SAT or ACT for months, and the few centers that were open had limited seats. This put an undue burden on applicants, so eliminating the requirement that year made sense. But COVID is gone and testing is readily available. So why stay “Test-Optional”? Because it’s hugely profitable.

Let’s take Harvard College as an example. In 2019, when the SAT or ACT was required to apply, Harvard had 40,248 applicants with an acceptance rate of 4.9%. The very next year, after the testing requirement was scrapped, that number shot up to 57,435 and the acceptance rate plummeted to 3.4%, almost half the previous rate. Those 17,187 additional applications paid $75 each for a total profit of $1.2 MILLION Dollars, without admitting a single extra student.

Now note that ALL of the Top 100 U.S. colleges got a similar application boost, and you can imagine the enormous financial incentive that maintains “Test-Optional” as a feature in college admissions.

Key Takeaway

At the end of the day, it's important to remember that colleges are businesses first and foremost. They need to make money, and one way they do that is by charging application fees. If you're considering applying to a test optional college, just remember that they may be encouraging you to apply even if your chances of being admitted are slim. And if you do get rejected, don't take it personally—the college probably didn't think you were a good fit academically (or financially).