Standardized tests are a part of life for every American, and indeed for almost everyone
in the developed world.
But especially for America, there is one company that stands above all others both due to its
success and shady practices.
That’s why today we’ll be looking at the world’s largest standardized test provider,
College Board.
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Now, standardized testing has been around in the US since roughly the 19th century,
but back then it wasn’t on a national scale.
Universities were limited to choosing test from local institutions, which rarely spanned
more than a single state.
At the turn of the 20th century there were roughly 1300 academic tests on the market,
so you most likely had to take a different one depending on which university you wanted
to go to.
Obviously this system was rather wasteful, so in 1899 Columbia University partnered with
11 other universities to adopt a more universal standard for testing.
What they created was the College Entrance Examination Board, better known today simply
as College Board.
As you may have noticed, four of its founding members would eventually be part of the Ivy
League, so College Board was considered a very high-level institution right off the
bat.
Originally it provided tests for 9 different subjects, which allowed participating universities
to streamline their curriculum.
The advent of World War 1, however, would be a game changer for standardized testing.
The US military developed the Army Alpha, a general test that could evaluate the intelligence
and skills of new recruits.
In an unprecedented effort, more than 2 million tests were administered during the war.
Afterwards, College Board hired one of the leading figures in the Army Alpha program,
who began working to adapt the test for academia.
Thus, in 1926 College Board began administering the Scholastic Aptitude Test or SAT.
At first, universities like Harvard used the SAT to determine who would receive scholarships,
but pretty soon the test became adopted as a standard for admission.
Technological advances were a big reason why the SAT became popular.
IBM, for example, developed a machine that could grade tests 10 times faster than even
the best teachers.
Over the next decade College Board’s membership would swell to 52 institutions.
When America joined the Allies in World War 2, College Board was directly assigned to
administer tests for the military.
But despite being the largest testing organization in the US, in 1945 College Board found itself
in a rather difficult position.
Only 15% of universities were using the SAT and there was still huge variance in tests
across the country.
But now that peace had been secured, American universities were faced with unprecedented
demand for higher education.
The man responsible for that was FDR, who in 1944 signed the G.I.
Bill, which paid for the tuition of every American soldier that had served in the war.
College Board realized that it wasn’t in a position to capture all of this new demand,
so instead of trying to compete, it secured an alliance with two other big testing institutions.
The first one was the American Council on Education, which was created towards the end
of the First World War to help the military in parallel with the Army Alpha.
The second one was the Carnegie Foundation for the Advancement of Teaching, which was
founded by Andrew Carnegie, the titan of the American steel industry.
Together with College Board, the three organizations created the Educational Testing Service in
1947, delegating to it the job of developing and administering most of their tests.
Now that the industry was much more consolidated, the SAT’s adopting rate grew exponentially,
reaching 25% less than ten years later.
In 1955 College Board felt confident enough to expand its individual subject tests into
the Advanced Placement program.
Unlike the subject tests, the AP program gave students the opportunity to essentially earn
credits instead of having to take classes.
During the 60s and 70s College Board and the ETS grew to dominate the testing industry
in America, administering one and a half million SATs per year.
Collectively, the two organizations were bringing in over $200 million of revenue, which they
used to spread their influence across the world, first in Europe and then in Asia.
But this aggressive expansion, coupled with their near-monopolistic power in the US, has
attracted a fair bit of criticism.
The most obvious one is the cost of their services, which can be very expensive for
low-income families that don’t qualify for the waivers, which by the way don’t apply
to international student.
But the real problem with College Board is its complacency, which is a trap that’s
very easy to fall into if you’re a big successful player in a mature market.
Despite the immense revenues and resources this non-profit organization has, it is full
of cases of downright incompetence.
In late 2005 for example, College Board found out it had given wrong reports to several
thousand students, artificially lowering the grade of 4,000 them.
That might seem like an honest mistake, until you realize that College Board found out about
the mistake in December, and didn’t issue corrections until March 2006, long after the
admission period.
Even the grading procedures themselves are notoriously suspicious.
A study done by MIT showed that there was a significant correlation between the length
of an essay and its score.
In fact, just assigning grades based on length would match the score given by College Board
90% of the time.
Ongoing leaks of test questions have become commonplace in South Korea and China, where
there were major scandals over cheating two years in a row.
Then you also have the questionable practice of selling student information for under 50
cents per person, which got College Board entangled in a class action lawsuit that didn’t
really change anything.
All of this has put College Board and ETS in the weird position where people are challenging
their status as non-profits.
Today, the two organizations collectively bring in over $2 billion of revenue, which
in and of itself is perfectly fine, until you combine it with their monopolistic practices
and excessive executive compensation.
In 2013 the president of ETS earned almost $1.5 million, while the CEO of College Board
brought in just over half of that.
Which again, nothing wrong with paying your executives competitive salaries, but under
these specific circumstances it does look a bit suspicious.
And while College Board and ETS have never been more profitable, their future is far
from certain.
With the rate of university enrollment trending downwards and the ever-increasing popularity
of trade schools and online courses, the long reign of College Board may eventually come
to an end.
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By the way, the YouTube channel PolyMatter did a great video on the SAT and the current
state of College Board’s monopoly.
The channel makes very thought-provoking animated videos, which you’re gonna love if you’re
a fan of Business Casual.
So go over there, watch the video and consider subscribing if you like what you see.
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