The two principal entrance exams for graduate school are the Graduate Management Admissions Test (GMAT) and the Graduate Record Exam (GRE). Both are general competency exams designed to establish a form of ranking for verbal and quantitative reasoning, critical thinking, and writing. There's a math component, a verbal component and the test for analytical composition in both exams. So what's the difference? It starts with the schools.

Business Schools

The GMAT was developed about fifty years ago by business school deans for business school use. It is accepted today by over 1800 business schools for MBA applicants and has long been the choice of standardized exams for graduate business programs and for many graduate economics and finance degree programs as well. The GMAT has owned a niche in the graduate school entrance exam that until recently, it held on an exclusive basis.

The GRE is the traditional graduate school entrance exam except for law schools and medical schools. It is taken by over 600,000 students annually and is administered by the Educational Testing Service (ETS), also a traditional standardized testing institution that until three years ago administered the GMAT as well. Upon losing the contract for GMAT services, the ETS launched a campaign to make the GRE an option for business school students as well, and today there are at least 140 business schools that will accept either test with an application.

Which Test to Take?

The first question is obviously what your choice of graduate school is. An MBA applicant is probably better off choosing the GMAT, but it's worth checking with the school to see if they accept the GRE for a couple of reasons. The first is the fact that you can save some money. The current fee for the GMAT is $250, while the GRE costs $140. The second reason to consider the GRE is the fact that grad school decisions can change like the tide for someone just finishing up a bachelor's degree. You may decide to enroll in a master's degree program other than business school, or you may end up putting off graduate school altogether and have an entirely different orientation when you head back to school after working for a few years.

The scores on these exams are good for five years and statistics suggest that those who take the exam at the age of 23 or younger do better than those who take it in later years. You're going to lose some of the quantitative skills you picked up as an undergrad because you may not use them in the work place. Your writing skills may diminish accordingly as well. If graduate school is less than a concrete or immediate goal, taking the GRE is probably your best bet.

If you're Sure about the MBA

But many MBA programs prefer students who have a few years of work experience under their belts. If it is your intent to work for three years and then apply to business school, investing in the GMAT is probably worthwhile. Unless you're an exceptional student, you'll be applying to multiple schools and it's (at this point) that some won't accept the GRE exam and will still insist on a GMAT score. If you're interested in entering the financial sector, the GMAT is likely to be the exam of choice for the Master of Financial Engineering degrees that are becoming a popular choice.

Today your career orientation makes the choice of exam for you, more or less. That may not always be the case, but the GMAT vs. GRE debate is really only worth discussing if you're applying to a business school that accepts both. In that case you may want to take both and submit the best score with your application. While the exams are very similar in length, complexity and design there are always going to be students who do substantially better on one than the other.