The State of the Gmat

The Graduate Management Admissions Council, the nonprofit organization that owns and administers the GMAT CAT (computer-adaptive test) exam to business school applicants, has kept test takers and test preparation companies on their toes for the past three years. In 1997, GMAC computerized the Graduate Management Admissions Test and increased the number of times the test was offered from four times a year to 216. Last February, another tech tool -- called the E-Rater -- was introduced to grade the essay part of the exam by computer. Today, GMAC considers the E-Rater software to be more effective than the traditional method of having teachers read and grade essays. GMAT test scores are up 4% this year, bringing the mean score to 530, and more people are taking the exam.

These days, the company is keeping one eye on the 4.5-hour test, which has been given 187,000 times in the past 12 months, and another on new projects. The council also is sponsoring a new MBA loan program (with funds distributed by Sallie Mae, a financial services company) that lessens the exposure of companies who pay to send employees to B-school. Essentially, students borrow the money, employers make the payments, but new MBAs who quit before the three-year loan is repaid have to pick up the payments when they leave their company. GMAC also plans to offer more practice exams on the Web, and will launch a revised Web site next June 1. On Nov. 3, Business Week Online's Mica Schneider spoke with David A. Wilson, CEO of GMAC, at BW Online's offices in New York City. Here's an edited transcript of their conversation: