Improving College Performance and Retention the Easy Way: Unpacking the ACT Exam

Improving college performance and retention can be difficult. We propose a simple and low-cost change in the way colleges use the ACT exam in their admission decisions that can greatly increase their ability to identify students at a high risk of underperforming and dropping out. Specifically, we show that only two of the four subtests of the ACT, English and Mathematics, can effectively predict outcomes in college. This result is robust across various samples, specifications and outcome measures. We demonstrate that by eliminating the noise associated with the two nonpredictive subtests, student-college matches can be significantly improved. (JEL I23)