In my opinion, it is the elite schools who suffer the “big loss.” The kids (from CA and elsewhere) top schools are trying to attract don’t even bother applying. It is easy for schools to claim that they searching for diamonds-in-the-rough and to even come up with a few anecdotes, but their policies prevent the vast majority of potential low SES applicants bothering to even apply.
The “local context” is that low SES kids are unlikely to bother to take the tests, and therefor can’t apply.
And if a kid happens to the odds and take the test and get a 1400, they probably aren’t going to apply to the elite colleges if the average for the elite college is 1540. How does an elite college admit that kid with the 1400 if that kid doesn’t even apply?
In a different thread, MITChris explained why MIT quit using Subject Test scores:
That’s the crucial balance that schools are repeatedly ignoring when they explain why they are going back to requiring the tests. Does the increased predictive utility for those who apply outweigh the fact that requiring the tests excludes a huge swath of potential candidates - especially low SES candidates - from applying at all?