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To validly measure students’ entry preconditions in the admission phase of higher education, the potentials of entrance tests are increasingly discussed in higher education research and practice. Based on a Germany-wide, large-scale representative study in higher education economics that assesses students’ level of prior study-related knowledge and economics understanding at the beginning of studies, we examine how study admission can be improved through entry diagnostics using a valid test. The analyses are based on a sub-sample of 863 economics students who participated in two surveys at the beginning and at the end of their first study-year. The findings show that using a domain-specific knowledge entrance test can predict study success and study dropout after one academic year with significant reliability.