Do step 1 scores correlate well with year 1 & 2 grades?

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Generally. Second year performance is supposedly the "best" predictor of all. However, that's not written in stone. Changes in study strategies, time spent studying, personal stress, etc. can all affect your scores for better or worse.
 
Our assistant dean has done tons of playing around with these numbers and presented all his results to us.

Our school is PBL, so our block exams cover multiple basic science topics - ie path, biochem, anatomy, etc. At least at our school, the grades on these tests have a very high correlation with Step 1 scores. Second year tests, which tend to be heavier on pharm, path, micro,etc. had a slightly higher correlation than first year tests. Interestingly, MCAT Bio scores also had a high correlation; MCAT verbal, physical science, undergrad GPA, and undergrad institution (competitive vs. noncompetitive) had low correlations.

While kind of interesting, obviously the results are more or less meaningless outside of our school.
 
I'm sure there's some correlation, but it depends on the content of your school's tests.

I didn't honor a single second-year course, and did much better on Step 1 than those who did.
 
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