Problems in the interpretation of standardized tests used to group children of limited backgrounds, cultural bias in tests, and the misuse of tests are considered. Reports on the use of specific tests with disadvantaged students are reviewed and some of the efforts being made to provide better interpretive data are discussed. Alternative strategies to homogeneous and heterogeneous ability grouping are suggested and described in some detail. The mutually compatible strategies include: individualized instruction, stratified heterogeneous grouping, student tutoring, team teaching, and early childhood education. An extensive bibliography and a list of test references are provided. See TM 000 501, 502, and 504 for other sections of this report. (PR)