Common practices regarding competency testing for handicapped students have ranged from inclusion and exclusion to selective inclusion based on handicapping condition. Factors involved in deciding about minimum competency testing include conceptualizing the categories of handicaps into two groups: students who require a modified learning environment, and students who require a modified curriculum and instructional goals. Consideration of the purpose for competency testing must also be made. The current widespread practice of linking high school graduation certification to competency test criteria may be harmful to handicapped students in terms of damage to self concepts as well as to future employment opportunities. Constitutional and statutory guarantees exist against unfair and discriminatory practices. (CL)