To understand how criterion referenced tests (CRT)and norm referenced tests (NRT)are different, you must have a basic knowledge and vocabulary of the world of standardized testing. To begin, let's look at what is meant by a "standardized" test.
In a standardized test, everyone takes the same type of test and is given the same time to complete the various sections. Timers are used, #2 pencils or computers are required, room climate is controlled as best as can be, and the tests are proctored by people who have been given specific instructions on what to do and when to do it. In other words, the test conditions are "standardized." In the field of education, widely accepted standardized tests have a 95% or better record of reliability and validity. In other words, the results are going to hold true for 95% or more of the population for which it is intended and thus they are also "standardized".
Now we can get into the basic categories of standardized tests. At one point, all standardized tests were pretty much norm referenced exams. That is, they were usually multiple choice tests that measured what someone knew on a certain topic in comparison to what other people knew about that same topic. The ACT, SAT, LSAT, GRE, PSAT, and MCAT are all examples of norm referenced tests.
With the inception of the guidelines under the No Child Left Behind Act, states and school districts were faced with setting standards and then measuring how well their children achieved those standards. That is what is known as a criterion referenced test. A criteria is set and then the mastery of that specific criteria is measured.
With all this testing going, on a new term was coined -- "high stakes" testing. It is so-called because the results on the test can affect a student's options when it comes to college or graduate school admittance. The norm referenced tests are the tests most closely associated with high stakes testing. But as more and more states develop better criterion tests, those tests are also being made part of those high stakes decisions. Ultimately, only time and student performance will show whether or not the right decisions were made.