I have a friend working to do well enough in graduate school after a mediocre undergrad experience to get into the University of Maryland Dental School. They do average together the GPAs to an extent, but they also reflect on your experience, ability to handle upper level work, and your improvement. Your 3.85 in grad school won’t be the same as a guy who just has a 3.85 overall, but it’ll certainly place you ahead of applicants with a 3.2 overall.
So basically, the answer to your question is both – they average it and take improvement into account.
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