An unusually comprehensive and insightful discussion of this problem was penned by the great recent rabbinical authority from New York, Rabbi Moshe Feinstein. Someone asked his opinion about reports of cheating by yeshiva students on Regents exams. Rav Moshe refused to give credence to the report, but at the same time made a strong statement forbidding cheating on tests. Here is an excerpt from his letter:

This is forbidden not only by the law, but also by the Torah. And this is not only misleading, which is in itself forbidden as [the Talmudic sage] Shmuel states . . . that it is forbidden to mislead [any other person], so much the more here that he misleads everybody. It is actual stealing, for when he wants later on to get a job, work in a trade to make a living, in most cases [the employer] wants someone who excelled in his studies. And they will see his test results that he has a good score, and on that [false] basis he will be taken on, and this is actual stealing.

And don't claim that even if that is the basis for his being hired, this is really an irrelevant basis and therefore it's permissible to lie. First of all, even if there is no real basis for insisting on [good grades], this employer at any rate insists on it and so his hiring is null and void; and in any case it is always forbidden to lie even if there is no [unfair] advantage gained. . . Furthermore, if [the employer] knew he had lied he wouldn't rely on him for anything, and he will [unfairly] cause others to be suspect. . . Furthermore, when people insist on this there is certainly a valid basis, for there are certainly things that someone expert in his studies will do better in business and commerce. . . This also develops habits of not knowing what is studied and habituates to laziness. (1)

Rabbi Feinstein mentions a number of reasons cheating is improper:

ILLEGAL: Cheating on tests is illegal and can get you into serious trouble .
DECEIT: Even if you don't get any monetary benefit from your scores, only the admiration of others, this too is forbidden by Torah law to obtain through misleading others.
FRAUD: When you are hired on the basis of false test results, your hiring is on a fraudulent basis. Your employer thinks he is getting someone both knowledgeable and trustworthy; instead, he is getting someone with less knowledge and ability than he expects, and someone who is willing and able to lie to get ahead.
UNFAIR COMPETITION: Not only does the employer get someone under-qualified; he has also unfairly turned away someone who is actually better qualified.
BAD HABITS: Even if the test results are actually totally irrelevant to your job acceptance, cheating cultivates the habit of shortcuts and sloppy work which will harm a person in any endeavor.