1. Greed to be degreed?: Korea has the highest percentage of young people with high school diplomas and bachelor’s degrees among the member countries of the Organization for Economic Cooperation and Development (OECD), according to a survey published last month. Ninety-eight percent of Koreans aged 25-34 graduated from high school as of 2011 while 64 percent graduated from college or graduate school, according to the OECD. It was the fifth straight year South Korea topped the list in terms of high school education and the fourth consecutive year it ranked No. 1 in college education.
Analysis: South Korea has transformed from a country that was undereducated to a modern economy that is arguably overeducated—meaning that the country’s supply of highly educated graduates greatly outnumbers the demand for such graduates (from a very narrow bandwidth of domestic South Korean firms, namely the large conglomerates, such as Samsung, Hyundai, and LG, to name a few).
2. Korean education isn’t cheap, but is it worth it?: Such achievements at the national level comes with costs and negative socio-economic externalities. Annual tuitions at Korean universities in 2011 averaged $5,395, the fourth highest among 25 countries, following Ireland at $6,450, Chile’s $5,885 and the United States’ $5,402. The survey found that tuition rates at South Korea’s private universities were the fourth-highest, trailing only behind the U.S., Slovenia and Australia.
Analysis: Given South Korea’s GDP per capita, and factoring in purchasing power parity (PPP), the country’s tuition rates are considerably high. But education is an investment. Thus, so long as one’s education investment has a reasonable return on investment (ROI), then such investment (and thus relatively high tuition rates) should be reasonable. However, this is an open question, given the current job market in which the graduation employment rates of most of South Korea’s top universities are in the 60-70 percentile range.
3. Going private for basic education: Private Cram School spending is a near necessity: Under Korea’s fiercely competitive education system, Koreans have become used to paying for supplementary education from private cram schools, or hagwon.
The survey showed that Korea spent 7.6 percent of its gross domestic product on education as of 2010, the third-highest following Denmark at 8 percent and Iceland at 7.7 percent. But it was top of the list in terms of private spending on public education (as opposed to government spending), which accounted for 2.8 percent of its gross domestic product, three times higher than the OECD average of 0.9 percent.
Analysis: The near necessity to need financing for private education above and beyond what is needed for public education sends some worrisome signals. First, that the public education K-12 structure is not working properly (i.e., not pareto efficient). Second, that the need for such additional private education will increase South Korea’s already prevalent gap between the haves and have-nots. Economically, this is non-optimal since all of South Korea’s human capital is not being put to good use. And socially, such effect can lead to a feeling of detachment and even backlash, in which a sense by many among the nation’s youth of the “Korean dream” may be just that—a mere dream.
4. Higher education meets higher tuition: There has been growing public concern over high college tuitions, prompting the government to spend more on scholarships and restrict yearly increases in tuition rate to 4.7 percent, down from a previous restriction of 5 percent in 2012.
Analysis: Scholarships for students are a fairly recent phenomenon in South Korea, compared to places like the U.S., UK, and Australia (based on the traditional collectivist mindset that one’s family should shoulder such responsibility). But with ever-increasing tuition rates, the need for greater scholarships are much needed.
5. More education with less need for financing: One of President Park Geun-hye’s presidential campaign pledges was to reduce college tuition by 50 percent, while the Education Ministry pledged to be able to give scholarships to all students in the bottom 30 percent.
Analysis: More funding should be allocated towards this end. This is especially the case since South Korea’s greatest asset is its people (i.e., thus, greater human capital investment would prove beneficial, particularly in a country with a shrinking population and exceedingly low birth rates). However, such pledge was during President Park’s pre-presidency campaign efforts. So it is yet to be seen whether such words will culminate into action. If so, it will be welcomed by many.
If you or your organization is interested in working with us, please contact Asia-Pacific Global Research here.