Over 10,000 Private School Staff Retire Without Repaying 3.9 Billion Won

Board of Audit and Inspection Audits 'Gongmuwon Pension and Sahak Pension'... Loans Taken for Living Expenses and Tuition Fees Not Repaid

[Asia Economy Reporter Ryu Jeong-min] An audit report from the Board of Audit and Inspection revealed that over 10,000 private school faculty members retired without repaying more than 3.9 billion KRW in overdue principal and interest after borrowing money under the pretexts of living expenses and tuition fees.

On the 7th, the Board of Audit and Inspection announced the results of its audit on the "Management of Assets such as Real Estate and Alternative Investment Operations of the Government Employees Pension Service and the Private School Teachers’ Pension Service." The Private School Teachers’ Pension Service Corporation handles lending and repayment of funds to private school faculty members (including corporation employees) in accordance with the Private School Teachers’ Pension Act and related laws.

The Board of Audit and Inspection explained, "According to lending regulations, faculty members who borrow living expenses must fully repay any outstanding balance upon retirement. The corporation issues demand letters when repayment is delayed, and faculty members are required to pay overdue interest."

According to the Private School Faculty Tuition Loan Business Consignment Management Rules (Ministry of Education Decree), the corporation must require faculty members who borrowed national tuition loans to repay any outstanding balance in a lump sum upon retirement, and if the faculty member fails to repay, overdue charges must be imposed.

The Board of Audit and Inspection pointed out, "The corporation has not notified faculty members to make lump-sum repayments of outstanding balances nor issued demand letters for overdue payments, citing reasons such as the outstanding balances for living expenses and national tuition loans being secured by the faculty members’ retirement benefits, thus assuming no risk of default until the faculty members claim their retirement benefits."

As a result, it was found that as of the end of April 2021, 11,740 faculty members who retired after December 2014 had not fully repaid their loans.

The Board of Audit and Inspection noted, "Despite the occurrence of overdue interest or overdue principal amounting to approximately 2.754 billion KRW for living expenses and 1.16 billion KRW for national tuition loans, totaling about 3.914 billion KRW, no measures to impose these charges had been established, and the amounts were left as is."

Furthermore, the Board revealed, "An analysis of overdue status among retired corporation members confirmed overdue interest or principal of approximately 120 million KRW for living expenses and 121 million KRW for national tuition loans, totaling about 241 million KRW."

The Board of Audit and Inspection notified the corporation’s chairman to ensure that retired faculty members who have not repaid living expense or national tuition loans are required to do so and that measures such as imposing overdue interest or charges are implemented. Additionally, they requested strict adherence to related tasks including repayment notifications, payment demands, and imposition of overdue interest or charges for living expense and national tuition loans.