[Enemies of Reform⑫] Urgent Need for Talent Development... Universities Wail Amid Financial Crisis

Universities urgently need to secure faculty and investment to cultivate talent required by the industry. Due to the declining school-age population and a 14-year freeze on tuition fees, universities have lost the capacity to invest. They are unable to hire more professors and are reducing the number of lectures.

Securing funding for higher education is an essential task to designate specialized universities in fields such as semiconductors and AI (artificial intelligence), and to actively promote expansion of enrollment quotas in new industries and industry-academia cooperation. Until now, the Ministry of Education has enforced tuition freezes on the condition of supporting Type 2 national scholarships. With the number of students decreasing, the abolition of entrance fees, and tuition fees frozen, universities have cut investments to reduce losses. 'Enemies of Reform'

◆Declining Students and Frozen Tuition

The number of potential university entrants decreased from 520,000 in 2018 to 420,000 last year, and is expected to drop to 370,000 by 2024. Last year, the university freshman enrollment rate was only 91.4%. According to University Information Disclosure, tuition revenue at private universities fell from 10.2931 trillion KRW in 2015 to 9.9577 trillion KRW in 2020. The tuition deficit adjusted for inflation (2012?2020) reached 1.2896 trillion KRW, about 6.7 billion KRW per university. The average annual legal tuition increase rate was around 1.5% from 2011 to 2020, but national universities reduced tuition by an average of 0.33% annually, and private universities lowered it by 0.06%.

The Ministry of Education plans to abolish the condition of supporting Type 2 national scholarships on the premise of freezing tuition next year, but this alone is insufficient. The limit on tuition increases is set only up to the inflation rate, and universities are reluctant to actively raise tuition due to opposition from students and political circles.

Recently, the Ministry of Education’s reversal on remarks about easing tuition regulations also demonstrates how difficult it is to relax tuition controls. On the 23rd of last month, Vice Minister Jang Sang-yoon said at the Summer Presidents Seminar, "There is consensus within the government on easing tuition regulations, but we are considering the timing of lifting regulations during inflation and ways to alleviate the burden on parents and students." The Ministry of Education issued a statement the next day that seemed to retract the vice minister’s remarks and attempted to manage the situation. The Ministry stated, "We will fully collect opinions from students and parents and consult with related ministries to review improvement directions, timing, and specific measures."

◆No Capacity to Invest in Quality Education

University financial difficulties have steadily accumulated as the number of enrolled students decreased and tuition fees were reduced or frozen since 2009. Private universities, which rely more heavily on tuition revenue than national and public universities, have had even less capacity to invest. Operating expenses directly related to paying faculty salaries decreased from 6.015 trillion KRW in 2016 to 5.9741 trillion KRW in 2020. Considering these are rigid expenses, this suggests that universities either did not hire new staff or hired non-tenure-track professors. The annual number of courses offered by universities also declined from 507,717 in 2014 to 471,709 last year.

Laboratory and practical training expenses as well as research funding have also been steadily decreasing. Laboratory and practical training expenses dropped from 194.9 billion KRW in 2015 to 149.1 billion KRW in 2020, and research funding fell from 538.6 billion KRW in 2011 to 394.4 billion KRW last year. Despite the need to utilize new technologies and equipment, spending has been cut, ultimately exposing students to ‘half-priced education.’

Financial deterioration directly leads to a decline in competitiveness. According to the World Competitiveness Yearbook by the International Institute for Management Development (IMD), South Korea’s national competitiveness ranked 27th out of 63 countries, dropping four places from the previous year. Educational competitiveness fell from 25th in 2018 to 29th. In particular, university education competitiveness ranked 46th, significantly lower than elementary and secondary education at 38th.

◆Plans to Allocate Local Finance Grants to Universities

As a measure to secure funding for higher education, the government unveiled a plan to reform the local finance grant system in the ‘Second Half Economic Policy Direction.’ Local finance grants, which consist of 20.79% of domestic taxes and part of the education tax, are used as budgets for metropolitan and provincial education offices. The plan is to use part of this budget to expand funding for higher education. Universities have urgently demanded the enactment of a Special Act on Higher Education Finance Support, but it was not included in the national agenda. Kim Seok-su, Vice President of Pusan National University, said, "A phased approach is needed to promote higher education innovation through the enactment of a special law on higher education finance (tentative name) for a temporary and revolutionary expansion of higher education funding, the establishment of a higher education tax, or the enactment of a higher education finance grant law in the mid to long term."

However, fierce opposition from the elementary and secondary education sectors is expected to cause conflicts over dividing the local finance grant pie. Cho Hee-yeon, Superintendent of Seoul Metropolitan Office of Education, said, "Most superintendents are very negative about transferring elementary and secondary education budgets to universities. There are areas requiring funding such as expanded childcare, after-school programs, and integration of kindergartens and daycare centers, so I believe a special law on higher education grants should be created to resolve this."

‘Regulatory reform’ of the four major regulations created during the period when universities proliferated is also essential. The government plans a comprehensive reform of regulations across higher education, including department quotas, university evaluations, academic management, and university operations. In the first half of next year, regulations related to the four major requirements (campus land, campus buildings, faculty, and basic property for profit use) will be fully revised, and improvements to faculty qualification and faculty recruitment rate standards will be refined. The Ministry of Education recently relaxed standards that can be eased without legal amendments, such as loosening approval criteria for the use of private university basic property and allowing buildings for profit use on campus land.

Professor Song Ki-chang of Sookmyung Women’s University said, "The ecosystem is collapsing due to the declining school-age population and tuition freeze, especially in regional universities where conditions are even worse, and in many places faculty salaries have actually decreased. Excellent scholars who can nurture talent should become university professors, but there is little incentive to go to universities. Since universities cannot hire professors due to lack of funds and are cutting lectures and laboratory and practical training expenses, securing funding for higher education is a prerequisite."