Private Universities Running Deficits Since 2011... Operating Deficit of 2.1 Trillion Won Last Year

Increase in Operating Deficit Since 2011
Excluding National Scholarships, Real Operating Revenue Decreased by 71 Billion KRW
Tuition and Course Fee Income per School Reduced by 11.9 Billion KRW

Yearly Changes in Operating Profit and Loss of Private Universities (Source: Korea Council for University Education)

[Asia Economy Reporter Han Jinju] Since 2011, tuition fees and course fees, which are the revenue sources for private universities, have decreased while operating costs have increased, resulting in an operating deficit exceeding 2 trillion won last year.

According to the analysis of the "Current Status of Financial Management of Private Universities in Korea" released by the University Education Council on the 20th, the operating deficit reached 2.1 trillion won last year, continuously increasing since 2011.

The actual operating revenue of private universities was 14.5 trillion won last year, while operating expenses were 16.7 trillion won. Operating revenue decreased by 71 billion won compared to 2011, and operating expenses increased by 2.9 trillion won.

Although the actual operating revenue excluding national scholarships did not change significantly, the decrease in tuition and course fee income caused the actual operating revenue to decline by 71 billion won.

2011~2021 Private University Operating Revenue Status (Source: Korea Council for University Education)

The total operating revenue of private universities increased by 12%, from 14.9 trillion won in 2011 to 16.7 trillion won in 2021, but the actual operating revenue excluding national scholarships rather decreased.

Tuition and course fee income also decreased by 854.7 billion won (7.7%), from 11.1 trillion won in 2011 to 10.2 trillion won in 2021.

The dependency ratio on tuition and course fee income relative to actual operating revenue of private universities was found to be over 70%. The ratio of recurring expenses such as personnel expenses and administrative operating expenses showed an increasing trend, reaching 75.9% as of 2021.

Yearly Changes in Average Actual Tuition and Fees Income per Private University Undergraduate (Source: Korea Council for University Education)

With tuition frozen for 14 years, the scale of tuition and course fee income for private universities has been continuously decreasing. Tuition and course fee income per private university was 52 billion won in 2021, a 7.7% decrease compared to 56.3 billion won in 2011. Considering the consumer price inflation rate, it is estimated to have decreased by 11.9 billion won (19.0%).

To cover the operating deficit, private universities responded by reducing investments in education. The scale of financial investment for education by private universities decreased by 346.2 billion won (19.6%) compared to 2011. The investment ratio relative to tuition and course fee income decreased from 20.1% in 2011 to 18.1% last year.

The items with the largest decrease in financial investment for education compared to 2011 were ▲laboratory and practical training expenses (30.0%) ▲book purchase expenses (26.0%) ▲research expenses (22.0%) ▲student support expenses (21.4%) ▲other student expenses (21.1%) ▲equipment purchase expenses (4.8%) in order. Equipment purchase expenses increased in 2020 and 2021 for non-face-to-face classes.

The University Education Council stated, "The decrease in tuition and course fee income of private universities shrinks investments ‘for education’ such as laboratory and practical training expenses, book purchase expenses, research expenses, and student support expenses," and added, "To resolve the chronic operating deficit of Korea's higher education sustained over the past decade and to promote active investment ‘for education’ by universities, an absolute scale of financial expansion is necessary."