The pitfalls of cutting college tuition in half

Having already succeeded in giving free school lunches to all the needy (and unneedy) elementary students in Seoul, it seems newly minted Mayor Park Won-soon has now gone in on the next big populist policy, one even more unnecessary and potentially negative than school food, half-price tuition.

Park has approved a budget which includes cutting tuition at the city-administered University of Seoul, likely the top public university in the Korean system dominated by private schools in rankings, from just under 2.4 million won (approx. $2000) to the low, low price of 1.2 million won per semester.

The school already has one of the most competitive admissions in the nation due to significantly lower costs than its private counterparts and this move will likely only increase applications, although we’ll have to wait and see if quality and support suffers as well.

Really this move is no surprise given it was a campaign promise and the progressive Seoul City Council had already had it in the works for a while. The big question, then, is whether or not this will set off a wave of half-price tuition nationwide, as it was a near universal talking point the last campaign season.

In the previous spring and summer, lawmakers on both sides of the aisle made calls for half-price or even free tuition as the annual student protests against hikes were being staged. Of note, in a classic example of political double speak, GNP floor leader Hwang Woo-yeo publicly stated he would work to achieve “half-price tuition” only to then have party policy chairman Lee Ju-young come out and say, “Half-price tuition doesn’t mean cutting the tuition price in half ...”

Personally, I can certainly sympathize with the idea of cheaper tuition, but still feel confident that not only is this idea incredibly unnecessary, but also, if widely implemented, will do far more harm than good to Korean education and society.

First and foremost, let’s take a quick note at the tertiary (post-high school) education environment of South Korea. Simply put, the percentage of Korean young adults who have completed secondary education is staggering and is the highest in the world according to OECD 2011 Education at a Glance.

We see that 63 percent of 25-34 year olds have completed some form of tertiary education in Korea, outpacing Canada and Japan tied for second at 56 percent and well exceeding the OECD average of 37 percent for that age group.

Especially astonishing is that this percentage was achieved in less than a generation as only 13 percent of 55-64 year olds have done the same. Finally, and most importantly to this discussion, all signs show this number increasing with the next age group, as many estimates show somewhere north of 70 percent of Korean youth entering tertiary education.

Make no doubt about it, this is a great achievement for Korea and just another sign of how far it has come as an advanced nation in a short period of time. As always, however, there are negatives to be considered. In particular, what are these students doing after they graduate?

Officially, the unemployment rate of Korea stands at around 3.2 percent and youth joblessness at 6.3 percent according to Statistics Korea. These stats are highly debated, as numbers from other sources place up to 20 percent of Seoul residents in their 20s as unemployed and somewhere around 30 percent of university graduates only able to find temporary work.

For better or worse, tuition cost serves as an economic barrier to entry into higher education. By lowering this barrier, it is an economic certainty that participation will increase. In Korea, there is a real, and growing, problem of young people over-educated for the work they are performing if they are able to find any work at all.

On a small scale, consider how recent changes made law school more open to many students in the past few years. Now, there are reports that out of the 1,500 law school graduates this year, likely only 500 or so positions will be available.

Of course there are many other circumstances in this case, but a big factor has to be the surge in student population outpacing equal job creation. I find it important to note that I’m not saying the poor in Korea shouldn’t go to university, but rather that they do have a barrier to entry that they can choose to overcome. The government should of course aid them in this regard (through grants, scholarships, student loans, etc.) but simply discarding the barrier all together is like breaking a dam when the river is already flooding. It will just make things worse for everyone.

The crippling cost of educating children in Korea is a common social issue and a true one when discussing reduced birth-rates and other family planning issues in the country. Does this really apply to higher education though? Maybe not. Again by OECD data, the average public university education in Korea costs around $5,000 annually and $10,000 for private institutions. On the surface, these costs are higher than other nations, particularly in Europe (a common point made during tuition protests).

Going deeper, however, comparisons between nations become murky at best, given the large number of different programs, policies and systems in place. For a clearer picture, Korea may be best compared to the U.S., where it winds up about a grand cheaper for public universities and is half the price for private institutions. Also costs in Korea do not seem strongly out of line with nations such as Japan, Canada, the U.K. and France. Also important to note from the data is that 71 percent of students are receiving some form of public aid or support for their educational costs, a good number.

The key to all of these numbers, though, is to keep in mind the previous paragraph. No country has a higher percentage of young people completing tertiary education, even at current prices. This means there is economically no reason to lower prices any further.

As said, the crushing cost of education in South Korea is not an illusion, but higher education is not really the culprit. Instead it is the push to get to university where the costs are accumulated, in the form of hagwon’s promising increased scores on the almighty tests required to enter higher education. And guess what? Lowered tuition will make this situation even worse.

So the number of tertiary education participants is incredibly high in Korea, perhaps even too high and lowering the barriers to entry will increase participation even further. With an increase in the applicant population, differentiation between applicants will become more difficult. Under the current Korean education system, just about the only form of differentiation comes from test scores. It’s logical to assume then, that by increasing the number of students applying to university, you are then placing additional weight on test scores to differentiate potential, thereby creating further pressure to spend resources on private education, to raise test scores and stand out.

I can envision lowering tuition rates actually increasing the educational cost burden on families in Korea, the exact opposite of the stated intention.

There are additional overall negative effects of widespread tuition decreases as well. Perhaps most obvious, if tuition cuts aren’t met and exceeded by corresponding increases in public money for universities, the quality of the facilities and education overall will decrease and the nation already spends well below the OECD average per student on funding to tertiary education, around $9,000 annually compared to the average of nearly $14,000. I have not heard any calls for tax raises in conjunction with populist programs, so no additional sources of funding are in sight.

An important, but often lost, point is that higher education is a choice, not a right and not a requirement. There is a social responsibility to help students achieve the highest level of education they desire, but this has to be tempered with the economic realities of the environment. Without a doubt, Korea can and should be doing more to help its young people, but changes should be made carefully with a scalpel and not a hatchet.

One can also question the importance of major change to the higher education system when its foundations in primary education system are the ones truly in need. But, that is a topic that requires far more words than you care to read and I to write. The calls for half-price tuition in Korea are, at heart, simply a populist play for votes, unsupported by the economic and social realities of Korea and, if widely instituted, have the potential to further erode the system of higher education in this country.

By Cory Olson

Cory Olson is a freelance corporate instructor in Yeosu, Korea. He writes about his experiences on Korea on his blog: www.CoryinKorea.wordpress.com. ― Ed.