South Korea’s private universities are grappling with mounting financial difficulties due to shrinking student populations and frozen tuition fees. (Image courtesy of Yonhap)
SEOUL, Dec. 4 (Korea Bizwire) – South Korea’s private universities, including major institutions in Seoul, are grappling with mounting financial difficulties due to shrinking student populations and frozen tuition fees.
An alarming analysis presented at a National Assembly forum on December 3 revealed that eight out of ten leading private universities in Seoul are operating at a deficit, according to Kim Byung-joo, a professor at Yeungnam University.
The financial strain stems primarily from a steady decline in tuition revenue, the main income source for these universities, driven by the country’s low birthrate and declining number of college-age students. Compounding the crisis, the government’s decade-long tuition freeze policy has further constrained university budgets.
The impact is evident in deteriorating facilities and inadequate resources. Kim highlighted anecdotes from students questioning why their university labs fall below high school standards, and administrators admitting they can only repair the most critical infrastructure issues due to budgetary constraints.
Projections show the situation worsening. The population of 18-year-olds, the primary source of college enrollment, is expected to drop from 437,706 this year to just 261,428 by 2040—a nearly 60% decline.
Universities heavily reliant on tuition income face the most significant risk of financial insolvency by 2030, when the demographic decline is expected to hit hardest.
Kim urged policymakers to extend the Higher and Lifelong Education Support Fund and enact a University Restructuring Act to link financial aid with structural reforms.
Han-soo Kim, a professor at Kyonggi University, supported these recommendations, citing a 2024 report from the Korea Foundation for the Promotion of Private Schools (KFPP) that predicts future operating losses for 94 private universities, including 34 general universities and 60 vocational colleges.
According to the KFPP, over 50% of vocational colleges outside Seoul face unsustainable financial conditions, with some institutions already failing to meet payroll obligations.
Experts are calling for policies that allow private universities to sell assets for restructuring, as well as lowered thresholds for mergers or closures to facilitate financial stability.
The crisis underscores the urgent need for systemic reforms to sustain South Korea’s higher education sector amidst shifting demographics.
M. H. Lee (mhlee@koreabizwire.com)
