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Universities in hot seat over use of reserve funds

May 18,2015
Students across Korea are preparing to sue over the excessive reserve funds they say their universities have accumulated. Acting on the assumption that colleges are continuing to set aside fees from tuitions in reserve funds rather than using them to improve the quality of education, students are demanding their money be returned.

Reserve funds are designated for purposes such as investing in research, constructing university buildings and funding scholarships. In the past, tuition money was frequently set aside for such reasons, but the Ministry of Education passed new standards in 2013, banning such practices. Under the new guidelines, only donations, corporate transfers and returns from the school’s financial assets can be collected for reserve funds.

“We are looking into filing class-action lawsuits against colleges that have unjustly accumulated tuition money for the sake of their reserve funds while neglecting to improve education quality,” said a statement by student council members from 10 different universities, including Yonsei University, that was read during a news conference Thursday.

“We envision that student councils and student governments of universities with overly large reserve funds will participate in these lawsuits,” said one student who participated in the conference. “We will begin suing universities located in Seoul.”

This movement was triggered by an April 24 ruling from the Seoul Central District Court on a class-action lawsuit filed by 50 University of Suwon students against their institution. The ruling required the University of Suwon to return from 300,000 won ($280) to 900,000 won to each student. In 2013, the University of Suwon’s reserve funds totaled 336.7 billion won, but the school only spent about 80 percent of the total tuition money for expenses related to the students’ education.

Following the precedent, Cheongju University’s student council announced on April 28 its plans to sue the college for “excessively accumulating tuition money while neglecting to improve the quality of education.”

“This is a misunderstanding on the part of the students,” said a representative of Cheongju University. “Our university, unlike the University of Suwon, has never amassed students’ tuition money into our reserve funds.”

Students from Kyung Hee University, Dongduk Women’s University, SungKongHoe University, Ewha Womans University and Hanyang University held a press conference Wednesday in front of Ewha Womans University criticizing their colleges’ reserve fund practices.

“Reserve funds are mostly developed through external donations. We have never misused tuition money to build up such funds,” said Yoo Sung-jin, vice director of publicity at Ewha Womans University, which has the largest reserve funds in the nation, totaling 786.8 billion won.

“Reserve funds are ultimately used for facilities investments, student services, research and other purposes,” he added. “These funds are like seed capital for the university’s future, yet students view this negatively.”

Ewha Womans University plans to release a web cartoon soon to explain to its students these reserve funds and what their current status is.

Further changes to the law may be on the horizon.

“We will soon be setting up research teams to create new guidelines that lay out appropriate sizes for university reserve funds,” stated an official from the Ministry of Education.

BY CHUN IN-SUNG [enational@joongang.co.kr]


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