Rethinking private education: Why regional quotas alone won’t reduce spending

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Rethinking private education: Why regional quotas alone won’t reduce spending

Published: 27 Mar. 2025, 00:03

Audio report: written by reporters, read by AI

Kang Chang-hui

The author, a professor of economics at Chung-Ang University, is the director of the Private Education Policy Research Center.

Every March, Korea’s Ministry of Education faces a familiar sense of dread. That’s when Statistics Korea releases its annual report on private education spending for elementary, middle and high school students. This year, the total reached 29.2 trillion won ($19.91 billion), marking a 7.7 percent increase from the previous year, with per-student spending rising 9.3 percent. What’s more alarming is that this figure excludes costs for preschoolers and repeat test-takers, suggesting that actual expenditures are far higher.

At the heart of this issue lies a simple truth: Parents turn to private education to give their children an edge in entering top universities, which in turn promise better job prospects. This pressure is driven by two core anxieties — university admissions and employment. While job creation depends on macroeconomic conditions and structural reforms, university access is an area where education policy can have more direct influence.

The problem is rooted in the fierce competition for limited slots at prestigious universities. Even if the quality of public education improves, admissions remain a zero-sum game. All students may perform better, but rankings still determine who gets in. Shifting from relative to absolute grading sounds appealing, but it’s unworkable when a fixed number of seats — say 100 — must be filled from a pool of hundreds of applicants. Absolute grading only works if universities are allowed to increase their admissions quotas.

Expanding university enrollment would lower the applicant-to-seat ratio, reducing competition and, in turn, the perceived need for costly private tutoring. For instance, reducing competition from 5-to-1 to 2-to-1 could meaningfully ease the pressure on families and students alike.

This leads to a more fundamental insight: Private education spending is directly linked to university admissions competition. To reduce that spending, we must reduce the competition for spots at elite institutions. This can be approached by either lowering demand — the number of applicants — or increasing supply — the number of available seats. Historically, Korea has pursued demand-side policies; reforming entrance exams, standardizing universities and improving public education. Yet these efforts have failed to significantly reduce private education expenditures.

It may be time to focus on the supply side. Two key strategies stand out: loosening enrollment caps on universities in the Seoul metropolitan area and investing in the development of prestigious universities in the provinces.

Students taking the College Scholastic Aptitude Test (CSAT) check their exam venues at a high school in Jeju on Nov. 13, 2024, the day before the exam. [YONHAP]

Since the 1980s, universities in Seoul, Incheon, and Gyeonggi have been subject to strict enrollment regulations. Despite a 1.7-fold increase in the capital region’s population since 1983, freshman slots at four-year universities have barely budged — rising only 1.1-fold. In fact, Seoul-based institutions have seen a decline in total slots. Given the rising demand, it is no surprise that competition and private education spending are so intense in this region.

Relaxing these caps could relieve some of that pressure. In fact, a 2018 study by the Korea Development Institute found that private education spending decreased in the mid-1990s following the 5.31 Education Reform, which expanded university quotas.

The second strategy involves developing high-quality universities outside the capital. If Seoul’s universities expand, regional institutions may struggle to compete. However, fostering elite schools in provincial areas supports national balance and reduces dependence on the capital. It’s a costly endeavor, but the government could redirect funds currently allocated to metropolitan universities to help establish “flagship” institutions elsewhere. As universities in Seoul gain autonomy through deregulation, their public funding could be gradually reduced, freeing up resources for regional development.

At present, Korea’s education spending is disproportionately tilted toward elementary and secondary education. In 2021, per-student spending at those levels ranked third among member nations of the Organisation for Economic Cooperation and Development (OECD), while university spending was far lower — just 70 percent of the OECD average. Reallocating public education funds to better support higher education could help establish world-class institutions outside the capital.

Programs such as the Ministry of Education’s Regional Innovation Centered University Support System and proposals like “creating 10 Seoul National Universities” are promising starts. These initiatives could trigger a healthy, productive rivalry between capital and noncapital universities, expanding educational options and reducing admissions stress.

In recent policy discussions, the “regional quota system” has attracted attention. The idea is to allocate more university seats to students from nonaffluent regions in hopes of reducing real estate speculation and enhancing upward mobility for the middle class. While this could lower private education costs in targeted regions, it would likely intensify competition in wealthier districts. Affluent parents have more resources and are willing to spend even more on tutoring — or relocate their children to take advantage of regional quotas. The overall result may be a rise, not a drop, in private education costs nationwide.

This is why the regional quota system, if implemented in isolation, risks becoming a zero-sum or even negative-sum policy. However, if paired with an expansion of university admissions, it has the potential to become a positive-sum solution. Greater flexibility in admissions, combined with investment in regional universities, could meaningfully reduce the financial burden on families.

Ultimately, solving Korea’s private education problem will require a balanced use of all policy tools: market mechanisms, legal and institutional reform and public finance. We’ve long relied on regulation alone — limiting enrollment numbers and capping tuition. Now is the time to strategically combine deregulation in the capital region with targeted investment in the provinces.

Translated using generative AI and edited by Korea JoongAng Daily staff.