Is free college tuition needed to support students from middle class?

The Korean government plans to expand the scope of national scholarship support to include middle-class families. Eligible students will be the bottom 80% of income earners, which is expanded from the current bottom 48% out of the 2.03 million college students. The goal is to expand and reform the policy to halve university tuition, introduced in 2012, to "zero tuition." Other policies include low-interest student loans for the middle class and supporting housing costs for college students.

Many people would agree with granting college education to young students without worrying about tuition. It is also true that Korea’s spending on higher public education is relatively small compared to other advanced countries. The issue is whether we can financially afford to do so.

Reportedly, the additional budget needed to provide free tuition is 1.5 trillion to 3 trillion won per year. Korea's national debt already exceeds 1,000 trillion won amid lower tax revenues and rising debt due to low birth rates and an aging population. Under the current policy to subsidize college tuition by half, students from families with a monthly income of over 10 million won receive a national scholarship worth 3.5 million won per year. Is it fair to support middle-class college tuition with taxes paid by high school graduates? Is free tuition so important that it’s worth having the government take on bigger debt?

The impact of free tuition on the labor market and university ecosystem should also be considered. Korea has a college education graduation rate of 70%, higher than the average (47%) among OECD countries. Still, the employment rate of college graduates and the wage gap with high school graduates are lower. With the number of college graduates exceeding demand, graduates tend to apply for less ambitious positions, and the gap between jobs and educational backgrounds is widening. Obtaining a college diploma that is not worth the investment plus opportunity cost adds up to a more significant social cost. If more students opt to go to college due to free tuition, uncompetitive universities that need restructuring will continue to delay reform, placing the university ecosystem at greater risk.

The half-price tuition policy, which started as an election pledge of both conservatives and progressives, ended up producing more highly educated, jobless people and forced universities to freeze tuition rates and increase scholarships, thereby reducing competitiveness. Regrettably, politicians are focusing on escalating the issue rather than reducing the side effects of the policy. To increase school competitiveness and educational opportunities, we should encourage innovation by granting more autonomy to universities and focusing on providing public financing to needy students.