Reasons for Rising Private Education Demand

The so-called “academic credentials premium” has been pointed out as the main reason for the private tutoring explosion in Korea.

The “academic credentials premium” refers to the theory that the amount of money one can earn is directly linked to the rank of the university one graduated from.

It has also been pointed out that public education must be improved since its quality has an influence upon private tutoring demand.

The Korea Development Institute (KDI) published a report entitled “The Effects, Demand, and Factors of Private Education” ranking 199 universities nationwide according to student SAT scores, and used data from the Korea Labor and Income Panel Study (KLIPS) to analyze the salaries of graduates.

According to the research, the monthly wage of graduates from the top five universities was about 2.33 million won during 1998-2002. However, the monthly wage of graduates from the top 6th -10th dropped dramatically to 1.78 million won. The monthly wage of graduates from universities ranking 11th -30th was 1.73 million won, 1.6 million for the 31st-50th universities, 1.52 million won for the 51st-100th universities, and 1.45 million won for universities ranking lower than 101st . The amount of wages decreased as the ranking was lower. The KDI did not disclose the universities, since the issue is a very sensitive one.

Jang Su-myeong, one of the co-writers of this report and a professor at the Korea National University of Education (KNUE), said, “The so-called “academic credentials effect” is very obvious in Korea, which means that graduates from high-ranking universities receive higher wages on average than others.”

Meanwhile, the report says that people spent about 215,000 won per month as of 2003, which is a 25 percent increase from 104,000 won in 1998.

The wide gap in the amount of money spent on private education was directly linked to the income of a family. For example, households with top 10 percent incomes spent 407,000 won on private education monthly on average in 2003, which is 4.8 times more than the lower 10 percent of households.

While the costs for private education are expensive, students and parents are feeling that they need private education more than ever. According to a survey held by the KDI of 1,500 parents and 10th and 11th grade students, more than 90 percent of respondents said that, “Private tutoring is effective in improving SAT scores.” 76 percent of the respondents said that they would spend the same time on private education even if their peers decreased the amount of time they spent on it.

Also, it turned out that the more a household does not trust public education, the more they demand private education. The report revealed that students attending schools that have low productivity rates and low scores have more demand for private education.

However, it turned out that private education can actually have a negative effect on students after they go to universities.

The report says, “Academic achievements of students who did not get private education were higher than that of students who did. Also, the academic achievements of students who received private education for longer terms were lower than that of students with shorter term exposure to private education.”

jarrett@donga.com