Universities struggle with rising costs under tuition cap

South Korea’s university tuition is regulated by a legal ceiling under the Higher Education Act. Until last July, universities could raise tuition by up to 1.5 times the annual consumer price index increase, but the limit was lowered to 1.2 times. The Ministry of Education recently informed universities that this year’s legal ceiling for tuition hikes is 3.19 percent, down from 5.49 percent last year.

After receiving the cap, universities convene tuition review committees, known as Deungsimwi, which include students, faculty, and tax experts to finalize tuition rates. Since 2009, the Ministry of Education had pressured universities to freeze tuition, making these committees largely ceremonial. Schools explained how they covered budget shortfalls with non-tuition revenue but generally complied with the government’s freeze. Only universities that froze or reduced tuition were eligible for Type II national scholarships, prompting institutions reliant on government funding to closely follow the directives.

Last year, the situation changed. Among four-year universities, 136, or 70.5 percent, raised tuition. Even after the education minister sent letters urging presidents to keep tuition flat, universities argued that 16 years of frozen fees had eroded their competitiveness. Meeting records from last year show that students recognized the financial challenges and supported tuition hikes to improve aging facilities, recruit top faculty, and expand academic programs.

Universities setting tuition this year face difficult choices. The momentum from last year’s increases is hard to reverse, and the additional revenue was used for student scholarships and facility upgrades. With the legal cap now lower, universities say they may have little left after providing their own scholarships to replace the Type II national scholarships students will no longer receive. They also risk criticism for raising tuition two years in a row. A Seoul-area university president noted, “This year, with local elections approaching, raising tuition could trigger even harsher criticism.”

Still, a shift in perspective is needed. Tuition hikes create household burdens, but nurturing talent requires substantial resources and time. The government seeks to train artificial intelligence specialists, yet many universities report no applicants for AI professor positions. A Seoul university president said, “Faculty salaries are so low compared with the private sector that even if talented instructors are available, we cannot make competitive offers.” Students cannot dream of designing semiconductor circuits while catching water leaking from ceilings during heavy rains. Some universities lack cooling systems for graphics processing units essential for AI research, forcing shutdowns when temperatures exceed 40 degrees Celsius.

It is difficult to expect national progress when universities cannot produce even a single skilled professional for advanced industries. Considering that consumer prices rose 139 percent from 2009 to last year, real tuition has fallen to one-third of its former value. Tuition for English-language kindergartens reached 20.93 million won per student in 2023, nearly 2.9 times the average for private universities. While restructuring may be necessary for less competitive institutions, the government should restore tuition-setting authority to universities before it is too late, allowing them to fulfill their core mission of cultivating talent.