South Korea education funding hits record high

South Korea’s local education grants are set to surpass 80 trillion won for the first time this year, driven by a surge in tax revenue from the semiconductor boom. Annual spending per student is also projected to exceed 16 million won.

The increase comes even as the number of elementary, middle and high school students falls below 5 million, because 20.79% of domestic tax revenue is automatically allocated to education grants. Critics argue that if the government intends to use surplus tax revenue more effectively for future generations, it must first overhaul the rigid funding formula.

According to the Ministry of Planning and Budget on Tuesday, local education grants totaled 76.44 trillion won under the first supplementary budget approved by the National Assembly in April. The figure included an additional 25.2 trillion won in tax revenue generated by the semiconductor boom. Under the Local Education Subsidy Act, 20.79% of domestic tax revenue is automatically distributed to provincial and metropolitan education offices. With tax revenues now expected to exceed earlier projections, total education grants are likely to top 80 trillion won this year.

At the same time, the student population continues to decline and is expected to fall below 5 million this year. The Ministry of Education estimates that the number of elementary, middle and high school students will drop 3.5% from 5.014 million last year to 4.837 million this year. If education grants exceed 80 trillion won, annual funding per student would rise above 16 million won, roughly 14% higher than last year’s 14.02 million won.

First introduced in 1959 as a funding mechanism for compulsory education, the grant system is credited with helping South Korea invest in human capital during its early stage of economic development. In recent years, however, critics say it has failed to keep pace with declining student numbers. Because allocations automatically rise with tax revenue, the system has been criticized for encouraging inefficient spending and excess budgets at local education offices. Critics also note that funding is limited to primary and secondary education, while universities facing financial strain and growth areas such as research and development receive comparatively less support.

Fiscal authorities have made reform of the education grant system a key part of next year’s budget restructuring plan. The Ministry of Planning and Budget is considering replacing the current tax-linked formula with one tied to nominal gross domestic product growth. The Ministry of Education and education groups, however, favor maintaining the current link to tax revenue while improving spending efficiency.

“We need to address the rigidity of the current tax-linked structure," Planning and Budget Minister Park Hong-geun said. "We are consulting with the presidential office, the Education Ministry and superintendents of education while reviewing a range of options.”


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