Worried housewife Han cannot stop frowning these days when she thinks of her twins, who are to enter universities in March.

“Enrollment fees cost a fortune. Paying more than 10 million won ($8,900) a year for each child is out of my range,” the 47-year-old said.

She could break open savings and other financial investments she had made for the couple’s retirement, but that would still not be enough.

She is not the only parent having to shoulder ever-soaring university tuition fees. In fact, it is currently one of the most controversial and sensitive issues in Korea.

According to a governmental report, Korea’s college fees ranked second-highest among OECD members following the U.S. in 2007 when it marked $8,519 a year for private schools.

In a separate report by the National Assembly, the annual university fee reached 7.5 million won in 2010 for private schools and 5 million won for public schools. The amount exceeds 10 million won for medical schools. Adding costs for class materials and lodgings, the money easily surpasses 10 million. The sum amounts to about 23 percent of the average Korean’s income of 32 million won.

Staggering students

The students are the first to be affected. About 440,000 college students ― about 15.1 percent of those registered ― took a gap year from school last year. Even taking into account those joining the military or going abroad for language training, it still appears that excessive tuition fees have forced them to choose making money over studying. About 10,000 are believed to have become credit delinquents.

An online recruitment website SaramIn recently surveyed 467 university students and found 44.8 percent having used student loans an average of 3.4 times. They had an average of 9.9 million won in debt each but were still planning to apply for another loan. 

Many said their student loans, stemming from high tuition fees, were a great source of stress because they did not like the idea of being mired in debt even before landing a stable job or their being forced to make money over pursuing academic careers and other options.

In November, a 21-year-old female university student killed herself after agonizing over her tuition fees.

In February, a 53-year-old man jumped off his apartment building after suffering constant anxiety about being unable to pay his daughter’s course costs.

On Jan. 14, a 19-year-old college student was arrested after stealing goods from supermarkets and bookstores. He said he wanted to study but economic hardship hindered his enthusiasm.

Tuition freeze

The Ministry of Education, Science and Technology on Jan. 21 asked presidents of universities nationwide to refrain from raising this year’s tuitions. It instead suggested doubling its subsidies for research and development projects.

However, when Minister Lee Ju-ho asked for a freeze or a modest raise less than 3 percent, university presidents complained that the “guideline” was a violation of their business rights.

“The government has requested the freeze for three consecutive years, which has seriously obstructed our business. Universities cannot survive,” said Lee Sung-woo, president of Kookmin University.

Instead, schools are gearing up for a price hike. The first was Pai Chai University suggesting a 2.1 percent hike, followed by Korea, Hanyang, Kookmin and other universities, all citing fiscal difficulties.

“The president said the freeze will inflict 9.2 billion losses this year,” said a member of Hanyang University students’ association, who recently protested against the school’s announcement of 2.8 percent raise, as quoted by a local daily.

“It is true that many presidents have been requesting a raise in tuition fees and have complained about Minister Lee’s demand. We are sticking to the principle: the government should not intervene in private foundations’ management rules,” Jeong Yu-seok, PR officer of the Korean Council for University Education, said. “However, we will not make an official statement about our stance,” he added.

Mere stunts

Many believe that the complaints are mere stunts.

According to the Education Ministry, private universities have been saving up more than 10 trillion won as reserves. A total of 115 private universities are believed to have made more than 28 trillion won in the past decade.

As of 2009, Ewha Womans University, Yonsei University and Hongik University have been piling up 738 billion won, 511 billion won and 485 billion won, respectively. Korea University, which has recently announced a 5.1 percent tuition hike, has also set 230 billion won aside. The amount of reserves for these prestigious schools has risen by double digits over the past three years, despite their complaints.

The money has rarely been used to replenish the “management costs and losses,” insiders say. Instead, the schools have been enthusiastic about constructing new buildings and making extra profits in financial investments such as bonds or funds.

According to the Korea Foundation for the Promotion of Private School, a total of 189 private universities had 7,353 buildings in their campus in 2008 ― 279 up from the previous year ― suggesting that 1.5 buildings per school have been built within a year. The schools have spent 1.4 trillion won on construction works in 2007, which took more than 8 percent of total expenditures. Experts said the schools have enough buildings.

Such construction has been accused of aiding the creation of slush funds from time to time. By allotting excessive budgets for the construction projects and manipulating or omitting production records, some foundations could easily secure “nobody knows how much” money, insiders claim.

Risky investment is another means. Korea University has invested a total of 126 billion won in financial packages by the end of 2007 but has refused to disclose the profit. KAIST, the nations’ top university in science and technology, has been rumored to have seen 60 billion won in losses during the global financial meltdown.

Another 19 universities are believed to have seen 57 billion won in losses. The Education Ministry sits on the fence, however, as the management of private foundations’ assets is not regulated.

The Korea Higher Education Research Institute noted that schools have been making fortunes by underestimating their incomes and overestimating expenditures to bloat budgets. The institute assumes 151 universities stockpiled a total of 1.5 trillion won in reserves this way in 2007, which could have made that year’s tuitions hike unnecessary at the first place.

Still, universities have been stingy about investing to enhance students’ and professors’ capacity and aptitude. The KHERI found the private universities spent only 0.9 percent of their budgets on books for their libraries. The portion has risen only 0.04 percent over 10 years. On average, the number of books per student is 58.5, a far cry from Stanford’s 703 and MIT’s 259 in the United States.

The universities have spent less than 9.2 percent of their reserve funds on research and development, while using 46 percent for construction. According to education authorities, about 81 percent of the 4.1 trillion won set aside for university research and development projects is sponsored by the government while just 18.4 percent came from universities, private corporations and individuals.

The schools, on the other hand, have been reluctant to keep the mandatory 30 percent-quota of students entitled to tuition discounts. They were strict on repayments, too.

Colleges also pay part-time lecturers less than 60,000 won per class, which infuriated civic activists last year. “That can’t make one barely meet the ends,” Kim Dong-ae, a member of one lecturers’ group, said.

What are solutions?

The KHERI, which has recently published a book about college fees increasing at an insanely rapid pace, suggested that universities find new investment models to replenish coffers.

“Schools shouldn’t be heavily dependent on tuition fees when they have coffer full of money in another room,” said Yi Su-yeon, a researcher at the KHERI.

She conceded that some schools would have problems in management if they do not make a raise this year because they are heavily dependent on tuition fees ― one private university pegs 81.4 percent of its budget on tuition income.

“It is time that schools diversify their resources, find investors, and start other businesses. Students cannot and should not be the ultimate financial resource,” she said.

Yi also said it was time to start discussions on “half-tuition” policies, where the government subsidizes half of college fees. Currently, the government supports universities by subsidizing about 8 percent of the university budget, but the new plan aims to benefit students directly.

The idea was first raised by Education Minister Lee, while working at an election camp for President Lee Myung-bak. The pledge undeniably captured parents’ and college students’ hearts.

Currently, the plan has been tossed to the main opposition Democratic Party and is at the forefront of its campaigns for next year’s presidential election, while the ruling party has taken a dispassionate stance since gaining power. Professor Cho Kook of Seoul National University said in his latest book, titled “Plan to empower progressives,” that the plan will cost around 3-4 trillion won a year, excluding scholarships and benefits to the extremely rich ones.

“Tuition freeze is not a fundamental solution. College fees have already surpassed 10 million won a year, which is a huge burden. The government needs to be hands-on regarding the matter since tuition is nothing of a private issue and could be a huge burden and threat for the next generation,” Yi said.

By Bae Ji-sook  (baejisook@heraldcorp.com)