President Hints at Crackdown on Hagwon
By Na Jeong-ju
Staff Reporter
President Lee Myung-bak instructed his Cabinet Tuesday to set up measures to address rising household spending on private education, saying such costs are weighing down on urban households amid rising inflation.
``I've received reports saying hagwon raised tuitions significantly this year and many parents are complaining about that,'' Lee told the Cabinet at its weekly meeting at Cheong Wa Dae. ``The administration needs to address their concerns and strengthen monitoring of the private education market.''
The remarks are viewed as an indication that the government will crack down on providers of expensive after-school lessons.
Lee's aides confirmed the anti-trust Fair Trade Commission is looking into hagwon which failed to report their tuition hikes to the authorities and allegedly dodged taxes.
``The commission will share the outcome of the investigation with the National Tax Service and the Ministry of Education, Science and Technology,'' a presidential spokesman said. ``Parents have complained that many hagwon accept only cash for the settlement of tuition fees and reject credit cards. We need to check whether hagwon are dodging taxes.''
The National Assembly Budget Office said Sunday the government's planned income tax cuts won't boost private spending as many families are expected to spend extra disposable income on private education for their children rather than purchasing goods.
Hagwon officials say this year's tuition rises reflect inflation in general. The hikes are also in line with growing expectations among parents that the government's move to set up English-only schools and increase English immersion classes in public schools will raise educational costs, they said.
``We have seen an increase in the number of enrollees as well as inquires from parents about the government's move to strengthen English education in schools. The tuition rises reflect such rising demand for services,'' said an official of Mega Study, one of the largest private language institutes.
Many global private equity funds, such as Carlyle Group and Tstone, have invested in the country's private education market over the past couple of years to take advantage of the sprawling business.
According to the education ministry, the market was sized at 20 trillion won last year. Some, however, estimate the market to be as big as 30 trillion won when including institutes for kids and adults.