Cash handouts more likely to benefit academies than local restaurants

Private academies line a street in Daechi-dong in Seoul’s Gangnam District, a hub for Korea’s private education industry, July 2, 2023. Yonhap

By Jun Ji-hye

• Published Jul 23, 2025 4:33 PM KST
• Updated Jul 23, 2025 5:09 PM KST

Pandemic-era vouchers funneled into private education spending

Choi, the owner of a dessert cafe in Seoul's Nowon District, one of the country's most education-focused areas, said the government's ongoing distribution of voucher-based cash handouts provides more frustration than hope.

Having run a business in an area dense with private academies, the 39-year-old said she can already tell the vouchers are unlikely to translate into meaningful revenue for small business owners like herself.

"I remember seeing news reports during the COVID-19 pandemic about how the relief funds provided by the government at the time mostly flowed into the private education market. I'm worried this round of handouts will do the same," she said.

According to Choi, students usually head straight to their parents' waiting cars after class, either to go home or be dropped off at another academy. She said fewer and fewer students stop by nearby stores or cafes for a snack or drink.

In fact, multiple posts have already appeared in online communities where parents share information about child-rearing and education, noting that the cash handouts are expected to provide meaningful relief by helping cover expenses such as private academy tuition and other educational costs.

One user wrote, "I asked my son's math academy if the vouchers could be used there, and they said yes right away. I paid the August tuition with it. It was a financially tight month, so I'm really satisfied that the voucher helped cover the cost."

Heo, an office worker living in Seoul's Seodaemun District and a mother of two elementary school children, also said, "At first, I thought the vouchers could only be used for daily necessities. But once I learned they could also be used for my kids' academy fees, I decided to spend them on education."

As demand from parents grows, an increasing number of private academies have begun putting up signs that read "government vouchers accepted."

On June 19, the Lee Jae Myung administration announced plans to issue cash handouts in an effort to revive domestic spending and reinvigorate the sluggish economy. The program offers a one-time payment of 150,000 won ($108) to all Korean citizens, along with foreign residents who meet certain requirements, residing in the country as of June 18, with additional support to be provided selectively based on income levels.

According to the Ministry of the Interior and Safety, the first round of voucher applications began at 9 a.m. on Monday both online and in person, with actual spending starting in earnest on Tuesday.

Since the program is aimed at stimulating domestic consumption and revitalizing local economies, the government has set a basic rule that vouchers can only be used at small businesses with annual sales of 3 billion won or less. This includes traditional markets, neighborhood supermarkets, restaurants, clothing shops, hair salons, local clinics as well as private academies and tutoring centers.

The vouchers are also restricted for use within the recipient's area of residence, further increasing the likelihood that they could be spent more on children's academy tuition.

According to local merchants in education-heavy districts, a similar pattern was observed during the pandemic, with parents often pooling COVID-19 relief funds issued under their children's names and using them collectively to pay for private academy fees.

At the height of the pandemic in 2020 and 2021, the government provided emergency relief funds in the form of credit cards, debit cards, prepaid cards or regional gift certificates to mitigate the economic impact. The latest voucher program is being distributed in a similar manner.

Data from the Seoul Metropolitan Government analyzing regional gift certificate usage by sector from May 2020 to May 2025 shows that the education sector, including private academies, accounted for the largest share of spending.

Of the total 5.39 trillion won worth of certificates issued by Seoul, 22.96 percent, or around 1.09 trillion won, was spent on educational services. Expenditures on restaurants and food and beverage businesses were comparatively lower, accounting for 18.54 percent.

Still, Lee, 42, who runs a private academy for elementary school students in Cheongju, North Chungcheong Province, said that concerns about the government's consumption vouchers only fueling spending in the private education market are somewhat exaggerated.

She added that the issuance of the vouchers is unlikely to cause a sudden surge in sales.

"Private academies operate on a monthly payment system. Since the vouchers are a one-time support measure, I don't expect them to dramatically boost my sales," she said.

According to the interior ministry, nearly 7 million people — about 13.8 percent of all eligible recipients — submitted applications on the first day of the initial round of voucher distribution. The total amount to be distributed based on these applications reached approximately 1.27 trillion won.

"The number of applications on the first day was 40 percent higher than the roughly 5 million applications received on the opening day of the previous COVID-19 relief fund distribution, indicating strong public interest in the program," a ministry official said.