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By Kim Sun-woong
Professor at the University of Wisconsin _ Milwaukee
Korea is one of the most highly educated nations in the world. As of 2010, the enrollment in primary schools and secondary schools is virtually universal although substantial tuition fees are necessary for high-school attendance. Approximately 2 million students (about one half of people aged between 18 and 21) are enrolled in four-year universities, and an additional 700,000 students are enrolled in junior colleges. Even though Korea’s GDP per capita is less than one half of the U.S., its gross enrollment rate in higher education is higher than the U.S. In enrollment rate, Korea ranks second in the world after Finland and by only one percentage point.
No one would have dreamed of such an explosive surge in schooling 60 years ago. In 1945, only 83,000 were enrolled in secondary schools and less than 8,000 students in higher education institutions because of the grossly inadequate educational infrastructure. Despite its meager beginnings and the tremendous population pressure after the Korean War (1950-53), Korea achieved universal primary education in the early 1960s, universal secondary education in the early 1980s, and near universal higher education by 2000.
In conjunction with the quantity expansion, the quality of Korean education has improved considerably over time. Primary and secondary students in Korea routinely achieve high marks in standardized international tests of academic achievements. Trends in International Math and Science Study (TIMSS) is an international academic achievement test for mathematics and science under the initiative of the International Association for the Evaluation of Educational Achievement (IEA) _ an organization of national research institutions and government research agencies. In 2007 TIMSS tests, Korea ranked second in math and fourth in science for eighth-grade students among 47 participating countries. Another well-known international test is the Program for International Student Assessment (PISA) run by the OECD, which tests15-year-old students in reading, math, and science. In PISA 2006, Korea ranked first in reading, second in math, and between 7th and 13th in science among 57 participating countries. Although the performance indicators of Korean universities are not in the top-tier in international comparisons, its quality of teaching and research capability have been improving rapidly in recent years.
Korea’s rapid expansion of educational opportunities and the improvement of the quality of education is a marvel to many educational policy-makers in the world. The rapid accumulation of human resources through the expansion of the education system has been a crucial part of the engine of growth in Korea’s rapid economic growth. Effective government initiatives and shrewd economic planning were the main determinants for success in Korea’s rapid economic growth. It would not have been successful without an accompanying improvement in the capacity of the education system. Educational opportunities began to be dramatically expanded through the implementation of compulsory education for primary schools under President Syngman Rhee, the founder and first president of the Republic of Korea.
Improving the capacity of a poor nation’s education system is not an easy task, because investment in education is not only costly but time-consuming. It requires appropriate balance and timing between low and high levels of education. A hasty push for universal primary education (without enough provision of resources) is likely to lead to low-quality education (due to low salaries of teachers, corruption and waste), and the low quality in turn pushes away students. Perpetual low investment in education cannot propel countries out of poverty, as economic development will not be possible without an adequate supply of educated and trained workers. In this regard, Korea’s experience was a remarkable combination of government policy and private response. The education system expanded to meet the demand for more educated and skilled labor.
Historically, the Japanese colonial occupation and the devastating Korean War resulted in a relative equal distribution of income and fluid social mobility due to the breakdown of the existing social order in which education was a powerful tool for self-improvement. Moreover, the lower investment in education by the Japanese colonial government created a high rate of return for education. The pent-up demand exploded as soon as the country became independent.
As the young nation’s fiscal resources were not large enough to provide quality education for the masses, Korea relied heavily on the private provision of education. However, the early push for education paid off handsomely when the push for rapid industrialization started in the1960s. By then, Korea already had a large supply of workers with primary education. The increase of primary school graduates and the exploding demand for skilled labor in the 1980s in turn generated greater demand for secondary education.
Another reason for the early success in Korean education was the efficiency of the old education system. Student selection was open and competitive for all secondary and tertiary schools. All students had the freedom to choose schools and all schools had the freedom to choose students. While such a competitive nature of the admission procedure generated a strict pecking order among institutions, the quality of education at top-tier schools could be achieved without much expenditure due to positive peer-group effects. Such competitive admission procedures for secondary school students were radically transformed as the government adopted an equalization policy for secondary schools starting in 1969.
Although the equalization policy did not have an explicit objective of achieving universal secondary education, it was the main reason behind the dramatic increase in enrollment at secondary schools. In 1970, 66 percent of primary school graduates entered middle schools, and 70 percent of middle school students moved up to high schools. By 1980, 96 percent of primary school graduates advanced to middle schools, and 85 percent of middle school students to high schools.
Certainly, one of the most crucial ingredients for improving the quality of education was teacher training. During the last few decades in Korea, the qualification of teachers and their compensation in primary and secondary schools improved gradually. In the 1950s and 1960s, primary school teachers were only required to finish normal schools (high-school equivalent). Over time, that requirement has been upgraded to a four-year university education.
Meanwhile, the continuing transformation of the nation’s economic structure generated greater demand for more highly educated workers. Despite the growing labor demand, the restrictive university admission policy during the 1980s generated large pent-up demand for higher education. Such excess demand was only satisfied with the great expansion of higher education during the 1980s and 1990s, as the government was forced to expand and deregulate the higher education sector.
The rapid expansion of Korea’s higher education was driven by the private sector. Out of 2.6 percent of GDP spent on higher education (Korea ranks the second in the world in terms of the share of GDP trailing the U.S.), the government spends only 0.6 percent. Private households spend the remaining 2 percent (77 percent of the total spending on higher education). In terms of the share of the private funding, Korea ranks the first among the OECD countries. The U.S. is a distant second with 55 percent. In order to facilitate private funding for higher education, Korea recently adopted an income-contingent education loan program.
Korea’s student body is also one of the most globalized in the world. More than 200,000 Korean students have enrolled in undergraduate, graduate, or in intensive language programs. The U.S. is the most popular destination. According to data by the U.S. Institute of International Education (IIE), there are more than 500,000 Korean students at U.S. higher education institutions, and Korea ranks third in the number of students in the U.S. Only India and China, both much more populous than Korea, have more.
The phenomenon of study abroad has a long tradition in Korea, and it has been used successfully to accumulate the highest level of human capital in a relatively short period. Since the 1970s, many graduate students who studied abroad returned to Korea. About two thirds of those who received Ph.D.s in the U.S. returned to Korea during the period between 1970 and 1990. Korea, along with Taiwan, is one of the few countries that have not suffered from “brain drain,” as they have successfully attracted many highly educated professionals back to the home country.
Since the economic crisis of 1997-98, the rapid expansion of higher education reduced the returns to higher education and lowered the employment prospects of some university graduates due to the temporary mismatch between job requirements and worker qualifications. However, as more than 80 percent of high-school graduates advanced to higher education with 50 percent at four-year universities, Korea will be well equipped to meet the challenges of the upcoming knowledge-based and globalized economy in which human capital becomes the key engine of economic growth.
Equalization policies for secondary schools
Since 1969, Korea adopted a sweeping reform to equalize resources at secondary schools. Under this policy, all schools, public or private, gave up their right to recruit new students. They accept all students assigned by the Ministry of Education through district-wide lotteries. It also made curriculum, tuition and teacher salaries of private schools equal to those of public schools. The government guaranteed any deficit in operating costs (but not in capital costs) of all private schools. Accordingly, private schools became almost public in terms of accessibility to students, content of learning, and quality of teachers.
The equalization policy for middle schools (grades 7 through 9) was implemented for all schools throughout the nation in 1971. However, high schools (grades 10 through 12) have been only partially equalized due to strong opposition by private schools. Currently, about 60 percent of schools, 70 percent of teachers, and 70 percent of high-school students are in the districts where the policy is in place.
The equalization policy quickly reduced the quality difference of students across schools. The reduced burden of entrance examinations promoted physical growth. For example, the average height of a ninth grade male (female) student increased from 153.5 (151.4) centimeters (cm) in 1973, to 160.1 (154.4) cm in 1983, to 167.7 (157.2) cm in 2003.
Although one of the major objectives of the equalization policy was to reduce private tutoring activities by eliminating the secondary school entrance examinations, the household expenditure on private tutoring has been increasing steadily. In addition to spending 3.5 percent of GDP on formal schooling in primary and secondary education, Korea spends an additional 3 percent of GDP on private tutoring, making the nation number one in total education expenditure measured in terms of the share of GDP.
Income-contingent loan (ICL) for college education
In 2010, Korea started to implement an income-contingent loan (ICL) program for college students. The major characteristic of ICL is that the structure of the payment obligation is determined by the income of the borrowers when they finish their education. Under the traditional loan program, if the student failed to secure meaningful employment after education, he or she was likely to default on the educational loan. Therefore, a risk-averse student may be reluctant to take out a loan even if the expected benefit would outweigh the loan. By reducing the risk of default, ICL encourages students to take more educational loans for college education.
Korea is one of the few countries that rely heavily on private institutions for the provision of higher education. More than 75 percent of university and 90 percent of junior college students are enrolled in private institutions. As private institutions rely heavily on tuition revenue, their fees are relatively high. Even public universities in Korea charge substantial tuition, because government support for higher education in Korea is relatively small. The net result is that, the household sector bears the bulk of the financial burden for higher education.
Korea’s ICL is financed by government bonds and aims to be self-supportive. As such, the interest rate charged by the Korean government (5.7 percent) is much higher than other countries with similar programs supported by general revenue such as Britain, Sweden, New Zealand and the Netherlands. Despite the high-interest rate, the program has become very popular as many students realized the benefit of the reduced default risk. In the first year of the program, about 450,000 students (about 25 percent of the students) applied for the ICL. The ICL may suffer from adverse selection and moral hazard problems as it may attract applicants who pursue risky fields of study. The latter problem arises when borrowers do not exert enough efforts in obtaining higher-paying jobs to pay back the loan. It remains to be seen how these potential problems can be minimized in the future operation of the program.
kim@uwm.edu
