Assemblyman Seodong Yong's Investment of 1.5 Trillion KRW in Securities Using University Reserve Funds Results in 6.3 Billion KRW Loss

Student Scholarships and Faculty Research Funds Should Be Invested with Secured Stability

[Asia Economy Honam Reporting Headquarters Reporter Lee Hyung-kwon] Although private universities invested a principal amount of 1.5 trillion KRW in securities from their reserve funds in the last fiscal year, they actually recorded a loss of 6.3 billion KRW, resulting in a net loss.

According to an analysis by National Assembly Education Committee member Seo Dong-yong (Democratic Party), who received the "Status of Securities Investment from Reserve Funds by Private Universities" for last year from the Korea Private School Promotion Foundation, the total investment principal of 39 universities nationwide was 1.35 trillion KRW, with total earnings of 12 billion KRW. Meanwhile, 19 specialized and distance universities recorded a securities loss of 18 billion KRW, about 10% of their 180 billion KRW investment principal.

As of last year, the total securities investment loss for university corporations nationwide was 6.3 billion KRW.

According to the Private School Act, private universities accumulate assets to build or expand educational facilities, provide scholarships to students, and support faculty research activities. Among these, securities investment is allowed up to half of the reserve funds transferred from the tuition account to the non-tuition account, excluding a significant portion of the transferred reserve funds.

Examining the evaluation differences and rates of return by type of securities, equity securities recorded the highest rate of return, achieving approximately 4 billion KRW in earnings with a 6.1% return.

On the other hand, depositary receipts recorded the smallest loss of about 200 million KRW but had a return rate as low as -45%.

Looking at the investment status by general universities and specialized/distance universities, general universities invested 1.35 trillion KRW in securities but had an average return rate of only 1%. Specialized and distance universities recorded a loss of 1.8 billion KRW, about 10% of their total investment principal of 180 billion KRW, with a return rate of -10%.

As of last year, 18 private universities were confirmed to have invested more than 20 billion KRW in securities.

A total of 9 private universities recorded profits relative to their investment principal, earning approximately 18 billion KRW, while 9 universities recorded losses amounting to about 19 billion KRW.

The university with the largest loss relative to its investment principal was Myongji College, which recorded a return rate of -56%.

Its evaluated amount last year was approximately 940 million KRW, making it practically impossible to recover the principal. Following this were Gyeongnam University and Sogang University, which recorded return rates of -8.9% and -8.3%, respectively.

Large-scale securities investment is a high-risk area where even financial institutions organize specialized risk management teams for investment and operation. However, under the current system, there are no regulations that hold universities directly accountable even if their investments result in large-scale losses.

In response, Assemblyman Seo Dong-yong emphasized, “Most universities that ventured into securities investment using reserve funds recorded poor returns or even losses so severe that recovering the principal is difficult.” He added, “Since these reserve funds should be used for the educational activities of students and faculty, the Ministry of Education must prepare institutional measures to ensure that investments are made with at least minimal stability.”

This content was produced with the assistance of AI translation services.