KEPCO Provides 1.5 Million Won Scholarship Even to Children of Employees with 'C Grade'

Avoiding Prohibition on Free Tuition Support... Circumventing Support through 'Scholarships'
National Scholarships Also Subject to 'C Grade Warning System'
Yejungcheo "Deviates from Social Norms, Indirectly Violates Guidelines... Improvement Needed"

[Sejong=Asia Economy Reporter Kwon Haeyoung] Korea Electric Power Corporation (KEPCO), which is burdened with over 132 trillion won in debt, has been found to provide scholarships to employees' university student children, paying 1.5 million won per semester even to those with poor academic performance. Public institutions, including public enterprises, are prohibited from providing free tuition support to university student children to prevent excessive welfare benefits. However, KEPCO is being criticized for allegedly circumventing this rule by supporting children with low grades under the name of 'scholarships' for employee welfare. Particularly, this criticism is heightened as the National Assembly has repeatedly pointed out the issue of excessive tuition support for public institution employees' children, making the situation seem like "preaching to deaf ears."

According to the '2020 Fiscal Year Public Institution Settlement Data' from the National Assembly Budget Office on the 13th, KEPCO provides scholarships up to 1.5 million won per semester to employees with university student children who have a semester grade of C or higher. For those with a B grade or higher, the support limit is 2 million won. Including cases with C grades, KEPCO paid a total of 9.1 billion won to 3,620 employees' university student children last year.

Notably, KEPCO-related organizations showed particularly generous scholarship payments. KEPCO Nuclear Fuel provides actual expense support up to 1.5 million won for employees' university student children with grades of C or higher, paying a total of 1.08 billion won to 256 students last year. Additionally, KEPCO KPS supports 65% of the loan amount for semesters with a C grade (31.79 billion won in tuition support last year), KEPCO KDN supports 60% (440 million won), and Korea Power Exchange supports 30% (123 million won).

The Budget Office viewed that KEPCO and some other public institutions used loopholes to provide tuition support. According to the 'Guidelines on Innovation of Public Institutions,' public institutions cannot provide free tuition support to employees' university student children. Scholarships are the only exception and can be supported through in-house welfare funds within socially acceptable limits. The Budget Office judged that providing scholarships even to those with C grades exceeds social norms. Particularly, since the in-house welfare fund, which finances the scholarships, is created by allocating a certain percentage of the public institution's net profit, thereby reducing net profit, efficient use is crucial.

This contrasts with other scholarship systems. Even the 'Type I (Student Direct Support)' national scholarship operated by the Korea Student Aid Foundation, which targets students from financially disadvantaged families, applies a 'C grade warning system.' The academic standard for receiving scholarships is a B grade, and students who receive a C grade are given two warnings before losing the opportunity to receive scholarships. For four-year universities, students can receive scholarships up to eight times, but if they receive a C grade three times or more, they can no longer receive scholarships.

KEPCO's case also differs from other public institutions. Most public institutions set the scholarship eligibility for employees' university student children at B grade or higher. Gangwon Land requires a minimum B grade for scholarship support, and Korea Racing Authority and Korea Airports Corporation have similar standards.

The Budget Office pointed out, "Providing scholarships to employees' children who cannot be considered academically excellent by social standards is problematic," adding, "Expanding the support target to employees' university student children with low grades under the name of scholarships effectively amounts to free tuition support, which is an indirect violation of guidelines and needs to be improved."

Some criticize KEPCO for failing to overcome moral hazard amid increasing management burdens, including its debt exceeding 132 trillion won. Concerns are growing that management burdens will increase further due to the freezing of electricity rates in the second and third quarters of this year, which nullifies the nuclear phase-out policy and the introduction of the fuel cost linkage system. There is even speculation about a possible return to deficit this year. According to KEPCO's '2020?2024 Mid-to-Long-Term Financial Management Plan,' KEPCO's consolidated debt is expected to increase by about 20% to 159.4621 trillion won by 2024 compared to last year. The number of KEPCO employees also rose from 21,560 in 2016 before the current administration to 23,235 as of March this year.

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