Loan Support for Closed Universities Covering Appraisal Costs and Staff Salaries

Ministry of Education's 2022 Closed University Liquidation Support Loan Program
Support for Universities That Voluntarily Dissolved or Received Dissolution Orders
Loans Executed Based on 60% of the Appraised Value of Disposed Assets

[Asia Economy Reporter Han Jinju] The Ministry of Education will implement a project to provide loans for operating expenses such as unpaid wages for faculty and staff and for the priority repayment of debts to universities that are closing down.

On the 27th, the Ministry of Education and the Korea Private School Promotion Foundation announced the '2022 Loan Support Plan for Liquidation of Closed Universities' and stated that they will accept loan applications necessary for the liquidation of dissolved school corporations starting from the 28th.

The Ministry of Education is conducting this project for the first time this year to assist in the liquidation of school corporations that have closed. This is a follow-up measure to the 'Systematic Management and Innovation Support Strategy for Universities' and the 'Response to Declining School-Age Population through Strengthening University Competitiveness' announced in May and December of last year.

The support targets are school corporations that have voluntarily dissolved or have been ordered to dissolve under the 'Private School Act.' Those wishing to apply for loans should submit a loan application along with documents such as asset status and claims and debts to the Korea Private School Promotion Foundation.

The total project budget is 11.4 billion KRW, divided into operating expenses for the liquidation process (1.2 billion KRW) and debt repayment (10.242 billion KRW), and will operate until the budget is exhausted. Loans will be provided for operating expenses necessary for the liquidation process, such as property appraisal fees, and for the priority repayment of debts including unpaid wages, taxes, and public charges. Closed universities must repay the loans after selling their assets.

The loan support limit is determined based on 60% of the appraised value of the disposed assets, comparing existing debts and the requested loan amount. The decision on whether to grant the loan will be finalized after review by the Liquidation Loan Review Committee of the Korea Private School Promotion Foundation and approval by its board of directors.

The interest rate applied will be the public fund management fund deposit rate (2.32% per annum in the first quarter of 2022). Principal and interest can be repaid in a lump sum before the completion of the liquidation.

Choi Eun-ok, Director of Higher Education Policy at the Ministry of Education, stated, "The longer the liquidation of dissolved school corporations is delayed, the more the scale of debts such as wage claims and delayed interest increases. Moreover, the assets of closed universities become more difficult to liquidate due to aging and depreciation in value." She added, "We expect that through this loan project, the liquidation process will be completed promptly, contributing to minimizing social costs such as resolving unpaid wages for faculty and staff."

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