Reform of Grants for the First Time in 50 Years... Diagnostic Evaluation Support Budget Doubled from 2025

Reforming University Support Purpose and Competency Evaluation Amid Financial Struggles, Expanding Budget from 5 Billion to 10 Billion
Severe University Financial Difficulties Due to Declining School-Age Population and 14 Years of Tuition Freeze
Basic Competency Diagnosis Evaluation Also Reorganized to Pre-Finance Post-Evaluation Method, Reform Plan to Be Announced Within the Year
Convincing Early Childhood to Secondary Education Sectors Is Key, Alternatives Must Be Presented to Compensate for Reduced Grants

[Asia Economy Reporter Han Jinju] The reason for reforming the local fiscal grant system for the first time in 50 years is to establish a Special Account for Higher and Lifelong Education Support to urgently address the financial difficulties faced by universities. The Ministry of Education plans to revamp the Basic Competency Diagnosis Evaluation and increase the amount of support per school from 5 billion KRW to around 10 billion KRW.

On the 15th, the government announced the establishment of the Special Account for Higher and Lifelong Education Support, which will combine the transferred education tax portion of local education fiscal grants (3.2 trillion KRW) and the existing university support budget excluding student loans and national scholarships (8 trillion KRW), totaling approximately 11.2 trillion KRW to support universities. With tuition frozen for 14 years, a sharp decline in the school-age population, and a decrease in enrollment rates, projections indicate that university admission quotas will drop from 475,000 this year to about 310,000 by 2033, creating a consensus on the need for support to ensure university survival and capacity enhancement.

From 2025, the Ministry of Education will completely overhaul the current Basic Competency Diagnosis Evaluation and double the support budget per school from 5 billion KRW to 10 billion KRW. General financial support for university innovation projects will increase from 1 trillion KRW to about 1.9 trillion KRW, and some restrictions on the use of personnel and operating expenses will be eased. The evaluation method will shift to providing financial support first, followed by university-led autonomous evaluations and government post-performance inspections. Since the Basic Competency Diagnosis Evaluation has been criticized for ranking universities, it is expected that evaluations will be based on quantitative indicators such as education cost per student, educational facilities, and faculty securing rates, followed by self-assessment of performance. The comprehensive general financial support will increase from 1 trillion KRW to 1.9 trillion KRW, allowing the use of personnel and operating expenses to expand autonomy. A Ministry of Education official said, "The number of universities eligible for support remains the same, but the evaluation system and support scale will change, and new evaluation criteria will be prepared by the end of the year."

All outdated educational and research facilities at national universities will be replaced over five years, and a 500 billion KRW support track will be newly established for the specialization of regional universities, allowing them to freely design their specialization fields. Support will be provided to strengthen the regional education and research roles of national universities, and additional regional research-focused universities (Glocal BK) will be selected. The budget will also be concentrated on encouraging research by master's and doctoral talents. For private universities, financial diagnosis and management consulting for structural reform will be promoted. Although specific support items are clearly stated for national and regional universities, there are criticisms that support measures for private universities are relatively insufficient.

The establishment of the special account, funded by diverting a portion of the grants, has met strong opposition from the early childhood, elementary, and secondary education sectors. It is urgent to devise alternatives to persuade them. Local education fiscal grants are used for early childhood, elementary, and secondary education and for metropolitan and provincial education offices, and consist of 20.79% of domestic taxes and part of the education tax. Although grants have increased unusually this year, if grants decrease in the future due to economic downturns, schools will have to reduce operating expenses instead of personnel expenses. Sixty percent of education finances are personnel costs for teachers and staff, and personnel expenses do not decrease even if the number of students declines. Professor Song Ki-chang of Sookmyung Women’s University said, "If grants do not increase in line with personnel cost increases, supplementary measures to compensate for this must be prepared. In the past, local governments issued bonds when grants decreased, but now it is necessary to prepare safeguards for future decreases." He added, "There is currently a domestic tax grant rate adjustment clause, but it only applies to personnel costs for compulsory education teachers, and it has never been used."

The National Assembly’s Education Committee plans to submit the Local Education Fiscal Grant Act revision and the Special Account Act at the plenary session on the 18th, but the possibility of discussion during the regular session is uncertain due to opposition from opposition parties such as the Democratic Party. A Ministry of Education official said, "Balanced growth in higher education is most important, and issues such as personnel costs, which metropolitan and provincial superintendents are concerned about, need to be discussed at the National Assembly level. Preparing supplementary measures to cope with grant reductions is a reasonable proposal."

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