Private Education Costs 'Broke' Under High Inflation Despite Government Influence Absence

In South Korea, no matter how difficult times get, the amount of money spent on education is not easily reduced. However, education expenses, once considered the last bastion of household consumption in Korea, are now decreasing. It is not that the need for private education has disappeared, but rather that due to the impact of high inflation and high interest rates tightening household finances, more families are giving up even on their children's education expenses.

Korea's intense passion for education, especially excessive spending on private education, has been regarded as a social problem to the extent that it is pointed out as a cause of low birth rates. According to the National Statistical Office's National Statistics Portal (KOSIS), last year, the nominal education expenditure of households nationwide was 211,632 KRW per month on average, marking a 3.9% increase compared to the same period the previous year. This increase rate was higher than last year's consumer price inflation rate of 3.6%.

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As education expenses increase, the burden felt by parents grows. The 'Quality of Life in Korea 2023' report published by the National Statistical Office states that among household heads aged 30 and over with school-age children, 57.7% responded that their children's education expenses are a burden on household finances. This means that half of the households raising children feel burdened by education expenses.

In particular, 6 out of 10 people in their 50s (60.8%) responded that their children's education expenses are a burden on household finances. Those in their 40s (58.4%) and those aged 60 and over (53.2%) also answered that the burden of education expenses is significant. The percentage of parents in their 30s who felt the burden of education expenses was 46.1%, lower than other age groups, which is likely because this age group typically has preschool or lower-grade elementary school children who require less education spending than high school or university students.

However, statistics released this month showed an unusual decrease in education expenses. According to the 'ABC Report No. 14' published on the 18th by BC Card's New Finance Research Institute, sales in the education sector last month decreased by 24% compared to the same month last year. This breaks the steady sales growth trend maintained over the past four years (March 2020 to February 2024) despite COVID-19 and high inflation. The sharp decline in consumption in the education sector last month compared to the same month last year was influenced by sales drops in ▲arts and physical education academies (-31.5%), ▲cram schools (-26.7%), and ▲foreign language academies (-26.5%).

The report predicted that the phenomenon of household consumption sentiment shrinking due to high inflation would continue for the time being. The consumer price index inflation rate, which had stabilized at 2% last year, rose back to the 3% range last month. This figure is 0.3 percentage points higher than the previous month (2.8%), marking a return to the 3% range after two months.

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