Education investment efficiency in Kora declines over 10 years

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South Korea has seen its education investment efficiency decline over the past 10 years despite the sharp surge in the cost of education.

According to a joint analysis by Maeil Business Newspaper and the Federation of Korean Industries (FKI) on Wednesday, the country’s return on investment in education, which measures the efficiency of education spending, has seen a significant decline over the past 10 years.

The rate, which stood at 9.55 percent in 2010, dropped to 6.78 percent last year.

The education return on investment is an estimated rate calculated through regression analysis of factors such as the age, income, and duration of education of the recipient of education. It signifies the increase in earnings when the recipient of education receives one more year of education.

The country’s cumulative inefficiencies from public education to private tutoring and university education have resulted in its education being one of the worst in terms of cost-effectiveness.

The total budget for public education, including preschool, elementary, middle, high schools, and universities, exceeded 100 trillion won ($73.90 billion) last year. Private education expenditures reached a record high of 26 trillion won, with the per-student private education spending ranking 6th among Organization for Economic Co-operation and Development (OECD) countries.

Every year, a substantial amount of money is poured into education, but the productivity and the multiplier effect of investing in education remain stagnant. In next year’s government budget, the education sector has been allocated 89.7 trillion won, the largest amount, excluding health, welfare, employment, and administrative budgets.

Local elementary, middle, and high schools, in the meantime, have a surplus of funds, while university finances for higher education are in a hole, with private education expenses becoming a serious drain.

Industry sources note that productivity is declining as the virtuous cycle of talent creation leading to elementary, middle, and high schools, cram schools, and universities suffers a severe lack of funding.

Private education expenses are the main culprit in eating away at household incomes, and deteriorating consumption hinders growth, data showed.

According to an analysis by the FKI, the proportion of private education expenses per student, relative to disposable household income (excluding private education expenses), is expected to exceed 10 percent for the first time by 2027, up from the current 8.7 percent.