The Case for Easing Tuition Regulation and Policy Alternatives

This report analyzes the impact that the tuition freeze and tuition increase suppression policies maintained over the past decade have had on the financial structure of higher education and university operations, and presents policy alternatives for tuition deregulation and strengthening university competitiveness. The report begins from the recognition that the tuition issue is not simply a matter of student burden, but a structural issue directly tied to the institutional foundation that allows universities to design their finances autonomously and maintain and improve educational quality.

First, it confirms that Korea’s tuition-setting structure is not so much the result of university autonomy as it is the product of long-term control through legal and administrative regulation. Article 11 of the Higher Education Act mandates the operation of tuition review committees, limits tuition increases to within 1.2 times the average consumer price inflation rate over the previous three years, and allows administrative and financial sanctions by the Ministry of Education in cases of violation, thereby imposing strong direct regulation on tuition decisions. In addition, details such as the method for calculating the tuition increase rate are delegated to Ministry of Education ordinances, creating a structure in which the Ministry can effectively exercise broad control over tuition governance.

At the same time, indirect regulation has also been at work. Type II National Scholarship and various university financial support programs have linked participation conditions to efforts to freeze or lower tuition or ease tuition burdens, thereby creating additional administrative and financial ceilings beyond the legal cap. As a result, universities have been placed in an institutional environment in which even increases within the inflation rate are difficult to choose in practice, and tuition has tended to become fixed as a “policy price” managed by policy decisions rather than a price formed in the market.

The analysis of the current tuition situation confirms a long-term structure of suppressed increases. According to disclosed data from AcademyInfo, the average tuition at four-year universities fell from about 6.47 million won in 2007 to about 6.40 million won in 2015, and then rose only slightly after 2020 to reach about 7.10 million won in 2024. Even where there was some nominal increase, the overall trend was effectively one of a freeze or decline when inflation, labor costs, and demand for educational investment are taken into account. In addition, while average tuition revenue per university stagnated or declined over the long term, from about 56.8 billion won in 2007 to about 59.2 billion won in 2025, average government subsidies per university surged from about 1.2 billion won in 2007 to about 25.2 billion won in 2024, revealing a structural shift in university finances from “tuition-based own-source revenue” to “government subsidy-centered transfer revenue.”

The problems of chronic tuition regulation can be summarized in three points. First, university financial autonomy is weakened and dependence on the government is strengthened. At private four-year universities, the share of revenue dependent on tuition fell from 73.8% in 2007 to 57.1% in 2024, while dependence on government support rose from 1.5% to 23.1%. At national universities as well, the share of educational activity expenses (tuition) in university accounting revenue declined from 39.2% in 2016 to 29.0% in 2022. This means that resources under universities’ own control have shrunk, while the likelihood of dependence on government funding centered on conditional projects has increased.

Second, there are concerns about deteriorating financial soundness and declining educational quality. When tuition fails to sufficiently reflect changes in the cost structure, financial pressure accumulates, and universities become reliant on short-term cost cutting or securing outside funding. In particular, education- and research-related expenditures showed a pattern of stagnation or decline, with key investment items such as research expenses and laboratory/practical training costs at private universities declining over the long term, while total spending on education and research has also stagnated since 2020. This suggests the possibility that deterioration in educational quality may accumulate as spending is cut first in less visible areas such as research equipment, books, facility maintenance, and support personnel. The report also cites prior research showing that the expansion of National Scholarships may lead universities to reduce their own scholarship programs.

Third, the level of student welfare may stagnate or decline. Student expenses (scholarships, student support expenses, etc.) have shown a trend of stagnation or decline since 2015, indicating that tuition regulation does not necessarily lead to expanded student welfare simply because it suppresses student burdens. Although the expansion of National Scholarships reduces individual burdens, it has the limitation of not automatically translating into financial resources for improving universities’ welfare infrastructure and educational services. As a result, the paradox may arise in which “tuition burdens are maintained or lowered, but welfare as experienced on campus does not improve.”

Based on this analysis, the report presents policy alternatives for tuition deregulation and improving university competitiveness. First, it argues that the administrative regulation linking Type II National Scholarship to conditions requiring tuition freezes or reductions should be abolished, and that the scholarship system should be redesigned not as a mechanism for controlling universities but as a device for protecting students. Second, it proposes that the cap on tuition increase rates should be abolished or, at a minimum, that the system should be comprehensively reexamined so that universities can adjust tuition autonomously according to their cost structures and strategies; to this end, it suggests that Article 11 of the Higher Education Act should be amended. Third, it concludes that tuition deregulation should not be treated as a stand-alone policy, but should be combined with broader deregulation across higher education, including expanded autonomy in academic affairs and enrollment management, greater flexibility in faculty personnel and compensation systems, rationalization of regulations on revenue-generating activities and financial management, and stronger ex post performance-based evaluation, so that universities can build a system that enhances competitiveness on the basis of autonomy and responsibility.

I. Introduction: Chronic Tuition Regulation and the Need for Tuition Deregulation

II. Tuition Regulation and the Current Status of University Tuition

1. Changes in Laws and Policies Related to Tuition Regulation and Their Implications

2. Analysis of the Current Status and Trends of University Tuition

III. Problems of Chronic Tuition Regulation

1. Impairment of University Financial Autonomy and Increased Government Dependence

2. Deteriorating University Financial Soundness and Declining Educational Quality

3. Decline in Student Welfare Levels

IV. Policy Alternatives for Easing Tuition Regulation and Strengthening University Competitiveness

1. Abolition of Administrative Regulation Related to Type II National Scholarship

2. Abolition of the Cap on University Tuition Increase Rates or Autonomous Adjustment

3. Strategy for Abolishing or Deregulating Higher Education Regulations to Strengthen University Competitiveness

References

Wiki:

https://www.cfe.org/w/bbsDetail.php?&idx=57

Original title: 등록금 규제 완화 필요성과 정책대안

Author: Gwang yong Go

Date: 2026-02-28

Source: https://www.cfe.org/bbs/bbsDetail.php?cid=report&pn=1&idx=28639