Issues and Reform Directions for University Endowment Management

At the 2026 National Assembly audit, data were released showing that the cumulative reserves of private universities reached KRW 12.2358 trillion, surpassing KRW 12 trillion for the first time. It was also reported that 19.7% of deposits held at financial institutions were placed at interest rates below the benchmark standard, and that 46.1% of the estimated year-end balance under the 2026 budget was classified as intended for use more than 10 years later. In response, the media have criticized universities for leaving their reserves unused in low-interest deposits out of concern over investment losses.

These criticisms appear valid at first glance, but the scale and causes need to be viewed differently. Although reserve funds at four-year private universities have increased in nominal terms, in real terms they are actually 1.5% lower than in fiscal year 2016. As of the end of February 2022, 20 universities holding more than KRW 100 billion each accounted for 64.7% of the total, indicating that the issue lies not in the average but in the distribution. The concentration in deposits appears to be the result of both a legal structure that makes deposits the default option and an evaluation structure in which only losses are visible while opportunity costs are not. In addition, the markedly unfavorable deposit terms faced by some universities are tied to bundled transactions with their main banks. The large share of funds designated for use after 10 years also stems from the absence of target balance and withdrawal rules that would distinguish long-term accumulation from purposeless hoarding. The current disclosure system remains focused on size and fails to show management processes and performance.

The United States, Japan, and the United Kingdom do not legally restrict eligible investment assets; instead, they require prudence and diversification obligations, investment policy statements and independent decision-making, and disclosure of process and performance. The United States and Japan explicitly state in laws or guidelines that losses incurred despite following proper procedures do not trigger liability based on the outcome alone. The United Kingdom supervises institutions not on the basis of individual losses but on the basis of their financial sustainability and compliance with charity law, and all three countries establish a baseline for accumulation and use through spending rules. In 2026, Japan also recommended advancing fund management to include investment in risk assets, noting that management centered on deposits and bonds would erode real value.

Accordingly, this report proposes not stronger controls but a reallocation of what is controlled. The government should promote the preparation and disclosure of investment policy statements, the separation of accounts by intended time of use, expanded disclosure, procedure-based oversight, correction of problems in the lower end of the distribution, and support for joint management by small universities. The National Assembly needs to review ways to convert the deposit principle in Article 32-2 of the Private School Act into a prudent management principle, as well as the no-hindsight rule and the legal basis for total-return management and spending rules. In addition, exempting qualified universities from the application of securities investment limits should be considered as a phased alternative. Above all, this report proposes that institutional transition proceed in stages according to each university’s size and capacity, first expanding disclosure and then broadening managerial autonomy on that foundation.

I. Introduction: Background of the University Reserve Fund Debate and the Need for Review

II. Current Status of University Reserve Funds and the Institutional Structure

1. Scale and Trends 2. Composition and Distribution

3. Institutional Structure 4. Sources of the Issues

III. Issues and Evaluation of University Reserve Fund Management

1. Asset Allocation and Investment Returns: Structural Causes of Low-Return Deposits

2. Reserve and Withdrawal Rules and “Unused Reserve Funds”

3. Regulatory and Audit Structure and Disclosure: From Control to Accountability

IV. Overseas Cases of University Endowment Management and Their Implications

1. Investment Regulation Methods 2. Standards for Assessing Losses 3. Spending Rules

4. Governance and Disclosure 5. Overall Assessment

V. Conclusion: Tasks for Institutional Improvement and Legislative Review

1. Conclusion and Recommendations 2. Government Tasks for Institutional Improvement

3. Legislative Review Tasks 4. Step-by-Step Implementation Plan

References

Original title: 대학 적립금 운용의 쟁점과 개선방향

Author: Center for Free Enterprise (CFE)

Date: 2026-11-02

Source: https://www.cfe.org/bbs/bbsDetail.php?cid=report&pn=1&idx=29700