In 1980, the South Korean government banned college students and school
teachers from making money through private tutoring.
It didn’t work. Few governments have tried more to corral their people’s private education
spending than South Korea. Yet each year Koreans still spend billions of dollars of
their own money - up to a third of their income - to send their kids to supplementary learning.
Excessive spending on the private education industry is an issue across Asia,
but the education fever in South Korea is particularly strong. In this video,
we are going to dive deeper into South Korea's ridiculous private education problem.
## Beginnings
During the Japanese colonization period, ordinary Koreans lacked access to education.
The administration's shameful primary goal was to distort the culture and values of the Korean
people and keep them in their place. They were not interested in human capital development.
So when the new South Korean state gained its independence, the populace was sorely
under-educated. The literacy rate was 22% and less than 20% of children had gone to secondary school.
Strongman Syngman Rhee initiated a massive primary education push to ameliorate this.
But South Korea had few resources then, so state support for schools was meager.
Since resources were so limited, the government added comprehensive testing exams for middle and
high school to limit the size of incoming classes. The exams also solved a serious corruption issue
- some Korean colleges admitted whoever paid them the most money rather than who was most qualified.
Early on, outside observers noted that this could lead to future issues.
In 1952, UNESCO noted that 75% of the funding for secondary and higher education came from parents.
They recommended that the government pay for 100% of primary school costs
and at least 50% of secondary school and higher.
The government's early lack of initiative in this
area would lead to the out-of-control privatization of its education sector.
## Expansion and Quality Concerns
When Park Chung Hee took over as President, he sought to build up the country's supply of
human labor in support of his economic policy of rapid industrialization.
That means building factories, and a rich supply of trained human workers to run them.
Such workers only needed to have basic to moderate levels of trained skills.
Why send them to university? Furthermore, the Park government had concerns about the revolutionary
potential of idle college graduates running around learning silly things like socialism.
And so in 1963 the Korean government opened "vocational schools" - or
sometimes also referred to as "technical high schools" - as an alternative to the
traditional system. Referred to as a general or academic school.
It was hoped that up to 70% of students would take
this second track - and be set up with the practical knowledge for a successful career.
Successful examples of this dual-track system can be found in Germany, for instance.
But Korean employers soon complained that their vocational school graduates
had outdated skills and capabilities. The difference was that in Germany,
trade unions work closely with the vocational schools on the curriculum.
In South Korea, no such unions existed because the government desired low cost labor
and saw unions as a gateway drug to left-wing ideologies. I.e. Communism.
Even if the vocational system worked properly, however, the Korean baby-boomers would not have
likely accepted it. Scholars in Korea’s Confucian society had historically commanded respect.
And the general schools carried on their prestige.
## The Equalization Policies
By the late 1960s, the fierce testing competitions into elite middle schools were causing primary
schoolers to suffer from stress and tension - a situation referred to as "examination hell".
In 1967, it was estimated that 9 out of 10
sixth-graders - the last year of primary - in Seoul received private tutoring.
If kids didn’t test into a school of choice, they opted to repeat the sixth
grade to prepare again for the next year's middle school entrance exam.
You shouldn't be doing this to your 11 year olds. So in 1968, the government abolished the exams and
instituted a lottery. Each middle school got a mix of high and low scoring kids. It also forced
private middle schools to accept standardized curriculums, tuition, and teacher levels.
This was in effect a government takeover. It successfully reduced the intensity of the rat
race for elite middle schools, but only by transferring it over to elite high schools.
By 1973, about 27% of students suffered mental and physical stress
from the high school examinations - referred to as "middle school third year disease".
Thus in 1974, the government instituted the high school equalization policy. Private and public
general high schools are randomly assigned their students within residential districts.
Exceptions are made for certain rural regions and vocational schools.
These two equalization policies were and remain very controversial. People pointed
out that the middle school equalization policies merely shifted the trend up to
high school. A high school policy would only do the same for university. And they were right.
## University
In South Korea, where you go to university matters a whole lot.
I know that is also the case in the United States - only 1 current US Supreme Court
Justice didn't go to either Harvard or Yale - which FYI to me is a bit ridiculous.
But the influence is especially strong in South Korea. There are three domestic
super-universities: Seoul National University, Korea University, and Yonsei University, or SKY.
A top university opens the doors to bigger and better things.
50% of CEOs, 43% of politicians, and 80% of judges have graduated from a SKY college.
It also guarantees job security. This is an older stat but in 1988, 83-90%
of SKY graduates are able to secure a job.
This is in contrast to the 70% employment rate for all other 4-year college university graduates.
It also guarantees higher earnings. Seoul National University graduates make 7% more
even after adjusting for social background and labor productivity.
SKY PhDs are more likely to get a tenure-track position at a domestic university than a
non-SKY PhD. Though both fall short of a PhD from a top-100 university abroad.
And finally, graduates from prestigious universities show higher rates of job
satisfaction. So they get better jobs, make more money AND are happier. I hope that I
have impressed upon you the multiple benefits of graduating from a prestigious Korean university.
Throughout the 1970s, the middle and high schools still struggled to
deliver a high quality education. Class sizes were still regularly in the 70s,
and total annual spending per student was about $10 to $30 USD.
Thus, many turned to private tutoring as their best chance of entering a prestigious Korean
university. Tutoring eventually evolved into full-on shadow schools - referred to as Hagwon.
For-profit entities with the sole goal of preparing students for their university exams.
By 1980, 13% of primary school students, 15% of middle school,
and 26% of high school students received tutoring. Families found themselves separated
into two unequal classes - those who can afford Hagwons and those who could not.
## The 1980 Ban
When Chun Doo-hwan came to power, he sought to make more radical reforms to this arrangement.
And that is why in 1980 he banned private tutoring with the 7.30 Educational Reform Measure.
7.30 was a wide-sweeping reform of the system. It banned almost all forms of
private tutoring - with some exceptions carved out for kids who have failed tests.
The reform also raised the university quotas, abolished several university entrance exams
and modified the national curriculum. It also implemented a radio and television network for
low-cost tutoring - the Educational Broadcasting System or EBS. Kind of like PBS in the US.
At this time, South Korea had not yet democratized. But even with the full authoritarian
power of a military government, the authorities struggled to enforce the private tutoring ban.
Korean parents - willing to hire tutors at any expense - turned to the black market. And the
black market - recognizing that they might be caught - raised their prices to account
for the risk premium. Now only the richest could afford tutoring. Enforcement eventually lightened
until the South Korean Constitutional Court finally struck down the ban in 2000.
## Public Improvement
Throughout the 1990s, the Korean government increased investment in its public education,
believing that parents sent their kids to private tutoring
because of the perception that public school sucked.
I feel that while it is true that the Korean government early on
under-invested in public education, great improvements were made during the 1990s.
For instance, in 1983 the World Bank notes that Korean secondary schools
had a student-teacher ratio of 36.4. To compare, Canada had about half that - 17.96.
By 2000, this ratio fell by 40% to just 21 students per teacher.
It still lags behind Canada's 17.4 number, but great progress regardless.
Today, South Korea's total expenditure on its education institutions as measured by
the percentage of its GDP is not all that different from the OECD average.
But the more public schooling improved, the more parents still saw private tutoring
as a way to get ahead of everyone merely sending their kids to public school.
## The Hagwon Explosion
So the South Korean government developed low cost substitutes
in an attempt to "disrupt" private tutoring. This included adding entrance exam prep to the
aforementioned EBS broadcasts and after-school programs that copied the Hagwon curriculum.
They also worked with the universities - introducing elements into the entrance exams
that cannot be gamed with simple memorization: High school records, extra-curriculars, social
service involvement, long essay-style questions, and socio-economic disadvantage factors.
None of this succeeded. Despite this improvement, the number of Hagwon
exploded and continued to explode - growing from an estimated 381 in 1980 to 14,043 in 2000.
Tax records in 2013 showed that there are nearly 105,000 hagwon in Korea then.
The number of students enrolled in private schooling grew ten-times over the same time
period - from 118,000 to 1.4 million. Roughly a 70-80% participation rate.
Today, South Korean households spend up to 30% of their income on their child's - and it is
usually just one - education. This spending is heavily geared towards higher-income households.
Families with incomes over $50,000 USD spend 2.5
times more on private education than their lower-income peers.
Nine out of ten households consider this expense burdensome. 29% of them, very burdensome.
## The 2006 Curfew
With nothing else working, in 2006 the national government proposed a curfew for
the Hagwon - about 10 PM. Imposing this curfew was difficult and took
three years to fully implement - a reflection of Korea's new democratic era.
Hagwon owners argued against the ban, pointing out that high schools already kept students
in until 10 or 11 PM. Hagwon students would either go to tutoring early in the morning,
on the weekends, or hire private tutors to fill the time.
Parents and students petitioned the Constitutional Court, saying that it violated their rights. But
finally in 2009 the Court declared the curfew constitutional and it went into effect.
Research on the curfew's effectiveness is lacking. But one quantitative study found that the curfew
did indeed shift parents to move to private tutoring - for those who could afford it.
Another study somewhat corroborated this, finding that families in Seoul - which are
usually richer - increased their expenditures on private schooling. Families in Busan and other
found a reduction in spending or no significant change.
## After-school Classes
One reform that did end up working however, came a little bit earlier:
After-school classes. First introduced in the early 2000s,
the original intention of these classes were to provide arts and cultural enrichment.
A more holistic education that "experts" argued that regular Korean schools didn't have.
However, Korean parents gave feedback that they weren't interested in this. And soon,
the after-school programs evolved into de facto tutoring schools - teaching academic
subjects with the goal of bending the demand curve on household private tutoring costs.
It seems like that parents and students find these after-school programs effective
replacements for private tutoring. A study found that one hour of after-school
school each week replaced about 30 minutes of private tutoring and 22 minutes of studying alone.
Replacing any amount of expensive private tutoring with publicly subsidized after-school classes is a
financial net win for the home. A 2006 government study - corroborated later in 2018 - found
that adding after-school classes reduced spending by about 2.2% of household income.
This finding sort of hints at the role that the Hagwon's for-profit nature has
in fueling Korea's educational-industrial complex.
Furthermore, since they don't have to commute to their Hagwon, the students get
additional time - about 16 minutes each week on average - that they usually spend on sleep.
Do these programs actually improve
students' scores in the same way private tutoring does? The answer seems to be yes.
Though, it also seems that they are more effective at the high school level than in middle school,
and in urban areas more than rural areas.
It is interesting that even with the presence of an affordable alternative,
however, the Hagwon industry has continued on.
## Today
Today, the results are hard to deny. Almost every child in South Korea
goes to primary and secondary school. And nearly 80% go on to university.
Additionally, Korea produces some of the world's highest scoring children - with
top ten rankings in the math, science, and reading categories
of the 2018 Program for International Student Assessment or PISA.
For comparison, the United States ranks 38th in math, 19th in science, and 13th in reading.
Yet at the same time, beyond the aforementioned financial costs, the intense academic workload
and competition takes a psychological toll on both Korean children and their parents.
Including strained parent-child relationship issues, anxiety issues and depression.
And there is the demographic cost for Korean society.
Korea has the lowest birth rates of all the OECD countries. The 2019 fertility rate was 0.92.
Birth rates are a complicated indicator with many involved factors. But surveys
have shown that women's willingness to have an additional child decreases as
private childcare costs - of which education takes a significant portion of - increase.
The multi-billion dollar for-profit education market has also become a big business.
Hagwons have become large, profitable corporations
that employ tens of thousands of educated tutors, a critical employment tool.
Checking their growth will certainly create negative economic feedbacks - even if you
don't take into account the lengths to which parents will go to give their children an edge.
## Conclusion
I read a very interesting recently published paper - Locked In, by Dr. Sonia Exley of the
London School of Economics. In it she argued that if it is not addressed early then private
supplementary tutoring entrenches itself into modern society and basically becomes irreversible.
As I mentioned earlier, Taiwan, Japan
and Singapore also struggle with regulating their private education industries.
But South Korea’s education fever appears to be stronger than them all.
With one exception, amongst the households in urban China.
A 2020 Shanghai Consumer Council survey found that over 70% of families in Beijing, Shanghai and
Shenzhen send their children to private education - spending up to 10% of their pre-tax income.
This troubling trend is likely why in 2021 the Chinese government recently
converted its private education companies into non-profit entities, amongst other regulations.
They are trying to head off the $100 billion industry's entrenchment and
blunt a brutal rat race that fuels skyrocketing childcare costs, chronically low birth rates,
and a growing "tang-ping" or lying flat lifestyle amidst the youths.
South Korea failed to achieve this in time, and it cost them.
China is looking to avoid a similar fate.