Is There Any Reason Everyone Should Pay the Same Tuition?

As industry changes rapidly, there is a growing need for talented people. To cultivate talent, adequate education is necessary, and for education to be effective, it must be backed by capital. Yet in our society, there is still a perception that education is sacred and therefore unrelated to capital.

Education, too, can only be done well when there is ample capital. Places with abundant capital are also better able to nurture talent. At Harvard University in the United States, endowments worth tens of trillions of won have accumulated. Our universities also need that kind of capital if they are to stand shoulder to shoulder with the world’s leading institutions. When substantial capital flows into universities and they cultivate highly capable talent, a virtuous cycle can be created in which graduates go out into society and generate value. At a time when the world is competing fiercely, cultivating talent is critically important.

In short, universities are part of society, and scholarship must be closely connected to reality. The idea that “scholarship is pure and noble, so it must remain detached from reality” is badly outdated. Yet the problem is that this way of thinking still lingers in our society. We absolutely need to recognize that education improves when capital is abundant.

Capital and income must be distinguished. Capital was formed when school founders used their own assets to buy land, construct buildings, and procure various equipment at the time of establishment. The ordinary operating expenses of a school are covered through tuition and government subsidies. Recently, a private university went bankrupt because, although it had capital, it could not make up for its operating deficit, and all of the foundation’s assets were transferred to the national treasury.

It is not easy for founders to continue injecting capital into private universities. We need mechanisms that allow capital to accumulate further and a structure that makes capital contributions easier. The simplest way is to activate the legacy admissions system.

Prestigious private universities in the United States leave the door open to the children of those who have contributed to the university’s development or donated large sums. In the United States, legacy applicants are said to enjoy an advantage of about 160 points on the SAT, based on a 1600-point scale.

In Korea, where egalitarian thinking is strong, we are still not even able to discuss a legacy admissions system. Is there any reason everyone must pay the same tuition? Why should it be impossible for one person to pay 80 million won while another pays nothing at all? People’s financial means differ, yet when everyone is required to pay the same tuition, some inevitably struggle, and as a result tuition protests erupt every year.

Just as students have the right to choose their school, schools have the right to choose their students. Schools should have the right to choose between students who can pay 80 million won and attend and students who can attend free of charge.

Even more certain than legacy admissions is for corporations to contribute assets to universities. If companies contribute assets to universities, there should be measures to provide corresponding incentives. Korea offers relatively meager tax benefits for donations. Tax benefits should be expanded and incentives clearly provided so that donations increase.

As companies put capital into schools, they should also be able to make demands of them freely. If schools respond faithfully to those demands, much more capital would be able to flow into them.

Universities should make good use of donations to produce outstanding talent. Capital should be used efficiently in ways suited to real-world conditions. A virtuous cycle must be created in which capital is fully utilized to cultivate people who create value in the real world.

When capital is strong, education naturally improves as well. Institutions should be designed so that excellent talent can emerge from a rich environment and contribute to society. Despite the many constraints we face, Korea’s universities have risen to the middle ranks, and the country has entered the ranks of advanced economies with per capita income of $35,000. If regulations are eased and everything functions smoothly, Korea could certainly surpass Singapore and the Netherlands and reach the $80,000 per capita income mark. We need much more research into how education can develop further when viewed through the lens of capital.

Sung-no Choi, President of the Center for Free Enterprise (CFE)

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Original title: 모두가 똑같은 액수의 등록금을 낼 이유가 있을까

Author: Sung-no Choi

Date: 2023-09-15

Source: https://www.cfe.org/bbs/bbsDetail.php?cid=column&pn=3&idx=26026