(Source: Jinho Jung; CC BY-SA 2.0)
Update: One more reason unfettered access to student loans is so important is because only 60 out of 400 Korean universities allow students to pay their tuition with credit cards. For more on why these odd rules exist, and on Korean student loan rates and information in general, see here.
Why do Koreans generally stay at home until marriage? With some figures on the numbers of different household types in Korea now at hand, then I’ve recently been re-examining that question, but still see no reason to change my view that the combination of high rents and low wages is primarily responsible, or at least much more so that universal panacea for inquisitive foreigners otherwise known as “Korean culture.” But there are other factors of course. Consider this from Monday’s Korea Times:
Student Loan Plan Shelved
By Bae Ji-sook, Staff Reporter
A plan to allow students to get loans without their parents acting as guarantors has been scrapped, the Ministry of Education, Science and Technology said Sunday.
The National Assembly recently withdrew the measure since Korean civil law does not allow adolescents to make legal decisions on their own, the ministry said.
The initial plan aimed to help students who were unable to get loans because their parents were divorced or were from single parent families.
”If necessary, we will seek a revision of respective civil laws. Since its purpose is to help poor students pursue higher education, student loans should be available to more students, without barriers,” a ministry spokesman said.
Why do I suggest that this might be a victory? Well, because while the scrapping of the plan is certainly a tactical defeat so to speak, given the ministry’s apparent attitude as revealed by that last statement of theirs, then it does look like that university students will ultimately be given the opportunity to secure loans without the approval of their parents.
That students necessarily should take up the offers of loans is of course debatable, and I speak from bitter experience when I say that eighteen and nineteen year-olds of any country are not exactly well-known for their prudence and financial sophistication when given sudden access to lots of money, to be paid back in some distant future. But the only way for young adults to leave the family nest against the wishes of their parents, the move by implication meaning that they’d be – heaven forbid – openly engaging in premarital sex, as opposed to the present-day subterfuge in love-hotels that maintains their (and thus their family’s) reputations? That is of course by having the funds to do so, and sometimes an adult’s simply got to do what an adult’s go to do, debt, reputation or otherwise.
Personally, my father and I are very glad that student loans were available to me as a 19 year-old myself back in New Zealand, as we were literally very close to blows by that point, and it was simply essential for our relationship that I move when I did. Fourteen years later, both that and many other aspects of my life are much much better as a result, so much so that even if I could go back in time I’d still make the move, even with knowledge of my struggling with a mountain of debt today before me. But with no loans available, and so having to have had stayed at home instead? I shudder to think.
On a final note, I have a question for readers, particularly those with Korean partners and/or friends and/or students who are young enough to be university students themselves and/or remember how the Korean student loan system operates. Do all students currently require parental approval, regardless of their age? Obviously that would have quite an impact on their ability to leave home! Or is there a cut-off point, after which even the Korean state acknowledges them to be an adult, and responsible enough for his or her own financial decisions? My wife didn’t get loans herself, which I’m thankful for, but with that and her university days being so long ago then unfortunately she can’t remember how they operate exactly, so I’d be grateful for any information.
The Grand Narrative 
I will admit up front that I have not read through this (I don’t have time this morning), but I wanted to get out a thought that pertains to this: In the long run, access to large amounts of student loans is not a benefit to the lower socioeconomic classes.
What higher loan availability serves to do is to increase dollar demand for education, which forces prices up. Year after year of above-inflation tuition increases has made education astronomically expensive in the United States, particularly in private schools but increasingly in public schools as well. So the “benefit” of higher loans simply allows schools to charge that much more money, which the lower socioeconomic student will have difficulty paying off for years. My ex, for example, ran up $80K in debt, which she struggles to pay off even now, nine years later.
Do we really want this for Korea? I liked being able to attend Yonsei University at a whopping 4 million won per semester of tuition. I’d rather not have that shoot up to 14 million. If that were to happen, the grants and scholarships (and private teaching) that now can take a big chunk out of school costs will barely make a dent.
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I seriously doubt that student loans are not a benefit to the lower socioeconomic classes. Studying myself during a transition between New Zealand governments paying 100% of tuition to…well, I don’t know what exact percentage now, but to such a low level that tuition fees are prohibitively expensive for most students, then I’m intimately familiar with governments’ arguments that students rather than all taxpayers (through the government paying tuition fees) should pay for their education, as those taxpayers don’t benefit from the extra income that that student gets as a result of his or her education. In this view, student loan repayments in the future are effectively and/or literally a tax on that individual, in the case of NZ being a 10% tax one must pay in addition to normal tax. But that person will probably be making much more money than he or she would without the degree, so all in all a wise investment really.
Actually ideologically I’m opposed to that idea, university not being free meaning that in practice it’s not open to all, and an entire society benefiting both economically, culturally, and intellectually (and so on) from its members being better educated, but I do accept that the money for tuition has got to come from somewhere.
Higher loan availability then, by definition means higher access to tertiary education, which in turn is essential for most “financially-advancing” jobs, although it’s true that a degree barely gets one in the door in most of those these days. Still, I say let people make their own minds about whether its worth the debt, but not to deny whole swathes of the population of the choice simply for the sake of keeping prices down for the people who can already afford it.
And “do we really want this for Korea”? Er…isn’t it already here? Not at all sure what your point is there sorry.
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Having a more educated populace is positively associated with a better economy, so yes, it is in fact worth it. I’m no economist, but I’m willing to bet that the overall financial return for giving out loans for students far outstrips any meager effect it might have on overall tuition. And while tuition may seem low compared to, say, the US, it’s not inconsiderable and is rapidly going up (as this KT article indicates: http://www.koreatimes.co.kr/www/news/nation/2008/02/117_18562.html)
Since 8-10 million (and certainly more than that if the student is from outside the local area) a year is a big chunk out of the budget for many families here, the loans seem like a very good step in the right direction. Other points to remember are that tuition is only part of how universities (especially US institutions) are funded, and that there are other more likely pressures such as inflation, shrinking endowments, etc. that almost certainly play a larger role in rising tuition.
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Thanks for passing that on, although I’m a little braindead at the moment and can’t think of much to add sorry. One thing off the top of my head that you may find interesting though is how undeveloped the endowment tradition is in Australiasian universities, albeit understandable given that all costs were covered by the government in NZ until something like 1991 (and about the same time in Australia). They’ve been moving in the US direction ever since, and hence somehow being signed up for my university’s alumni newsletter means that I get regular emails effectively asking for donations. It’s working, a new business school recently being named after the guy who paid for it, but most Kiwis instincitively bristle at the influence that comes with that, and quite rightly too. Come to think of it, NZ universities accepting any foreign student who can pay is a somewhat inevitable new trend too, and one of my mentors as a student was fired a couple of years ago for complaining too vocally about the resulting drop in standards.
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If I didn’t have student loans, I wouldn’t be in college. I’d be working at a grocery store for the rest of my life. Thankfully the U.S. government payes 70% of all living costs. The other 30% is in loans, and the tuition is only $1800/semester.
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Shoot… I’m again stuck in a situation where I don’t have time to give a thorough answer, so I’ll just leave a taste of what I’m getting at.
Please note that I was not bashing student aid, but student loans. For a person who doesn’t have the means to go to college without loans, yes, receiving loans is better than not receiving loans.
But in the long run this is a system that hurts the lower classes: in a fee-for-education system, the influx of loans expands demand for education which forces up the prices. BUT the money is not free: it must be repaid. So the end result of an extensive system of loans instead of grants is that education costs go up but the middle and lower classes end up being tethered to these huge loans they’ve run up.
It’s still better than not going to college, but it would be better all the way around if a system of grants or ability to pay back college through service were in place.
In Korea, where loans are not nearly as extensive, students typically rely on their ability to do private tutoring (if not in English, then in math and other subjects). When the government tried to outlaw this, it utterly backfired for a number of reasons, including the fact that college students wouldn’t be able to pay for school.
With the exchange rate causing me not to be able to rely on my Korea-based financial resources while I’m in Hawaii, I am clearly in need of loans. I wish I didn’t have to, but I do, and I’m thankful that the loans are there.
BUT, it would have been better for me if, back in 1960-something before we were even born, if a system of grants and for-service tuition waivers had been put in place rather than loans. And since I can’t go back in time and change that, I hope that people will recognize this for future students.
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I should add that for undergrad I went to a “public Ivy” (UC) which provided a good education at an affordable price, which I was fortunate to have (mostly) covered by the Bank of Mom & Dad. Even if I’d had to take loans out, it wouldn’t have been so terrible, not like my ex who went to private schools because the public uni’s around her weren’t all that hot.
But I can attest that my lack of debt has afforded me much greater freedom than many people I know. The loan system that has generated stratospheric tuition costs is an albatross around the neck of many college grad.
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My apologies on two counts, first for my lateness in replying and then for my not really having anything to add, other than to say that Max, yeah, my sentiments exactly, and Kushibo, I’m pretty much in full agreement, and thanks for what is quite a thorough answer nevertheless!
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