‘Zombie universities’ face drastic action as births fall

South Korean universities that are least able to attract students could be closed down under new restructuring plans revealed by the Ministry of Education this month to reform universities affected by the country’s rapid decline in population.

The drop in student numbers is affecting universities disproportionately, with those outside Seoul and its surrounding areas least popular with students.

Many of them have been in dire financial straits for years, dubbed by the media as ‘Zombie universities’, but have been spared drastic action by the government, concerned by the economic impact of closures on areas outside the Seoul region.

This year the government announced that the country’s overall population dropped by around 20,000 in 2020, the first ever annual population fall, according to the Ministry of the Interior and Safety. The main reason was the declining birth rate. South Korea has the world’s lowest fertility rate, 0.92 as of 2019.

Tougher new measures will include new reduced student quotas for universities around the country, which will be divided into five new regions for higher education purposes.

Announcing its plan on 20 May, the education ministry said 30% to 50% of all universities in the country will be asked to cut back on their current student quotas, which many universities are currently unable to fill. By March this year some 40,586 student places remained unfilled as the freshmen enrolment rate fell to 91% of places, down 6% compared to the previous year.

Although this year’s shortfall was expected, the numbers were worse than the government’s own projections. The enrolment rate fell to just 75% of all student places in institutions outside the greater Seoul area, and is expected to decline each year.

Vice-minister for education Jung Jong Chul said at the 20 May press conference that if the student quota allocated to universities is not slashed, some 100,000 places will not be filled by 2024. “We are seeing a speedy reduction in the size of the student population and a shortage of students across universities,” he said.

Restructuring plan includes closures

The restructuring plan announced this month is the first roadmap that allows for planned university closures if they cannot be turned around under what some call a ‘three strikes then out’ system.

Under the new system the government will first make recommendations to help an institution stay afloat, before ordering changes. If that fails, a procedure for liquidation of insolvent universities will be brought into play.

Quota details for the five regions will be announced in October. Some 143 institutions will carry out their own internal investigations and revamp their administration and business strategies in specific reform plans to be submitted to the ministry by March 2022.

The ministry will examine the finances of institutions with significant debt and will make recommendations including reductions in the number of staff and students, but at the same time providing funding and advice to help them stay afloat.

Plans for reforming institutions will be made in the six months after March 2022. These could include mergers or shutting down individual unviable institutions.

“The crisis of universities is not limited to academia, but it has effects in the local and national economy. The issue needs to be addressed speedily and thoroughly. Universities will be encouraged to reform in ways that they can help each other survive and also be at the forefront of the fourth industrial revolution,” according to an education ministry statement.

The ministry said it will also provide funds for colleges to pool resources, including by sharing classes, professors, laboratories and other technology infrastructure.

The private Hanyang University in Seoul has opened its hologram classes on artificial intelligence to six other universities this semester, including several outside Seoul such as Eulji University in Gyeonggi, Gwangju Women’s University in Gwangju and Baekseok University in South Chungcheong province.

However, if institutions do not cooperate, the ministry said it would issue a directive to shut them down.

Regional universities hit by ‘triple whammy’

With tuition fee freezes since 2009, institutions have little room for manoeuvre as student numbers decline. Private institutions in particular depend on fees for as much as 56.8% of their revenue, according to the Korean Educational Development Institute (KEDI).

A KEDI report released in February said almost three-quarters of 141 private universities in the country suffered a deficit in 2018. The number making a profit dropped sharply from 97 in 2012 to 36 in 2018. Over the same period, the number of loss-making universities in Seoul jumped from 13 to 39.

Universities outside Seoul and its surrounding areas have been badly hit by the triple whammy of declining population, fee freezes and the COVID-19 pandemic which has led to higher than usual student drop-out rates.

In one example, Sangji University, a private institution in Wonju in Gangwon province, was 30% short of its allocated student quota this year, unable to fill its quota in 60 of its 64 academic departments. Some 45 of its departments received no applicants at all, including the department of Korean language and literature. Just one or two students applied to seven departments, including robotics.

Daegu University, a private institution in Gyeongsang province, fell short of its allocated quota in 63 of its 85 departments, including Korean language and literature, English literature, public administration, business accounting, and energy.

Some universities had optimistically advertised degrees in subjects such as big data, artificial intelligence and smart cities, but had not been able to find professors to teach them. They complain of a brain drain of their professors to better universities with higher quality students in and around Seoul.

Several universities stepped up their marketing and recruitment campaigns, making it even more expensive to attract students. Honam University in Gwangju attracted considerable attention for giving out iPhones and other electronic equipment to newly enrolled first-year students this year.

Changshin University, a private institution in Changwon, South Gyeongsang province, announced it would provide a full scholarship for a year for all new students this year. Daegu Haany University in North Gyeongsang province said it would provide scholarships to all incoming freshmen for a year as well as free university accommodation for the duration of their four-year degrees.

Universities talk of cutting back to the bare bones. One university in Gyeongnam said it had reduced journal subscriptions eliminating some of the less-used journals. But few speak openly of such cuts as this will only deter professors and student applicants further in what they see as a downward spiral.

Previous government attempts

In its February report, KEDI said the finances of 84 private universities were so bad that they can no longer operate normally and conduct proper academic research.

Previous governments cut admission quotas based on inspections and evaluations of universities, and the current administration of President Moon Jae-in also carried out evaluations of the viability and competitiveness of universities in 2018, but many universities engaged in lengthy appeals processes against the outcome.

The government stopped short of coercive measures and left it to universities themselves to arrange how to cut back on admissions – a move that simply led to fierce competition between universities for the declining pool of students without resolving the problem of a general shortfall of applicants, academics said.

Although admission quotas were reduced by almost 19,000 over the past four years, the decline in the school-age population was 130,000 over the same period. This compared to cuts in admission quotas of around 52,000 during the years of the previous government of former president Park Geun-hye when the school-age population declined by around 70,000 over the four-year period.

Only 17 universities have been shuttered since the 2013 government restructuring attempt, but, of these, just a single university – Chungbuk University of Foreign Studies – completed the liquidation of its assets. Others still have a huge bill of unpaid staff wages to pay as part of their liquidation process.