Students across the country are up in arms after recent reports that hundreds of billions of won in college tuition was subsidizing the pensions of employees at some of the country’s most expensive private universities.

The Korea Association of Student Council, which represents some 100 student bodies, held a demonstration outside the Education Ministry last week, demanding full reimbursement of the money.

The demonstration came after a special audit by the ministry revealed recently that dozens of private colleges and universities in the country misappropriated some 208 billion won ($185 million) from students’ tuition to benefit their employees.

Full-time faculty at private schools are eligible for the Korea Teachers’ Pension benefits, and under the scheme, they need to contribute 7 percent of their own salary to their pensions.

Yet, the audit found that 44 schools had been subsidizing employees’ eventual pension payments by using tuition money.

Students are outraged about the use of their tuition to benefit the employees and not them. And critics say it’s high time for the government to impose tougher regulations on for-profit schools.

The ministry at first declined to disclose the names of the schools, but later revealed them in the face of strong demands from students and civic activists.

Yonsei University, the country’s leading private institution, was at the top of the list with 52.4 billion won reportedly being spent on subsidizing employee pensions from 1996 to 2012.

Ajou University in Suwon also used 19.2 billion won to cover pensions, followed by Hanyang University and Yeungnam University with 17.7 billion won and 13.5 billion won, respectively, according to the ministry. 

“We are very upset. We expect our tuition go to things like improving education or classrooms,” Lee Han-seol, a senior undergraduate at Yonsei University, told The Korea Herald.

Son Ju-hyoung, the student council president at Hanyang University, said a huge sense of distrust had erupted between students and the school.

“We’ve always had suspicions about what the school’s administration is doing. But the news has deepened our distrust,” he said.

Under the current private school law, all tuition should be used for education-related spending, according to Yoon Dokko, a business administration professor at Ajou University.

“Although private companies usually have to fund employees’ pension, universities are different. It is clearly illegal to cover the pensions of employees through tuition,” he said.

Meanwhile, the schools linked to the special audit are continuing to defend themselves against growing criticism. Yonsei University claimed that the actual amount being spent on the workers’ pensions was 27 billion won, nearly half of the initial report.

“The school agreed with the workers’ union on subsidizing their pensions, instead of freezing their wages. It’s unfair to blame us as if we were embezzling students’ tuition,” an official from the school said.

Underlying the growing criticism is the fact that the tuition fees remain extraordinarily high in Korea, critics say.

According to government data, the country’s four-year college tuition fees have increased almost twice as fast as inflation over the last five years.

The average annual tuition fees at private universities, in particular, were $9,383 in 2011, twice as high as at tertiary public institutions.

“Many parents are struggling to pay their children’s tuition. It is nonsense that the money goes to the highly paid private school staff,” according to Choi Mi-sook, a head of civic group called Parents Who Love School.

“The schools should fully reimburse the money,” she added. “Otherwise we’ll take legal action against them.”

Critics say enhancing the financial transparency of private schools has become more important than ever since the government has increased state scholarships for college students.

“Students should be available to see how the schools spend their money in details, which is impossible at the moment,” said Moon Ju-hyeon, director of the civic group Citizens United for Better Society.

He noted that he believes the ministry should impose tougher penalties and regulations for private schools to have a transparent accounting system.

“Students felt that they had been ripped off by their schools. But the ministry has just warned the schools and didn’t take any serious action against them,” he said, adding that the private schools should undergo frequent financial audits with results made public to students.

To enhance managerial transparency at private schools, the Education Ministry last year developed a new standardized accounting system with a budget of 2.6 billion won. However, less than 40 percent of colleges are currently using the new accounting program, according to reports.

“We have some 30 staff to supervise more than 400 colleges across the country. It is almost impossible to look into every school in detail,“ an official from the ministry said.

Ajou University professor Yoon also stressed imposing stronger financial auditing to prevent schools from misusing students’ tuition. But the use of the ministry’s regulations on all private schools nationwide, he noted, has its limits.

“I think the more efficient way to control private schools is to establish a system that the inside members, such as students and professors, become internal auditors,” he suggested. “That way they can regularly keep the university administration in check.”

By Oh Kyu-wook (596story@heraldcorp.com)