[Moneyverse] Approaching 100 Trillion Won in Educational Grants

Published 06 Aug.2026 10:58(KST)

While the number of eligible students has decreased by more than 10%, the budget has increased by over 50%. According to the National Statistical Portal, the nationwide school-age population in elementary, middle, and high schools dropped by 12%, from about 5.82 million in 2017 to 5.11 million in 2025. Meanwhile, local educational grant funds increased by 55%, from 48.6594 trillion won (settlement) to 75.3869 trillion won (budget) during the same period, based on data from the Korea Fiscal Information Service. Due to the booming semiconductor industry, there are projections that next year, educational grants will soar to nearly 100 trillion won.

The educational grant fund is allocated based on the Local Education Financial Grants Act, which has been in effect since 1972. This law aims to promote balanced educational development by requiring the state to provide all or part of the resources needed for local governments to establish and operate educational institutions and education administration organizations. A total of 20.79% of the annual national tax revenue is allocated as educational grants.

As the number of students declines but the educational grant fund increases, the amount of educational funding allocated per student (based on school-age population) has increased by 76% between 2017 and 2025. Since the fund automatically increases rather than being adjusted based on need, the sharply increased educational budget tends to be used for less essential purposes. Examples include remodeling school buildings, constructing new sports facilities, and bulk purchasing and distributing smart devices. According to the Board of Audit and Inspection's "Status of Expenditure Restructuring Promotion" report published in May 2023, it was analyzed that 42.6 trillion won of educational grants were excessively allocated for three years from 2020 to 2022.

Reasonable alternatives have already been proposed. Fiscal authorities suggested allocating educational grants not according to a fixed percentage of national tax revenues, but by linking them to the growth rates of the school-age population and Gross Domestic Product (GDP).

This proposal has sparked opposition in the education sector. The Korean Federation of Teachers' Associations, the Korean Teachers and Education Workers Union, and the Confederation of Teachers’ Unions held a joint press conference on the 8th of last month. They commented that "shaking the foundation of educational grants undermines not only schools but also students’ learning and teachers' instructional activities." On the 29th of last month, the Council of Provincial Superintendents of Education held a "Public Forum for Stabilizing Local Educational Finance." At this event, education superintendents expressed concerns that a reduction in educational finance would lead to a decline in educational quality and widen educational disparity between regions.

What is needed is concrete evidence rather than just moral argument. In this context, a recent column by Baek Woojin, a distinguished professor at Korea University, was examined. Professor Baek claimed that in the age of Artificial Intelligence (AI), more teachers are needed. He argued, "Schools must foster uniquely human capabilities that AI cannot easily imitate," further explaining that, to this end, "teachers should spend more time conversing with students and observing them more closely." However, by adding educational components that foster thinking skills and self-directed learning capabilities—including the use of AI—there could be a reduction in traditional instruction based solely on knowledge transfer. By restructuring the curriculum in this way, the total number of class hours may even decrease.

Educational finance can be expanded in a more substantial manner, while at the same time increasing other budgets that are equally important. This includes preparing for structural changes in employment in the AI era, providing lifelong education to help the working population adapt, supporting vulnerable groups amid deepening polarization, and expanding health and welfare policies in response to an aging population. Educational grants are not an issue of having to choose between prioritizing or neglecting education.