Higher and Lifelong Education "Welcomes" vs. Elementary and Secondary "Undermines Public Education's Financial Foundation"

Abolition of National Tax Linkage System After 54 Years

Estimated Grants for Next Year to Reach 78.9 Trillion Won

Reflecting Real Growth Rate and School-Age Population Changes

New Fund Established to Address Elementary and Secondary Education Imbalances

Expanded Investment in Early Childhood, Higher, and Lifelong Education


354 Organizations Hold Press Conference

Demanding "Maintenance of the 20.79% Linkage Rate"

With the abolition of the system linking local education financial grants to national tax revenues that had been maintained for 54 years, there are expected to be major changes to the structure for allocating education funding. The government aims to increase flexibility in fiscal management by reflecting changes in the school-age population in fiscal calculations, and to address educational investment imbalances by expanding the focus of educational funding from primarily elementary and secondary education to include early childhood, high school, and lifelong education. However, the government also plans to implement a safeguard to prevent grants from decreasing compared to the previous year, thus maintaining the stability of elementary and secondary education finances.

Hongkeun Park, Minister of Planning and Budget (left), and Kyojin Choi, Minister of Education, are attending the public debate on the reorganization of local education finance grants held on July 8 at the Government Complex Seoul in Jongno-gu, Seoul, engaging in conversation. July 8, 2026. Photo by Yongjun Cho

The new reform plan will be applied starting from next year’s education budget. According to the new formula, which is based on the previous year’s grant amount and incorporates the average annual real growth rate and 35% of the school-age population change over the past three years, the Ministry of Strategy and Finance estimates that next year’s education grant will reach 78.9 trillion won. The exact figure will be finalized when the next year's budget plan is announced at the end of this month. If the estimate holds, next year’s grant will increase by 3.3% compared to this year’s supplementary budget of 76.4 trillion won.

The government believes that stable funding for elementary and secondary education can be secured even after abolishing the system that automatically allocated 20.79% of national tax revenues to this area. This is because the law will stipulate a safeguard to make up any shortfall if the grants calculated by the new formula fall below the previous year's amount. The government plans to include in the Local Education Finance Grants Act a provision stating, "If the grant amount decreases compared to the previous year, the shortfall shall be compensated so that the total amount does not decline." By applying the real growth rate from the last three years instead of annual tax revenues, the government also intends to reduce the volatility of grants caused by fluctuations in tax revenue.

This reform is expected to make it possible to invest future increases in tax revenue, which were previously automatically allocated to elementary and secondary education, in other stages of education as well. Under the current system, 20.79% of domestic tax revenues are automatically distributed as grants, drawing criticism for channeling education funding almost exclusively to elementary and secondary education. The government has pointed out that although the school-age population fell by 32.8% (2.88 million) from 8.8 million in 2010 to 5.91 million in 2025, grant amounts increased mechanically with rising tax revenue, exacerbating investment imbalances by education level. Government data show that while investment in elementary and secondary education is 166% of the OECD average, investment in higher education is only 69% of that average.

Accordingly, the newly established "Education and Talent Account" within the "Future Response Fund" is expected to focus investments on early childhood, higher, and lifelong education. The plan is to use the difference created by the grant reform to support educational investment at all stages of life. The law will specify that funds in the Education and Talent Account cannot be transferred to other accounts.

With this announcement, universities, which have long faced financial difficulties, now have stronger expectations for increased investment. According to a survey conducted by the Korea Council for University Education (KCUE) of presidents from 144 universities nationwide between June 2 and July 10, ahead of its 2026 summer university presidents' seminar, the top concern for university presidents was "financial support projects" (79.9%). In particular, while expanded investment in AI transformation (AX) is needed, half (55.5%) of universities have been unable to proceed due to a lack of funding. In addition, 89.4% of presidents responded that "significant government support is necessary." Lee Kijeong, President of the KCUE, stated, "Since higher education funding is a strategic investment for national competitiveness, it is essential to secure stable and structural resources, such as by increasing the government contribution to the special account for higher and lifelong education support."

Investment in lifelong education is also expected to expand. The National Institute for Lifelong Education, under the Ministry of Education, emphasized that although the school-age population is declining, the number of lifelong learners is increasing. Kim Wol-yong, President of the National Institute for Lifelong Education, said, "The number of people earning degrees through the Academic Credit Bank System and the Self-Study Degree System is increasing every year and now reaches 80,000, but the budget has been reduced to one-third of what it was three years ago," adding, "We have requested that resources for lifelong education be allocated from the Future Response Fund."

On the other hand, elementary and secondary education sectors have strongly opposed the abolition of the system linking 20.79% of national taxes, claiming it undermines the financial foundation of public education. They also pointed out that the grant safeguard only sets the minimum amount at the previous year's nominal value. Although the government has allowed for supplementation from the Future Response Fund in case of grant shortfalls, in practice, reinvestment in elementary and secondary education will likely be limited. The Ministry of Strategy and Finance stated in a prior briefing, "The Education and Talent Account in the Future Response Fund will focus on early childhood, higher, and lifelong education," and "elementary and secondary education should, in principle, be funded by the grants."

On this day, 354 organizations participating in the "Emergency Action for Reform of Local Education Finance Grants" held a press conference in front of the Government Complex Seoul and called for the "withdrawal of the grant reform plan," "the maintenance of the 20.79% linkage rate with national tax revenue," and "the formation of an official public debate body."

This content was produced with the assistance of AI translation services.