The 'Private University Restructuring Support Act' and its enforcement decree, aimed at facilitating proactive management normalization and orderly exits for struggling universities, were fully implemented on August 15. However, Gwangyang Health University, which is set to close on August 31, is confirmed not to be subject to this law. Due to financial difficulties culminating in a court bankruptcy ruling, the university's fate will be determined through bankruptcy proceedings rather than the various provisions offered by the restructuring law.
The Ministry of Education reviewed and approved the enforcement decree of the 'Private University Restructuring Support Act' during a cabinet meeting on August 4, with implementation starting on the 15th for a ten-year period. This decree provides legal grounds and detailed procedures for financial diagnostics, designation and removal of universities in management crises, and restructuring orders.
Notably, the law establishes a 'voluntary exit' pathway for struggling universities. If a university in crisis decides to dissolve, it can receive a portion of its remaining assets as a dissolution settlement or contribute them to public or social welfare organizations.
Additionally, staff members laid off due to closure will be prioritized for unpaid wages and severance payments within the limits of remaining assets, while students will receive special transfer support and compensation for interrupted studies, creating a comprehensive protection mechanism for stakeholders.
However, the law draws a strict line against private university corruption. Executives or individuals who fail to comply with rectification demands due to embezzlement, misappropriation, or accounting fraud will be thoroughly excluded from receiving dissolution settlement funds.
Gwangyang Health University Faces Court Bankruptcy Ruling, Not Eligible for Restructuring Law
Despite the benefits and procedures of the Private University Restructuring Support Act, Gwangyang Health University, which is closing on August 31 due to various financial issues and corruption, is not eligible for these provisions. A representative from the Korea Scholarship Foundation stated, "Gwangyang Health University is not subject to the restructuring law because it was declared bankrupt by the court before the law's implementation date."
The representative explained, "The bankruptcy trustee appointed by the court will take over the authority to proceed with the closure and asset liquidation. The Ministry of Education has decided on the closure due to bankruptcy, and measures to protect stakeholders, such as special transfer support, are currently underway."
Thus, Gwangyang Health University is following a bankruptcy process enforced by external authorities rather than seeking a 'restructuring' exit on its own, placing it outside the scope of the new law.
Struggling Universities Still Holding On: No Self-Directed Exits Yet
Although the Private University Restructuring Support Act has been officially implemented, no universities have yet taken steps toward voluntary closure or restructuring. A representative from the Korea Scholarship Foundation noted regarding the 20 universities recently identified for financial support restrictions for the 2027 academic year, "None of these institutions have reached out or expressed a desire to pursue an exit strategy voluntarily."
The representative added, "Universities are trying to escape the management crisis by any means possible," noting that some institutions are attempting to change their structure through their own assets or other resources.
The Ministry of Education indicated that the list of universities facing financial support restrictions released this year is a result of existing policy measures (such as restrictions on national scholarships and student loans). Starting next year, the newly established Private University Restructuring Review Committee will apply measures based on financial diagnostics, marking the beginning of serious restructuring law actions.
While the law has established a systematic foundation for private university restructuring, how struggling universities will accept and utilize it is expected to become clearer once the financial diagnostics results are released next year.
* This article has been translated by AI.
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