The paradox of increasing education budgets amid declining student numbers is sparking controversy. Where is South Korea's education finance headed? A report from the National Assembly Budget Office, titled 'Analysis of the 2025 Fiscal Year Settlement by Committee (Education and Culture, Sports and Tourism Committees),' reveals the contradictions within the current education finance structure. Despite a decrease in the school-age population, the local education finance grants linked to domestic tax revenues are expanding, highlighting structural limitations and irregularities in the budget for free high school education. The complexities surrounding higher education innovations represented by ANCHOR and Glocal universities are vast. Aju Economy is conducting a three-part series to diagnose the crisis in early childhood, primary, secondary, and higher education finance and to seek reasonable resource reform alternatives for sustainable future education. <Editor’s Note>
[Part 1] Increasing funding despite fewer students: '137.1 million won per student' warning
[Part 2] 'ANCHOR' chosen by city and provincial governors, 'Glocal' determined by the Ministry of Education: mismatched higher education finance
[3rd Part] Shadow of free education for 5-year-olds: the reality of monthly support of 110,000 won
[Part 2] 'ANCHOR' chosen by city and provincial governors, 'Glocal' determined by the Ministry of Education: mismatched higher education finance
[3rd Part] Shadow of free education for 5-year-olds: the reality of monthly support of 110,000 won
"I expected the government to take responsibility, but the costs remain the same," lamented a parent sending their child to a private kindergarten in Seoul. The government's ambitious early childhood education and childcare policies aimed at addressing low birth rates are struggling to align with on-the-ground realities.
A report released on July 10 by the National Assembly Budget Office captures the adverse effects of uniform budget execution that ignores regional disparities. Despite significant financial investment, the promise of free education has lost its luster, and the expansion of childcare infrastructure is stagnating.
A report released on July 10 by the National Assembly Budget Office captures the adverse effects of uniform budget execution that ignores regional disparities. Despite significant financial investment, the promise of free education has lost its luster, and the expansion of childcare infrastructure is stagnating.
Uniform monthly support of 110,000 won for free education: 'Insufficient' in Seoul, 'Excessive' in regions
The most contentious aspect is the 'Gradual Implementation of Free Education for Young Children' initiative. Launched in the second half of 2025 for 5-year-olds, this program allocated a total of 128.85 billion won from the reserve fund. The Ministry of Education set a uniform support rate of 20,000 won per month for public kindergartens, 110,000 won for private kindergartens, and 70,000 won for daycare centers, distributing these funds to local education offices. The aim was to cover the gap between the standard early childhood education cost (557,000 won) and existing government and education office support (448,000 won) for private kindergartens.
However, the reality for private kindergartens across the country diverges from these calculations. Kindergarten fees are determined by the principal with the approval of the education superintendent, leading to significant regional variations. According to the Kindergarten Information System, shortly after the support was implemented in October 2025, the average educational cost for 5-year-olds in private kindergartens in Seoul was 111,619 won, while in Gyeonggi Province, it reached 133,668 won. This means that even with the 110,000 won support, parents still face additional costs of 11,000 to 33,668 won. The term 'free education' has become misleading.
In contrast, regions like Ulsan, Gyeongnam, and Chungnam, where educational costs were already close to zero or very low, experienced a reversal where the support amount (110,000 won per month) exceeded the actual fees parents were paying. Thus, while parents in Seoul and Gyeonggi Province continue to bear significant costs, other provinces are facing serious 'regional asymmetry' with excessive budget allocations.
However, the reality for private kindergartens across the country diverges from these calculations. Kindergarten fees are determined by the principal with the approval of the education superintendent, leading to significant regional variations. According to the Kindergarten Information System, shortly after the support was implemented in October 2025, the average educational cost for 5-year-olds in private kindergartens in Seoul was 111,619 won, while in Gyeonggi Province, it reached 133,668 won. This means that even with the 110,000 won support, parents still face additional costs of 11,000 to 33,668 won. The term 'free education' has become misleading.
In contrast, regions like Ulsan, Gyeongnam, and Chungnam, where educational costs were already close to zero or very low, experienced a reversal where the support amount (110,000 won per month) exceeded the actual fees parents were paying. Thus, while parents in Seoul and Gyeonggi Province continue to bear significant costs, other provinces are facing serious 'regional asymmetry' with excessive budget allocations.
As national funds arrive, local education offices close their wallets: 'Without differential support, there are limits'
Even more perplexing is that in some areas, the initiative has led to reduced benefits. As national funds were distributed uniformly, some local education offices that had previously supported free education from their own resources cut their existing support budgets.
According to the report, six education offices, including Incheon, Gwangju, Ulsan, Gangwon, Jeonbuk, and Gyeongnam, reduced their own free education support budgets. For instance, in Incheon, the total amount combining national support and local free education funds decreased from 662,000 won to 559,000 won, a reduction of 103,000 won. Ulsan and Jeonbuk also saw decreases of 75,000 won and 70,000 won, respectively.
According to the report, six education offices, including Incheon, Gwangju, Ulsan, Gangwon, Jeonbuk, and Gyeongnam, reduced their own free education support budgets. For instance, in Incheon, the total amount combining national support and local free education funds decreased from 662,000 won to 559,000 won, a reduction of 103,000 won. Ulsan and Jeonbuk also saw decreases of 75,000 won and 70,000 won, respectively.
As the national government releases funds, local governments are finding ways to cut their budgets, and the burden falls squarely on parents.
In response, the Ministry of Education stated, "The actual burden on parents varies by institution and region, so we set the support rates to alleviate the average burden. If the burden on parents is less than the support budget, the Ministry will ensure that the remaining amount is used for direct educational expenses for children."
They added, "Differential application of national support considering the existing support levels of local governments could raise concerns about equity in free education support across regions."
However, the Budget Office pointed out, "Despite the varying fees among private kindergartens, the Ministry of Education's uniform application of the same support rate has resulted in situations where parents still bear costs, while some local governments are reducing their own support funds. To realize free education through national budgets, it is necessary to apply differentiated support rates by region, given the differing burdens on parents across provinces."
In response, the Ministry of Education stated, "The actual burden on parents varies by institution and region, so we set the support rates to alleviate the average burden. If the burden on parents is less than the support budget, the Ministry will ensure that the remaining amount is used for direct educational expenses for children."
They added, "Differential application of national support considering the existing support levels of local governments could raise concerns about equity in free education support across regions."
However, the Budget Office pointed out, "Despite the varying fees among private kindergartens, the Ministry of Education's uniform application of the same support rate has resulted in situations where parents still bear costs, while some local governments are reducing their own support funds. To realize free education through national budgets, it is necessary to apply differentiated support rates by region, given the differing burdens on parents across provinces."
New towns face long waiting lists while childcare facility expansion stagnates
The expansion of childcare infrastructure is also severely disconnected from reality. The government allocated 26.684 billion won for the 'Childcare Facility Expansion' initiative, which supports the establishment of public daycare centers favored by parents.
While the number of births and daycare centers nationwide is declining, new towns, where newlyweds are concentrated, still face severe local supply-demand imbalances, with parents waiting in line dozens or even hundreds of times for daycare admission.
Despite the urgent demand on the ground, the execution rate for the 2025 fiscal year childcare facility expansion project was only 42.0% (11.195 billion won). More than half of the budget remains unspent.
Looking at the annual execution rates, they have hovered around 40%: 38.5% in 2022, 35.5% in 2023, and 35.6% in 2024. Even though the budget for 2025 was reduced by 36% compared to the previous year due to chronic under-execution, the execution rate still only reached 42.0%, showing little improvement.
While the number of births and daycare centers nationwide is declining, new towns, where newlyweds are concentrated, still face severe local supply-demand imbalances, with parents waiting in line dozens or even hundreds of times for daycare admission.
Despite the urgent demand on the ground, the execution rate for the 2025 fiscal year childcare facility expansion project was only 42.0% (11.195 billion won). More than half of the budget remains unspent.
Looking at the annual execution rates, they have hovered around 40%: 38.5% in 2022, 35.5% in 2023, and 35.6% in 2024. Even though the budget for 2025 was reduced by 36% compared to the previous year due to chronic under-execution, the execution rate still only reached 42.0%, showing little improvement.
The Ministry of Education explained, "Despite the declining demand for childcare due to low birth rates, the demand for public daycare center expansion was overestimated. In some areas, the support rates for new construction or long-term lease projects were relatively high, leading to a lack of quantity, while the lower-cost remodeling projects for apartment complexes were favored, resulting in reduced execution scale."
In this regard, the Budget Office emphasized the need to improve the execution rate of the public daycare center expansion project to address the shortage of facilities in areas with high numbers of young children. They analyzed that the failure to accurately assess urgent local demand and the habitual allocation of budgets have led to a situation where funds are not reaching the areas that need them, resulting in a form of budgetary sclerosis.
* This article has been translated by AI.
In this regard, the Budget Office emphasized the need to improve the execution rate of the public daycare center expansion project to address the shortage of facilities in areas with high numbers of young children. They analyzed that the failure to accurately assess urgent local demand and the habitual allocation of budgets have led to a situation where funds are not reaching the areas that need them, resulting in a form of budgetary sclerosis.
* This article has been translated by AI.
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