South Korea to overhaul education grant formula amid shrinking student rolls

South Korean officials are preparing major changes to the education grant system that automatically allocates a portion of domestic tax revenue to local education budgets. The current formula links 20.79% of tax receipts to the grant, which has risen to 76 trillion won and is projected to exceed 80 trillion won as the semiconductor boom boosts tax collections, even though the number of school‑age children has fallen from 1 million in 1972 to about 250,000 last year.

The Planning and Budget Office and the Education Ministry held a public discussion in Seoul, highlighting divergent views. The Planning Office proposes adjusting the linkage rate or redesigning the calculation to reflect demographic trends, economic growth, and inflation. The Education Ministry agrees a reform is needed but wishes to keep the 20.79% rate, focusing instead on expanding the grant’s eligible uses to include universities, lifelong‑learning programs, and early‑childhood education, while maintaining funding levels for primary and secondary schools.

Experts describe the existing system as an "automatic transfer" that funds primary education lavishly while leaving higher education and childcare underfunded, calling for a more balanced and flexible financing structure.