On August 4, the Cabinet approved the enforcement decree of the Private University Restructuring Law, but experts criticized it as lacking essential elements. "This law is like a 'steamed bun without filling.' There are no clear financial criteria for designating a 'management crisis university' or legal requirements for key restructuring measures such as 'transfer of educational operations' and 'mergers of private universities,'" said Choi Young-chan, a lawyer at Barun Law LLC.
The enforcement decree, which will take effect on August 15, outlines the financial diagnosis of private universities, the designation of management crisis universities, and special provisions for restructuring. However, experts argue that the decree only lists soft measures like consulting from the Korea Foundation for the Promotion of Private Education and voluntary reserve fund utilization, making substantial restructuring or a series of closures unlikely.
According to the decree, private universities designated as management crisis universities can temporarily ease asset disposal standards and faculty retention rates (up to 30% flexibility) if they establish and implement a restructuring plan. Additionally, reserve funds previously earmarked for specific purposes such as construction, research, and scholarships can be converted for restructuring use.
Schools that voluntarily dissolve can receive part of their remaining assets as dissolution compensation or contribute to public interest corporations focused on education, scholarships, child welfare, elderly care, or disability services.
The decree also includes measures to prevent benefits for corrupt foundations. Institutions with executives who have committed significant violations related to corporate assets or operations within the last ten years, or those that have failed to comply with corrective orders from authorities, will be excluded from receiving dissolution compensation. Furthermore, transferring remaining assets to related parties or public interest corporations established within ten years is strictly prohibited.
To mitigate the impact of school closures on staff and students, the decree provides for compensation or severance pay for dismissed employees within the limits of remaining assets. It also aims to protect researchers' activities from being adversely affected.
To ensure students' rights to education, the decree promotes support for transferring to other universities and provides compensation for students who choose not to transfer. Additionally, a 'closed university record management system' will be established to continue administrative support, including issuing graduation and career certificates.
Experts have expressed concerns that the law lacks substance for meaningful higher education restructuring. Choi Young-chan noted, "The primary restructuring methods, such as the transfer of educational operations and mergers, are significant legal actions that alter the identity of private universities. However, the current enforcement decree focuses solely on small-scale self-help measures that allow universities to maintain their identity." He added that submitting restructuring plans to the Korea Foundation for the Promotion of Private Education or seeking management advice is merely a self-directed effort, and it is impossible for management crisis universities to normalize through simple consulting without an increase in student enrollment. He concluded that the absence of legal requirements and effects to support substantial higher education restructuring will limit the effectiveness of this law in facilitating necessary changes.
The enforcement decree, which will take effect on August 15, outlines the financial diagnosis of private universities, the designation of management crisis universities, and special provisions for restructuring. However, experts argue that the decree only lists soft measures like consulting from the Korea Foundation for the Promotion of Private Education and voluntary reserve fund utilization, making substantial restructuring or a series of closures unlikely.
According to the decree, private universities designated as management crisis universities can temporarily ease asset disposal standards and faculty retention rates (up to 30% flexibility) if they establish and implement a restructuring plan. Additionally, reserve funds previously earmarked for specific purposes such as construction, research, and scholarships can be converted for restructuring use.
Schools that voluntarily dissolve can receive part of their remaining assets as dissolution compensation or contribute to public interest corporations focused on education, scholarships, child welfare, elderly care, or disability services.
The decree also includes measures to prevent benefits for corrupt foundations. Institutions with executives who have committed significant violations related to corporate assets or operations within the last ten years, or those that have failed to comply with corrective orders from authorities, will be excluded from receiving dissolution compensation. Furthermore, transferring remaining assets to related parties or public interest corporations established within ten years is strictly prohibited.
To mitigate the impact of school closures on staff and students, the decree provides for compensation or severance pay for dismissed employees within the limits of remaining assets. It also aims to protect researchers' activities from being adversely affected.
To ensure students' rights to education, the decree promotes support for transferring to other universities and provides compensation for students who choose not to transfer. Additionally, a 'closed university record management system' will be established to continue administrative support, including issuing graduation and career certificates.
Experts have expressed concerns that the law lacks substance for meaningful higher education restructuring. Choi Young-chan noted, "The primary restructuring methods, such as the transfer of educational operations and mergers, are significant legal actions that alter the identity of private universities. However, the current enforcement decree focuses solely on small-scale self-help measures that allow universities to maintain their identity." He added that submitting restructuring plans to the Korea Foundation for the Promotion of Private Education or seeking management advice is merely a self-directed effort, and it is impossible for management crisis universities to normalize through simple consulting without an increase in student enrollment. He concluded that the absence of legal requirements and effects to support substantial higher education restructuring will limit the effectiveness of this law in facilitating necessary changes.
* This article has been translated by AI.
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