More of South Korea’s “zombie universities” are predicted to “quietly disappear” after the country finally passed a landmark law that will see founders receive controversial settlement fees.
Dozens of Korean private providers have long been struggling, in part because of the country’s rapidly declining 18-year-old population.
A new law – known as the Private University Structural Improvement Support Act – was passed last month after 15 years of political deadlock, giving the government new powers to shut down financially distressed institutions.
When it takes effect in July 2026, founding bodies will, for the first time, be able to retain up to 15 per cent of remaining assets as a “dissolution settlement fee” after liquidation – a key stumbling block that has prevented similar measures from getting off the ground in the past.
Previously the government could require universities to shut but only if an audit found they didn’t serve enough students to justify their existence?and many tried to hold on as long as possible.
Until now,?assets of closed universities reverted entirely to the state and critics argue that institutions dogged by mismanagement, and in some cases corruption,?risk?being rewarded for failure.
Theodore Jun?Yoo, professor of history at Yonsei University, believes the law is likely to accelerate closures in the country’s provinces.
“With the founders now getting a piece of whatever’s left when a private university closes, it sort of feels like the government’s giving them permission to walk away when things get tough?– especially in those smaller regional schools that are already struggling to keep students.
“I wouldn’t be surprised if we start seeing a bunch of these schools quietly disappear,” he said. “That’s a real blow for the local areas too, because the university is often kind of the glue that keeps communities alive.”
Yoo?warned that the impact will extend beyond campuses. “Once it’s gone, you lose jobs, you lose young people – pretty soon the whole area feels like it’s fading out. And for the people who actually work at these universities? It’s a scary time.
“There aren’t any solid guarantees for professors or staff if their school shuts down, and let’s be honest – they’re the ones left holding the bag,” he said.
The number of 18-year-olds in Korea fell from 660,000 in 2015 to 430,000 in 2024, according to Statistics Korea. University admission quotas declined by 10 per cent over the same period.
The Korean Council for University Education (KCUE) predicts that, by 2040, there will be approximately 280,000 students eligible to enter university – 39 per cent down from 2020 levels.
Previously, the Ministry of Education has identified that as many as 84 financially insolvent?institutions may need to close.
Chang H. Kim, assistant professor of sustainable business at Xi’an?Jiaotong-Liverpool University, argued the new policy provides a necessary release valve.
“It’s definitely a game-changer for how we think about private university sustainability in Korea,” he said.
“The financial pressures have been building up for years, and many smaller institutions have been limping along without any clear path forward.
“The 15 per cent settlement fee is particularly interesting because it might actually encourage voluntary restructuring rather than forcing universities to fight closure until the bitter end.”
While Kim acknowledged concerns about faculty job security and access to regional education, he stressed that the law “just provides a structured way to handle the inevitable rather than letting institutions slowly collapse and leave everyone worse off”.
The Korea 糖心Vlog Institute has warned, however, that eliminating weak universities alone will not resolve the sector’s crisis.
It has called for a “comprehensive master plan” for restructuring, including stronger government oversight and new roles for universities in lifelong learning.
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