hankyoreh

By Lee Jae-hoon　
　
It has been confirmed that North London Collegiate School (NLCS) Jeju, Korea’s first profit-making school, must send 61.2 billion won ($50.7 million) in the name of royalties and other payments to its parent school in the United Kingdom. Controversy has arisen, however, due to the lack of a provision allowing the sending of profits overseas in the law that constitutes the basis for the school’s establishment.
An NLCS Jeju financial management plan made public by Democratic Labor Party (DLP) Lawmaker Kwon Young-ghil on Monday shows that the school plans to pay a total of 61.2 billion won in commission to NLCS in the UK by 2033: a combination of more than 46 billion in royalties and 15.2 billion won of a fixed payment that includes NLCS UK personnel expenses. NLCS is a 161-year-old private school near London in the UK. The Jeju Free International City Development Center (JDC), an affiliate of the Ministry of Land, Transport and Maritime Affairs (MLTM), opened NLCS Jeju on Sept. 26 in Seogwipo, Jeju Island.
“Payment of royalties is inevitable, in the same way as with other international schools, because [NLCS Jeju] uses the curriculum, name and logo of its parent school,” said one official from the JDC’s Edu-City Department. “This was stipulated in the contract.”
There is no provision, however, on earnings remittance that allows profits earned at profit-making schools in South Korea to be sent overseas under the “Jeju Special Law” or the “Special Law on Foreign Educational Institutions,” which form the basis for the establishment of NLCS Jeju. In June 2008, 19 Grand National Party (GNP) lawmakers submitted an amendment to the Special Law on Foreign Educational Institutions that would allow earnings remittance, but this is still pending in the National Assembly following strong resistance from opposition parties.
NLCS Jeju is South Korea’s only international school run by a profit-making corporation, and can take up to 100% Korean students. Of the 435 students that will study there next year, 411 (94.4%) are of Korean nationality. 161 (39.1%) of the Korean students are from the “Three Gangnam Districts” of Gangnam, Seocho and Songpa, considered affluent Seoul districts, while the institution has attracted controversy as an “aristocrats’ school” because of annual tuition fees reaching 36-42 million won.
NLCS Jeju was established with the purpose of absorbing demand for study overseas within South Korea itself. Classes in all subjects are conducted in English. Jeju Island also plans to open Branksome Hall Asia, a branch of a famous Canadian private school, next year. The Jeju Special Law allows profit-making corporations to establish schools.
A funding plan from the JDC revealed by Kwon shows that Haeul, the educational foundation that runs NLCS Jeju, received a total of 170 billion won from investors such as the Korean Teachers’ Credit Union (KTCU) when putting together its investor body in October last year. These funds have all been spent on construction fees of 128.9 billion won and other initial founding costs.
Because of this, Haeul must run the school at a profit and pay back 13 billion won this year and next year, then 17.3 billion won every year from 2013, in principal and interest. When combined with the commission to be paid to NLCS in the UK, the foundation must pay annual costs of between 37.5 and 80.9 billion every year. It has emerged that NLCS Jeju is forecasting a cumulative loss of 17.9 billion won by 2016.
The school’s only sources of income are the tuition and boarding fees paid by its students. But because it was only able to recruit 56.3% of its total capacity of 772 students this year, its deficit is expected to grow.
“NLCS Jeju’s funding plan stipulates that, if Haeul is unable to pay principal and interest, JDC will make these payments itself,” Kwon pointed out. “It is highly likely that the operating losses from this ‘elite school’ will end up being paid for using the Korean people’s taxes.”
In response, an official at the JDC’s Edu-City Department said, “Allowing for a deficit over the first two or three years when creating the school management plan was inevitable. It was our view that we would be able to attract more students and make a profit once we had created a reputation for NLCS Jeju for sending lots of students to the world’s top universities.”
　　
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