Graduates are seen during the graduation ceremony at the campus of Seoul National University College of Medicine in Seoul, Feb. 27. Korea Times file

The Bank of Korea (BOK) proposed on Tuesday that top universities, such as Seoul National University (SNU), should voluntarily allocate admissions quotas based on regional school-age population ratios.

The central bank said this measure can be a solution to address issues such as population concentration in the Seoul metropolitan area and rising housing prices in the capital.

The bank made the suggestion in the report, which contains the analysis of new students of the top eight universities, including SNU, Yonsei University and Korea University, in 2011 as well as new students of SNU in 2019.

Among the various issues, the BOK particularly highlighted the inheritance of socioeconomic status. As private education costs have grown and institutions offering such education have been concentrated in certain areas, the amount and quality of education students can receive now depends heavily on their parents' income level and where they live.

Last year, high-income parents, earning over 8 million won ($6,000) per month, spent an average of 970,000 won per month on private education for a single high school student. In contrast, families with monthly income of less than 2 million won spent 380,000 won per month, a difference of 2.6 times.

There were also significant regional disparities. Last year, the average monthly private education expenditure per high school student in Seoul was 1.8 times higher than that in rural areas.

Students pass by private education institutions in Seoul's Gangnam District, July 8. Yonhap

The disparity in private education expenses and residential areas has led to differences in the rate of admission to top universities.

In 2011, the rate of admission to top universities for students from the highest 20 percent income bracket came to 5.9 percent. This was 5.4 times higher than the 1.1 percent admission rate for students from the lowest 20 percent income bracket.

Based on math scores of these students in the first year of middle school, the bank analyzed that only 25 percent of the difference in the admission rates could be attributed to differences in potential, while the remaining 75 percent was due to economic disparities among parents.

Additionally, the report estimated that 92 percent of the difference in the admission rates to SNU between Seoul and non-Seoul regions was attributable to where the students live.

The situation was similar in the case of SNU students admitted in 2019. According to the report, only 8 percent of the difference in the admission rates was attributed to differences in potential, while 92 percent was attributed to area of residence and parents' economic status.

Against this backdrop, the bank said applying a regional proportional admission system could significantly narrow these gaps.

When asked why the central bank is making policy recommendations on university entrance system reforms, Jeong Jong-woo, the co-author of the report and head of the microeconomic systems research division at the BOK, said, “Intensifying competition for college admissions is exacerbating structural social issues in this country, posing threats to social stability and growth potential. Addressing these challenges has become increasingly urgent.”

He added, “Reducing the gap in the admission rate to top universities between Seoul and non-Seoul areas would likely decrease the migration to Seoul. This could help mitigate the rise in education costs and housing prices in the capital.”