海角大神

When Cheon Sun-kyoung and her husband took out a $100,000 loan and moved their family of three from the affordable suburbs to one of Seoul鈥檚 most affluent neighborhoods, she hoped it would be the start of the climb up South Korea鈥檚 highly competitive social ladder.

She wanted to enroll her teenage daughter in one of the pricey after-school tutoring academies here to giver her an edge on getting into a prestigious university and, eventually, landing a high-paying job.聽But for now, Ms. Cheon says her family has to scrape by.

鈥淚t鈥檚 really expensive living here, I even have to buy our groceries in another, cheaper neighborhood,鈥� Cheon, a part-time teacher, says. 鈥淚t鈥檚 not possible to save any money now because we are paying off the loan we took out to get this apartment.鈥�

Despite the efforts of the Korean government to rein them in, more and more South Korean families like the Cheons are channeling all of their disposable income into supporting their children鈥檚 education 鈥� and increasingly driving themselves into debt.

In August, the Bank of Korea released data that shows households here are facing a debt-to-income ratio around 160 percent this year, up from around 123 percent in 2010. Loans taken out from mostly secondary lenders that charge high interest rates total close to $600 billion. As of the end of July,聽household debt totaled聽$573.25 billion, according to the Bank of Korea.聽

According to the LG Economic Research Institute,聽28 percent of South Korean households cannot make payments on their debts each month and can鈥檛 cover their monthly expenses with their current income.

For some observers, those figures have set off alarm bells. Just ahead of the US financial crisis in 2008, Americans had a debt-to-income ratio of around 130 percent.聽

According to the Chosun Ilbo, South Korean parents spend an average of $1,000 per child on education each month.聽South Koreans poured $19 billion into private tutoring, cram sessions, and college exam prep in 2009, more than half the sum spent on public education. Some report this spending is the number one reason Koreans are deciding to have fewer children: In聽2011, South Koreans spent an estimated $17.7 billion on private education, down for the second year in a row because of Korea's declining birthrate.

Jeong Young-sik is an analyst at the Samsung Economic Research Institute in Seoul.聽 He estimates that 70 percent of household expenditures go toward private education. Mr. Jeong says that, thanks to a slumping real estate market, a perfect storm has been created.聽 聽

鈥淭here are myths that contribute to South Korea鈥檚 household debt problem. One is the belief that real estate prices will always go up.聽 Another is that education will increase a family鈥檚 social position,鈥� he says.聽 聽聽聽聽聽聽

This notion of education-based social mobility became cemented into the public consciousness after the Korean War.聽The nation was left in ruins with few natural resources. The only way for a family to lift itself out of poverty was 鈥渉uman capital.鈥� And that began with ensuring children received the best education available, no matter the sacrifice or cost. 聽聽

鈥淧arents still want to educate their children so they can achieve better status,鈥� Jeong says. And parents are increasingly willing to do whatever it takes for their children to do that, even if that means losing status in the short run.

Who is benefiting?

Rising stature is linked to how well a student scores on the South Korean standardized university entrance exam,聽a multiple-choice test, which was held Nov. 8, this year. Many consider it the most important test of their life.聽

After-school and private education in South Korea is centered on preparing students to ace the exam.聽It鈥檚 a multibillion dollar industry that caters to families hoping to send their children to one of the nation鈥檚 top four universities.聽Owners of these private preparatory academies, known in Korean as hagwon, are making huge profits.聽 聽聽聽聽聽聽

鈥淧eople want to go to high-ranking universities. They think that the better the school the more successful you will become,鈥� says Kim Dong-young, director of the Highest Hagwon in Seoul. 鈥淏ut the public school system doesn鈥檛 provide enough tutoring to do so. This is why families send their kids to these private schools.鈥� 聽

Kim says that annually, his school brings in around $9 million.聽

Not enough slots at colleges

But not all South Korean students who score well on the entrance exam and enroll in top universities go on to achieve great success and pay back their family鈥檚 investment.聽There are fewer slots available than there are students trying to get in, and some observers say Korea鈥檚 culture of education-driven mobility is creating an economic backlash.聽聽

鈥淭he problem is we have an overeducated working class,鈥� says Jasper Kim, who heads the Asia Pacific Global Research Group.聽鈥淭here are highly qualified people who want to work for a narrow bandwidth of companies, namely the LGs and Samsungs of the world.鈥澛�

Kim points out that South Korea鈥檚 youth unemployment rate, which stands at about 7 percent, is more than twice the national average.聽Companies keep raising the bar in order to hire only the most impressive graduates.聽And the Korean version of 鈥渒eeping up with the Joneses鈥� is the cause of shame for many young South Koreans.聽聽聽聽 聽聽聽聽

鈥淲hat happens to the rest of the pack who don鈥檛 get selected?聽 For them, it's a real challenge and a real hardship,鈥� Kim says.

Over the edge

Some mental health experts say this pressure to live up to their family鈥檚 expectations is pushing some young Koreans over the edge.

鈥淚f they are under stress, feel anxious about their exam score and lack a support system, this could make them think about suicide,鈥澛爏ays Kim Hyun-chung, a psychiatrist at the National Medical Center in Seoul.聽 鈥淪uicide is the leading cause of death for young adults.鈥�

The South Korean government is trying to lessen the emotional and economic burden on families that results from this competition.聽Recently, President Lee Myung-bak encouraged high school graduates to skip college and head straight for the workforce.

Last year, the government opened 21 specialized trade schools as an alternative to university education. The government also initiated tax breaks for companies who hire holders of only a high school diploma.聽 These measures are also aimed at bringing down Korea鈥檚 high youth unemployment numbers.

But government incentives can鈥檛 resolve all of Korea鈥檚 problems, says Kim Hyun-chung.聽 The psychiatrist says it will take a generational shift in the way people regard education and employment to make a real difference.聽 But for now, Koreans need to slow down, she says.

鈥淓veryone is burning out,鈥� she says. 鈥淲e need to become more self-reflective and take a step back. Everyone is rushing to try to fit in. 鈥�

Ms. Kim adds that Korean mothers can start this by putting less pressure on their children to ace the university entrance exam.

Cheon, the woman who took out a large loan with her husband to give her daughter better opportunities, says her family's move and all the money spent on her education are worth it. Her聽daughter still has one more year to study before she takes the test, and many hours of private tutoring lie ahead. 聽 聽

鈥淲e're giving her more opportunities,鈥� says Cheon. 鈥淔or Korean mothers, it鈥檚 the most important thing we can do for our children.鈥澛�