According to the LG Economic Research Institute, 28 percent of South Korean households cannot make payments on their debts each month and can’t 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.
According to the Chosun Ilbo, South Korean parents spend an average of $1,000 per child on education each month. 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 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. 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.