Cost of education a drag on the economy
A survey carried out by the Japan Finance Corporation has been getting a lot of attention in the media this past week. JFC asked 5,400 households that receive government education loans about the amount of money they spend on education for their children. The respondents on average answered that they have spent 37.6 percent of their income on education in 2010. The average percentage in 2009 was 33.7.
One of the reasons for the percentage rise is that household incomes themselves have dropped, from an average ¥5.92 million in 2009 to ¥5.72 million this year. What’s particularly shocking is that the burden rises considerably as household income drops. For households making between ¥2 million and ¥4 million a year, education costs account for an average 56.5 percent of household incomes. Last year it was 48.3 percent.
The JFC says that tuition, textbook prices and transportation costs to and from school have gone up in the last year. The average student in 2010 will spend ¥10.6 million from the point he or she sits for a high school entrance exam until university graduation. That’s an increase of ¥520,000 over the average in 2009.
Respondents said they are cutting back on other expenses in order to cover education costs, with 63 percent saying they have reduced spending on leisure and travel, 51 percent forgoing eating out and 41 percent eliminating “pocket money” (kozukai) for the adults in the family. The ruling Democratic Party of Japan, of course, made public high schools tuition-free last spring, one of the few campaign pledges they’ve kept so far, but education remains a serious drag on household spending and, by extension, on the economy as a whole.
Education is a huge industry in Japan but the trickle-down benefits aren’t very clear. However, the benefits to education executives are clear and can be understood by that recent scandal involving Teikyo University, whose late chancellor, Shoichi Okinaga, was found to have stashed a cool ¥1.5 billion in a bank in Liechtenstein without telling Japanese tax authorities. Obviously, the education biz is good for some people.
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