Financial Aid, Tuition Controls, and Access to Selective Higher Education: A Study of South Korea’s Half-Tuition Reform

Abstract Building on the Bennett Hypothesis literature, we investigate the unintended effect of South Korea’s 2012 ‘half-tuition policy’—a policy bundle combining the large-scale, quasi-universal National Scholarship program with a binding tuition cap—on the relationship between university selectivity and students’ economic backgrounds. Using an interrupted time series analysis, we analyze data from 207 four-year universities across Korea during 2008–2014 (2009–2014 for covariate-adjusted models). We classify universities into three selectivity tiers—Most, More, and Less selective—and examine changes in the average household income of first-year students before and after the policy was implemented. The findings indicate that while the universal scholarship program and the tuition cap together significantly improve affordability and increase enrollment among low-income students, they fail to address disparities effectively at highly selective universities. We argue that, under binding tuition constraints, aid expansions may shift competition to nonprice margins—including admissions—thereby sustaining socioeconomic advantages. Moreover, unintended effects may occur, including increased selectivity and competition among universities. For policy implications, we suggest the need for targeted financial aid and affirmative action strategies to ensure equitable access to higher education.