SEOUL, South Korea — South Korea’s household debt-to-income ratio hit a nine-year high in 2012, according to Bank of Korea data released Wednesday.
The ratio — which measures the ability of Korean households to repay debt with disposable income — rose to 136 percent, up from 134 percent in 2011, Yonhap News Agency reported.
Much of the growing household debt burden in South Korea owes to skyrocketing cost of attending universities and after-school academies, along with the intense pressure for young Korean couples to take out mortgages for apartments at premium prices despite an oversupply of rooms.
More from GlobalPost: South Korea in the red
Households’ disposable income rose 4.1 percent in 2012. Loans and purchases on credit rose 5.2 percent to $857.2 billion.
In the big picture, the debt is just as much a social problem as it is economic. Experts say it's a symptom of the impossible standards that South Koreans set for themselves in an over-achieving society.
Last week, a report published by McKinsey even noted that the country will find relief should Koreans stop the "education arms race": the desire of parents to pay exorbitant fees for their children to attend elite schools from a young age — with the eventual goal of attending the Ivy League or its Korean equivalent.
Cho Dong-chul, an economist at the Korean Development Institute, recently told GlobalPost that a government bailout isn't the best option, because public funds should be put towards programs that are more effective for the market.
One problem, he said, is that too many Koreans are going to college and becoming over-educated for the jobs they're taking after graduation.
Ballooning household debt has been an issue for South Koreans for a while.
According to the Financial Times:
Its consistent growth over the past decade has been driven by factors including property speculation, high spending on private education and corporate deleveraging after the 1998 Asian financial crisis, which prompted banks to turn to consumers for credit growth.
In March, the new government led by President Park Geun-hye launched a $1.3 billion fund to bail out some households that are struggling to repay loans, the Financial Times reported.
Interesting to note: Korean conglomerates like Samsung might be unable to repay their debts too, according to the Financial Times. The top 30 conglomerates in Korea have almost $900 billion in debt.