Ewha, along with Yonsei University, officially agreed to deposit the schools" working funds with Samsung Investment Trust Management Corporation (ITMC) in a meeting on February 3.
Such a move is the first ever taken by any university in Korea. The program, entitled "Samsung Academy-YES," is specially designed for universities seeking to increase their reserves. The program will be run on the capital that both Ewha and Yonsei deposit monthly, including an estimated sum from Ewha of about four billion won. The officials appraised the probable annual profit rate for the school at 5.4 percent. This is slightly higher than the interest rate of 4.6 percent at most banks, more importantly, after taxes, the interest that bank depositors end up receiving is almost zero. Thus, the move is designed to circumvent problems in the school"s financial situation in terms of scholarships and student welfare.
"All school-run scholarships come from the money the school receives from bank interest. However, current local bank interest rates are so low that it is getting difficult to secure money for scholarships and student welfare. That is the main reason why we came to this decision," says Park Kyung-hee, Dean of the Office of Financial Affairs.
Yet, there is a golden rule in investment that the higher the profit is, the riskier it is. Even though the profit the school will gain from the fund will probably be larger than from bank interest, it is the school that takes the sole responsibility for any kind of loss resulting from the fund"s stock investments. Therefore, the school"s privately placed funds in the Samsung Academy-YES program will be invested in low-risk assets such as public bonds, monetary stabilization bonds, and AAA-rated corporate bonds.