SEOUL (Reuters) - After years of heading abroad in droves to study, more young South Koreans are opting for education at home as expensive overseas degrees no longer provide an edge in a tough job market - and are even a liability.

Recruiters and students say the improving quality of domestic education, including in English, means the premium placed on a foreign education is not what it was in a country known for its intense focus on academic achievement.

At the same time, connections cultivated at home through school and university play a factor in landing a job and getting ahead.

"Domestic graduates' capacity has increased, so now businesses no longer blindly prefer overseas graduates," said Lee Young-mi, senior executive director at headhunting firm Careercare.

South Korea trails only China and India when it comes to sending students to the United States, but the number has been declining for four years, according to the Institute of International Education (IIE).

The overall number of South Koreans studying abroad at college level or above peaked in 2011 at 262,465, accounting for 6.7 percent of those in higher education; it fell last year to 214,696, or 5.8 percent of the total, government figures show.

The drop is especially sharp for younger students: the number of primary- or secondary-school Koreans who went abroad for study was 10,907 last year, a nearly two-thirds decline from the 2006 peak.

Kim Dong-jin, an adjunct professor at Kookmin University in Seoul and the former head of recruiting at LG Electronics Inc, said Korean employers still valued applicants with prestigious foreign MBAs or advanced degrees, but there was less demand for overseas-trained undergraduates.

This was partly because people emerging from the Korean system came with a useful network of connections, he said.

"Domestic students have a lot of support from their school, their seniors, as well as through government programmes," he said.

Overseas-educated Koreans, on the other hand, can have a harder time fitting into a hierarchical South Korean workplace.

"They are individualistic, which makes it hard for them to adapt to the Korean business culture," he said.

COSTS AND BENEFITS

The high cost of studying abroad is another reason more Koreans choose education at home, especially amid a sluggish economy with high youth unemployment and household debt.

Average tuition for the current school year at four-year U.S. private institutions is $32,405 (21,540 pounds), and $23,893 at public institutions for out-of-state students, according to the College Board.

That excludes living and travel costs. Average tuition at South Korean universities is 6.67 million won ($5,812), according to the Korean Council for University Education.

Fiona Mazurenko, marketing manager at the University of Texas at Austin's international office, said the number of Korean students there had fallen since 2010.

Data from its website showed the number of Korean undergraduates fell by 19 percent, from 532 in late 2010 to 430 in late 2014. During the same period, international undergraduates overall increased from 1,732 to 1,906.

South Korean funds remitted overseas to pay for tuition and living costs fell from a peak of $5 billion in 2007 to $3.7 billion last year, which was a 14 percent decline from the previous year, according to the Bank of Korea.

Some students head abroad because of the difficulty of getting into South Korea's three most prestigious universities, or because they want to work overseas, said Hur Wahn-burm, marketing director at Overseas Educational Corp, which places 700-800 Korean students abroad each year.

In a survey of 484 job applicants by Incruit Corp, which runs a recruiting website, half of the 151 applicants with overseas experience felt they had faced discrimination while looking for work in South Korea because of time abroad.

"There's no advantage in the job market for internationally educated applicants unless you have work experience in an international corporation," said Park Shin-young, a 22-year-old student in Seoul who graduated from high school in Canada but returned to South Korea for college.

The drop in the number of South Koreans is unlikely to make a dent in the multi-billion dollar education business in the United States, Britain and Australia as intake from China and India is more than making up the shortfall.

The number of foreign college and university students in the United States rose 10 percent last year to nearly 1 million, IIE data shows, while Australian education exports rose 14 percent in the last fiscal year to a record A$18.1 billion ($13 billion), making education the country's fourth-largest export.

(Editing by Tony Munroe and Sanjeev Miglani)