Guest Post: The Nearly-Free University

Tyler Durden's picture

Submitted by Charles Hugh-Smith of OfTwoMinds blog,

The Nearly-Free University model would revolutionize higher education, enabling a universally accessible college education at a very low cost.

The key to understanding higher education in the U.S. is to grasp that it is at heart just another debt-dependent neofeudal cartel. In other words, it is just like sickcare and the national defense complex.

Each cartel shares these features:

1. Compelling PR "cover" for cartel extraction of wealth. "Healthcare" (i.e. sickcare that profits from illness, not health) is a "right." The defense industry is the bulwark of democracy, and "educating our children" is the key to future prosperity. Each portrays itself as sacrosanct.

These "Mom and apple pie" cover stories enable monopolistic exploitation: $300 million a piece fighter aircraft (replacing $54 million aircraft), $150,000 college diplomas, and "healthcare" spending that is two times more per capita than competing advanced democracies.

2. Government (monopoly) protection and funding. The largest monopoly is of course the Central State, which holds a monopoly on taxation, coercion and distribution of swag. All these cartels have gained control of Federal (monopoly) funding.

3. Illusory competition. Each cartel is protected by wide, deep regulatory moats and complexity fortresses that protect the Status Quo income streams from any real competition or innovation. Within each cartel, meaningless variations in price are offered as "proof of competition," but everyone knows the price of each cartel's "product" ratchets higher, regardless of conditions in the real economy.

That's the way cartels and monopolies work. The most implacable enemy of innovation is monopoly. If you're protected from real competition, then you have no incentive or need to innovate. That is the essence of cartel-capitalism and the neofeudal model.

In the case of the higher education cartel, the Federal funding is both cash grants and loans issued to newly minted debt-serfs. Student loans cannot be discharged in bankruptcy like other debt; these loans have ballooned to about $1 trillion.

This is the essence of the neofeudal model: a protected Elite parasitically extracts wealth from the debt-serfs below. Should the debt-serfs resist, the State steps in to coerce compliance.

The problem with protected cartels (neofeudal fiefdoms) is that they are unsustainable. Freed of any competitive pressure or need to innovate, cartels inevitably follow an S-Curve of diminishing returns: it takes more and more money just to sustain the bloated Status Quo, even as the value created by the cartel declines.

For a taste of diminishing returns in the higher education cartel, please read Bureaucrats Paid $250,000 Feed Outcry Over College Costs (via Maoxian). Yes, top research universities have to manage grants and research projects; but only a relative handful of universities need enormous administrative staffing, and even fewer can justify paying managers $250K+ each.

All Federally protected cartels are living off debt. One in every three Federal dollars is borrowed, and this doesn't even count the $1 trillion in student debt which is nominally private-sector debt.

Debt that skyrockets higher while the real economy that supports it stagnates is unsustainable.

As I note in my new book Why Things Are Falling Apart and What We Can Do About It, complex systems based on diminishing returns collapse under their own weight and are replaced by systems that are simpler, faster and affordable. This can be a conscious process or it can be a default process, where the system becomes increasingly fragile and then suddenly undergoes a phase-shift that is widely viewed as "impossible," i.e. the system freezes up or collapses.

The Internet has already opened up an alternative to the neofeudal higher-education cartel. I call it The Nearly-Free University, a development I anticipate will take shape within the next decade. Once the model has been proven, it will rapidly spread, as it is a very advantageous adaptation that is faster, better and cheaper than the present bloated cartel.

The entire education industry on the U.S. is based on an inflexible, increasingly marginal-return "factory model," something I have written about since 2005. Is Our Education System Based on a Factory Metaphor? (November 15, 2005)

We are "training" millions of people in an assembly-line based on the assumption that academia is a limitless growth industry, when in fact it has reached the zenith of diminishing-return complexity and cost.

The Nearly-Free University may or may not have a physical plant. If it does, it will be a cheap re-use facility such as an abandoned office park or factory. It may not have a physical headquarters at all; "classes" may meet in cafes when the need arises. This is the new distributed model of global corporations, some of which have no headquarters at all. Physical plant is now unnecessary for pretty much everything but lab work.

In the current high-cost model, the physical plant only available at certain times and in a specific locale. The Nearly-Free University would be available anywhere there is an Internet connection and other people willing to self-organize and collaborate. In many cases, if space is required, it could be shared. Vast campuses are no longer needed.

The coursework will largely consist of free lectures and tutorials from non-profits like the Kahn Institute or classes already distributed for free online by institutions such as Stanford and M.I.T.

In place of costly professors and overworked, underpaid non-tenured teachers, the instruction will be overseen by part-time mentors from the real world who act as guides, occasionally lecturing but more often encouraging peer-to-peer tutoring and collaborative projects that are not "study groups" but actual work projects that produce something of value in the real world.

The mentor is a working professional who "works" at the Nearly-Free University on a flex-time basis. Their "job" is to suggest a practical foundation of basic courses in the student's chosen field; these courses are taken while the student is engaged in the core curriculum, which are the work projects.

These mentors choose to devote time to Nearly-Free University because they enjoy it; their fee will be modest. Most will work part-time while they pursue their primary career.

Students will move seamlessly from online coursework to projects undertaken in real-world enterprises and communities, learning by doing and from collaboration with others in self-organizing groups.

Mentors would have access (as in the Kahn Institute's classroom software) to a visual display of the student's coursework and work-project progress.

Student would be encouraged to earn money via the work projects undertaken. Instead of owing $120,000 after four years of passive study, students might complete their University experience with earnings in the bank.

Very few people continue on to research or scholarship within academia, corporations or the national laboratories. A relative handful of large research universities would be enough to train those who needed PhDs for scholarship or high-level research. The Nearly Free University model would educate the 95% who do not need PhDs.

Instead of an essentially opaque diploma—what exactly does a diploma communicate about the student's mastery, interests, coursework or accomplishments? —students will be issued a C.V./resume listing all their completed courses and their work projects.

Prospective employers would be able to scan this C.V. and get a real sense of the person's coursework, mastery and work results in the real world.

A decentralized non-profit network of organizations would arise to accredit the coursework shared by the Nearly-Free Universities. There would be no centralized “gatekeeper” that could demand a premium for its accrediting or testing services. Verification of coursework, work history and skillsets would be provided by multiple-sourced, voluntary transparent networks on the Web.

Credentialing is another system that has reached the top of the S-Curve and is slipping into stagnation and decline. What you can accomplish in the real world will rapidly become more valuable than a credential such as a conventional college degree. The credentialing gatekeepers are protecting an "asset"--the college diploma--that is largely a phantom asset for the vast majority of students.

The total cost of the Nearly-Free University might be $3,000 tuition and fees for 3-4 years compared to $60,000+ today. (This does not include room and board, of course.) The credential issued upon “graduation” (an arbitrary concept in an economy that rewards perpetual learning and improved skills) would be secondary to what the student has learned to create, accomplish, fix and innovate in the real world.

This is how innovation works: costs don't decline by 5%, they decline by an order of magnitude.

There would be no student loans. The low costs of the Nearly-Free University would be paid in cash or hours of labor that the University could “cash” for goods or services it needed to operate in a cash-free labor exchange.

Like many of the concepts discussed in this blog, this model is considered "impossible" within the confines of the Status Quo even though it is the only truly sustainable model of universal education.

The value of higher education for many is the network they establish during their university years. The Nearly-Free University model actually enables far more robust networks to self-assemble than the static, high-cost classroom model. "Lifelong learning" would not be a cliche in the Nearly-Free University, it would be an affordable, dynamic, exciting reality.

The Nearly-Free University is just one "faster, better, cheaper" alternative I discuss in Why Things Are Falling Apart and What We Can Do About It, currently offered at 20% to 30% discounts this week only.

New video on Triffin's Paradox and The Rule of Law, CHS with Gordon T. Long:


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vast-dom's picture

i am sparticus.

AldousHuxley's picture

wikipedia and youtube can teach you almost anything.

there are corporate testing centers when you need a proctor.


but college's value is not education but exclusivity brand value. oh and it is a family business. once you are in, they want your younger sibling and children. so price it like a luxury goods and forget the ROI.



Ident 7777 economy's picture






" wikipedia and youtube can teach you almost anything. "


Or not.


Take for exxample the CTs (conspiracy theorists) on the board, they make reference to JUNK all the time ...



MachoMan's picture

True, but I used youtube to assemble an ar15...  there are practical and impractical books in the library too.

disabledvet's picture

meets "i am spasticus." what the article should say is "declining marginal UTILITY" and not "declining marginal price." we all know the price ("more") and therefore try and "define the benefit" ("little to none.") and within that "cost curve" attempt to estimate...attempt to estimate...attempt to estimate....

vast-dom's picture

YEs! No. We are Tyler. No, we are Sparticus! Sparticus = Tyler. Piss in your soup / rise up against the Romans.

catacl1sm's picture

spartacus and the other 70k rabble-rousers eventially got their asses kicked.

libertus's picture

This is an article that while not as radical as the one above does make some pretty good points about the higher ed-bubble.

I'd be interested in your comments if you have any. 

disabledvet's picture

"if you have an education you are labeled a terrorist."

no taste's picture

That must be why Karl Rove has not been arrested yet.  Karl Rove is stupid.

Dr. Sandi's picture

An edumacation don't keep ya from bein' stoopid.

cxl9's picture

Dude. What's up with the Karl Rove fixation? You one of those "chubby chasers"?

Aductor's picture

It sounds good, in theory. Although I to some extent share the analysis of the vast problems that the current system of higher education is entangled with, I don't think the solution proposed would work in practice. For example, it underestimates the importance of real-time, face-to-face, in-room human interaction. From my experience, attendance and throughput on web based courses never comes close to "traditional" courses. As I see it, the more pressing concern today is how the universities more and more resemble factory floors. You don't get much innovation or so called "critical thinking" with a precisely defined process.

AldousHuxley's picture

people will go to the nearly-free universities as long as you can get a job afterwards


looking at practical value of education is where peasants get it all wrong.


It is about getting your pedigree not degree



that's like buying cubic zirconia instead of a diamond. The end goal is to make the recipient feel good.

college degrees are for stupid corporate managers to feel good about hiring a brand name university grad.


 as long as masses believe in it, scam will continue. right as americans discover the truth, you have billion chinese lined up for that harvard pedigree.

Ident 7777 economy's picture




They should charge, then, FOR THE TESTS.



FuzzyDunlop21's picture

Although I think you are right with the vast majority of majors, you can not train an engineer or chemist with wikipedia and a textbook. 

greensnacks's picture

Big name universities are embracing online education programs. is a great example. Newer offerings look promising too, like OpenClass: . A lot of the content is being commoditized. It is the experience, graduation rates, student services, sports and specialty programs that is becoming a selling point for universities.

I agree with your point regarding the "traditional" classroom experience.  Much of the learning process comes from the interaction of students with teachers,  but it is also hard to replicate things like medical or chemistry labs online.

On a side note, while education costs have gone up, much of it can be attributed to the states shuffling funds away from education to fund other programs like overcrowded prisons systems, pensions, etc. ... Many of these types of articles tend to examine the cost to the student and not why the cost went up.  Education just isn't as heavily subsidized like it was  before 2007.


davidsmith's picture

Isn't this about the 50th time we've read something similar on ZH?  TIRESOME.

Dr. Sandi's picture

I like the concept behind Nearly-Free University. Knowledge is knowledge, no matter where it is disseminated.

I think Zero Hedge is my favorite Econ 201 classroom. But I might hot foot it over to a local abandoned factory for some face time with somebody who knows something real about something real.

However, there are two things that need to be appended before Nearly-Free University will really catch on.

We need Totally-Free Parties. There is no college life without the life of a party.

Also, we have to find a Nearly-Free University sports diversion. Perhaps we could adopt the NFL Fantasy Football Website as our university sports franchise. At least until we can come up with a version that could feature local heroes who can play in the shipping bays of the previously mentioned abandoned office park.

It's pretty obvious that Dinosaur State University is gonna go down hard when the printing presses start burning out their bearings.

SqueekyFromm's picture

This is a ding-a-ling Internet Article. Can you imagine an engineering degree based on the class work project of designing a foot bridge over a drainage ditch at a dog park??? Sorry, but structured teaching of theory is absolutely necessary. It is better if the theory can be followed up by apprenticeship work, in much the same way doctors learn their trade.

There are many cost savings that can be had by eliminating highly paid professors, and high price structures. Additionally, some degrees do not need to be 4 year degrees. But the idea above is nonsense, and of the type which has already destroyed the first 12 years of  education.

Squeeky Fromm, Girl Reporter

toomanyfakeconservatives's picture

That explains why so many inventors and self-made millionaires are high school dropouts.

insanelysane's picture

I have a degree in manufacturing engineering.  My first job out of college I walk in with a briefcase and white shirt and with 5 years of education.  I learned more in 1 year of work.  Sure I learned some stuff in college but it could have been done in 2 years.  I also degree that living in college is an education in itself but you either learn to survive the living part in a couple of years or you don't.  2 years of college with some reality thrown would be best.

Henry Chinaski's picture

Big Tobacco. Big Oil. Big Academia.

insanelysane's picture

and the one everyone misses; Big Politics.  The 2 party system has a stranglehold on the political system.

HurricaneSeason's picture

I like the idea of art history majors being able to sue their university after graduation if a certain percentage of the art history students find no jobs within a certain time period. If the universities are experts they should know if there are no jobs for years to come in some fields. If not sue then at least have their loans forgiven. Having the loans forgiven wouldn't motivate the university enough, though.

MachoMan's picture

That would be a great idea except for the whole sovereign immunity part...

I'll posit that this type of consumer protection is exactly the nanny state bullshit that necessarily leads to dependence on the state and learned helplessness.  It's time to put on our big boy pants...  right after we get done growing a pair.

Dr. Sandi's picture

You grow your own pants?

MachoMan's picture

Awesome.  I'll chalk it up to tired posting.

Downtoolong's picture

If you're protected from real competition, then you have no incentive or need to innovate. That is the essence of cartel-capitalism and the neofeudal model. 

How did Volcker say it about the banks? Oh yea, their greatest innovation in the last 20 years was the ATM.

I have to admit, that’s where I do most of my banking now. I’d be happy if we just kept that part and got rid of the rest of the system.


erg's picture

I make almost all of my payments in cash. It's much faster than cards and really annoys the establishment.

People forgetting their pins, cashiers swaddling cards in plastic bags and re-swiping, hoping for a different outcome.

Yeah, that's convenient.

Soon it will all be digital for lack of care.

erg's picture

I demand a government grant to really study myself. Give myself a really good going over and come up inconclusive.

A couple hundred grand should cover it.

rbg81's picture

Has anyone actually looked at the material on the MIT Open Courseware site?  It is written for the elite.  In many cases, it assumes the students have knowledge that even many seniors do not have.  If anyone thinks the average college student out there can absorb that, they're smoking something.

freedogger's picture

See my post below, I started it before seeing your comment. I agree, it is a stretch to think anyone could get through it. The guy I mention in my post had serious game before he even started in on the courseware.

freedogger's picture

I have worked with a guy who thoroughly went through the MIT courses for computer science. Previous to this he had a non-related business degree. I asked him how he did it, he said he locked himself in a room for six hours every day for five years. He discussed it with his wife and they figured out a way to give him enough time and also raise four kids while he was starting out. He also worked in the industry at the same time while going through this. 

Backing up great courses from MIT with loads of real world experience has opened a lot of doors for himself. He is also awesome to work with, and sought out by many companies to come in and teach and lead their teams developing custom software systems. We are from Canada and universities here don't seem to offer the fraternity for life club benefits that US schools seem to have. Also, he doesn't need a certificate or degree, anyone worth working for in our city has already heard of him.

So it can be an option for the right person.  Here's a link to his blog:

ebworthen's picture

Higher Affirmation is expensive.

nah's picture

god I hope so, being smart and able to work and research in a low cost, experience driven 'acedemic' environment


that should help

catacl1sm's picture

FuCk that was a long read!

epwpixieq-1's picture

The education is only the tip of the iceberg, everything is extremely overpriced in US of A. It seems again that it is good to have the old European education, as it is extremely inexpensive ( compared with US ) and based on all comparetive stats ( high school and university ), is the best on in the world.

Now, as a good investor, everyone should ask themselves, do you invest at the tops, especially for your children? And again, this is a rhetorical question, as not to have any confusion.

q99x2's picture

If I go to enough colleges long enough I'll never have to work again (not that I would otherwise.) 

e-recep's picture

while the tuitions and fees are skyrocketing the quality of education remains in free fall. yes, even in american universities. what the fuck is an "e-MBA" btw?

AurorusBorealus's picture

This is a neat little piece in a Hi-I'm-a-corporate-dude-now-but-I-smoked-pot-in-college way.  The reality of the matter is teaching does take time, especially at the university level and a great deal of education for the instructor.  One is not going to find a group of "volunteers" to come in and do this labor out of the kindness of their hearts, I am afraid.  The solutions to the problems in education are much more complex than some group of "civic-minded" volunteers stepping in to educate the whole of our youth.

For one thing, just about every form of work requires a license or certification of some kind, which requires a degree in some field, even fields as ridiculous as communications, for example.  You would have to restructure the whole of the labor market first (after you find all these highly-educated, civic-minded volunteers who seem to be more concerned with virtue than receiving market-based compensation in your free-market utopia).

Might I suggest some realistic solutions to solve the problems in education-- 1) Government pays primary and secondary schools per student a fixed rate--- any primary or secondary school (including private and religious).  This breaks the monopoly of the teacher's unions and the garbage public school curriculum.  No liscensing process is required... only proof that the said number of students attended said number of classes.   2)  No more federal loans for college and university.  Colleges and Universities are responsible for issuing and collecting the loans to students.  This will end the woman-studies programs in short-order and the ridiculous hold that feminist propoganda has over the universities.  3)  Fire everyone in the system who does not directly teach math, science, or foreign languages.  None of the fired people are eligilble for rehire.  Hire a new cohort of people to teach history, English, Sociology, and the like who emphasize critical thinking: and who do not have, as their primary agenda, a neo-socialist, feminist, racist, and totalitarian political doctrine.

kralizec's picture

It's the socialist-education complex funded by taxpayer dollars, what's the problem again?