How Low Can You Go? The Tuition-Free Business Model of the University of the People

This paper presents the recent emergence of organizations that offer tuitionfree academic education by leveraging various online tools. The feasibility of
such offers is analyzed by exploring a variable cost minimization (VCM)
approach created by the California-based nonprofit The University of the
People (UoPeople). This approach cuts undergraduate tuition to US$4,000 or
less per program, by replacing instructors with peer-to-peer learning
processes, and by charging students only for admissions and for examination.
An analysis of the VCM approach as implemented by UoPeople shows that it
fails on two fronts. Firstly, it is based on an unsubstantiated assertion that
peer-to-peer learning can replace, altogether, the need for a skilled and
trained online instructor. Secondly, even if it is possible for some students to
teach themselves without the involvement of an instructor, an economic
analysis shows that the cost of instruction is only one of several line items in
the budget of an accredited online academic program. Academic programs
that remove critical variable cost services such as teaching and student
advising, fail students by neglecting to provide them with the minimal
support they are entitled to. The risks, as well as the significant promise of
the VCM approach are discussed.