Education Business January 21, 2010, 4:42PM EST

Tuition-Free University Gains a Following

A year since its formation, the online University of the People has attracted several hundred students, a team of top academic advisers, and growing support worldwide

Shai Reshef

Story Tools

One of the higher education world's boldest experiments began in September when 180 students from nearly 50 countries around the world logged on to their computers for their first day of school at the University of the People. At first glance, the school has many of the trappings of a modern university: a provost, department heads, even an admissions committee. Yet there are glaring differences—namely, a the lack of a campus or physical classroom and just a handful of paid staff—that set it apart from its bricks-and-mortar counterparts.

Those are shortcomings the students, most of them from developing countries and without the means to pay for college, are willing to overlook, says Shai Reshef, an Israeli entrepreneur and founder of the school, the world's first global tuition-free online university.

"Education has become so expensive that not that many people can afford it, and in some parts of the world it just doesn't exist or there isn't a big enough supply," says Reshef, who has more than two decades' experience with Internet-based educational ventures and is chairman of Cramster.com, an online study community. "This is exactly why the Internet was invented. I thought: What can be done better with the Internet than helping people get an online education for free?"

Backed by the U.N.

It was just about a year ago that Reshef made headlines in the distance learning community with his announcement that he intended to start an online college program using open-source software that would be free to students all over the world, one of just a handful of tuition-free universities. The nonprofit venture, which he named University of the People, attracted attention not only because of its tuition-free mission but also because it had the backing of the U.N., a leadership team made up of academics from top educational institutions like Columbia University and New York University, and an innovative approach to distance education, with an emphasis on peer-to-peer learning.

Today, the online university is fully operational, with 300 students, a growing array of course offerings, and even a recently announced research partnership with Yale University. The school is tapping into a growing market: Nonprofit institutions account for 68% of the more the more than 2 million students enrolled in online education, according to the latest estimates from Eduventures, a higher education consulting firm.

There are still many trials ahead for the fledgling university, which is struggling to make inroads in the competitive online global education market. To stay afloat, the school will need to raise several million dollars in startup costs this year and introduce new admission and application testing fees, which could pose difficulties for students from developing countries. But perhaps its greatest challenge—and the one its success will hinge on—will be gaining accreditation, a step toward the school's goal of conferring bachelor's degrees to students. This would also allow the school to carve out a niche as a major player in a space that has so far been primarily dominated by schools like the for-profit Apollo Group's (APOL) University of Phoenix and Washington Post Co.'s (WPO) Kaplan University, both of which have broad online degree offerings, says Roger C. Schonfeld, the manager of research at ITHAKA S+R, a higher education strategy and research organization.

Business and Computer Science

"What the University of the People is offering to do is make education time- and space-neutral. They have a lot of ingredients there to be successful, and they certainly have quite a few superstars on their advisory board," Schonfeld says. Among them: a former dean at INSEAD and the current U.S. Ambassador to Bangladesh. "I think that their success from a business perspective may turn on their ability to become accredited," Schonfeld notes. "With accreditation, they have a good chance of an innovative model that might see some success."

For now, the school's academic offerings are limited. Students can pursue an associate's-degree or bachelor's-degree track in business or a bachelor's track in computer science. Those subject areas were chosen because they are professions that "are in high demand and areas where students will most likely be able to find a job," Reshef says. (A notice on the school's Web site reads: "These programs may in the future lead towards undergraduate degrees. However, no degrees will be granted until the university obtains proper authorization from relevant authorities.")

Obtaining accreditation is a top priority for the school, says Reshef, noting that the school is incorporated in Pasadena, Calif., making it easier for the school to work with American accreditation agencies. "We intend to apply for accreditation as soon as we can," Reshef says, though he declined to specify which accreditation body the school planned to work with.