Ever since the open courseware movement was launched in the US almost 10 years ago, traditional universities have deployed a powerful weapon to prevent students from using it to earn degrees.

That so many universities now make their teaching materials freely available online has allowed US and international organisations such as Peer-2-Peer University (P2PU) and University of the People to gather up and organise the content into entire programmes - and to offer these courses to students at little or no cost.

But conventional universities have refused to award academic credit to people who complete them.

So these students have been unable to apply their work towards degrees unless they take - and pay for - the same course again on a bricks-and-mortar campus or via an established distance-learning provider. And that has kept them away in droves.

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University of the People, for example, which charges an application fee of only $10 (?6.30) to $50 for any of more than 40 online classes culled from open courseware, has enrolled just 1,100 students in its two years of operation. Meanwhile, some 6.1 million Americans now take (and pay for) online courses offered by conventional and for-profit universities.

Critics contend that the universities fear being undercut the way newspapers and the music industry were when their content was made available for free online.

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The universities' tight hold on the granting of academic credit "is to prevent competition", says Philipp Schmidt, co-founder and executive director of P2PU. "It's to prevent real innovation happening."

But things may be about to change.

Some of the organisations that create courses from open educational resources are inventing novel forms of credentials that employers may one day consider to be just as trustworthy as academic credits from established universities.

Saylor.org, for instance, a not-for-profit organisation offering 200 free online higher education courses in 12 majors, is introducing an "electronic portfolio" containing more detail than a university transcript that its students can use to show employers what they have learned.

"If I were the universities, I might be a little nervous," says Alana Harrington, Saylor.org's executive director. "What's to stop a company from hiring these individuals after reviewing proof of proficiency in some area, despite the absence of a degree from an accredited institution?"

Meanwhile, the respected John D. and Catherine T. MacArthur Foundation is running a $2 million competition to design digital "badges" that can be used instead of university degrees to vouch for a candidate's experience and knowledge to prospective employers.

P2PU and Saylor.org are already experimenting with such badges to show when students have completed courses.

And the Massachusetts Institute of Technology - whose embrace of open courseware in 2002 launched the idea in the US - announced in December that it would offer certificates of completion to anyone who successfully finishes the courses that MIT makes available for free online, with a small fee levied for the actual certificates.

The project, MITx, was launched via an experimental prototype earlier this month.

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"What we predict is that these upstarts coming in will get better and better over time [and] try to handle these accreditation problems and be more visible to employers," says Michael Horn, executive director for education at the Innosight Institute, a thinktank.

Like MITx, many of these new arrivals are not-for-profit bodies, and most have high-powered support. P2PU is supported by the web-browser company Mozilla and by the William and Flora Hewlett Foundation. University of the People is backed by, among others, the Clinton Global Initiative. Saylor.org was established by a foundation underwritten by Michael Saylor, a high-tech entrepreneur who was able to attend MIT only via an Air Force officer-training scholarship.

Much of the content they use comes from leading universities worldwide - not only MIT, but Tufts University, the University of Michigan, the University of Nottingham, The Open University and the University of California, Berkeley. Those are among some 250 institutions worldwide that have put a collective 15,000 courses online in what has become known as the open courseware movement.

In making their teaching materials available, the universities hope to widen international access to course content, including to prospective students. At MIT, half of incoming first-year students report that they have looked at MIT online courses and a third say it influenced their decision to study there.

But P2PU, Saylor.org, the University of the People and others have been scooping up the material, which includes audiovisual footage of lectures by leading academics, and organising it into catalogues of free content in various fields and disciplines.

"Maybe these upstarts don't have all the bells and whistles of the beautiful campuses. But people are deciding that it's not worth paying for that," says Horn, a co-author of the book Disrupting Class: How Disruptive Innovation Will Change the Way the World Learns (2008).

Horn compares the conventional universities' snub of low- and no-cost course providers to the reaction of the US automobile industry when it began to be threatened by cheaper foreign competition, particularly from Japan.

"As it became clear that the Japanese automakers were more and more threatening, the American automakers spent a lot of time trying to keep the Japanese out by erecting tariffs and so forth" rather than recognising that consumers wanted smaller, cheaper cars and adjusting their strategies accordingly, Horn says.

With that salutary lesson in mind, Harrington and others in the open courseware movement believe that universities should lower their guard and embrace open courseware.

"So much money is poured into the higher-education system every year to benefit an elite few when this technology exists to disseminate an education at no cost," Harrington says. Rather than competing with existing institutions, initiatives such as Saylor.org will widen the market, she believes.

Whatever the outcome, "there's no doubt that this is a period of uncertainty for universities," says Stephen Carson, the external relations director for MIT's OpenCourseWare programme, who also sits on the advisory board of P2PU. He too thinks that open education systems will ultimately help the market for conventional higher education to grow.

But conventional universities - at least for now - are reluctant to loosen their grip on the monopoly on awarding academic credit towards degrees. These institutions say they cannot always judge the quality of courses offered by others, and that reading online content alone, or even watching lectures, is not the same as attending a class in person.

"Somebody has to be confirming that you are capable of doing something with your knowledge," says Carol Geary Schneider, president of the Association of American Colleges and Universities. "The key to fulfilling that potential is whether or not faculty with knowledge of and competence in the field are putting together a comprehensive course of study."

She adds: "I would never as an employer consider an undergraduate who pieced together an education without faculty supervision from a set of courses that are out there in cyberspace."

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Students who have found their way to low- and no-cost higher educations counter that argument by pointing out that many classes at universities seem no more personal than the ones they take online for free or little cost. Others have been drawn to the rebellious nature of this innovative new model.

"There's a fundamental tension between the fact that people want standardisation - which is what credentials and accreditation are - and the fact that a lot of these new, interesting educational organisations are coming in and saying, 'Well, we don't have to standardise,'" says Jessy Kate Schingler, a software developer who lives in Washington DC, who has taken courses from P2PU alongside her doctoral studies in computer science at the University of Maryland, College Park.

Meanwhile, some businesses that reimburse employees' tuition fees are also becoming interested in free- and low-cost online education providers. This could put more pressure on traditional universities to accept academic credits from outside sources, observers say, or face the loss of potential transfer students.

"If employers start to move into this new world, that's when it's really going to take off," says Horn.

CompuCom, a Dallas IT company with 5,000 employees, already has. It has begun to work with StraighterLine, a for-profit provider that uses course materials from McGraw-Hill. StraighterLine students pay $99 a month plus a $39 registration fee for each of more than 30 online courses. That's a full academic year of higher education for less than $1,000, when the average price of the cheapest conventional route to a two-year associate's degree offered by community colleges is three times that price.

What CompuCom is doing, says Ed Rankin, who runs the company's tuition-reimbursement programme, "is analogous to what's happening in healthcare, where you've got insurance companies negotiating on behalf of their insured for lower costs from their healthcare providers". That's because StraighterLine's $99-a-month price tag not only saves CompuCom money but also saves money for the employees, who pay a share of the fee.

Conventional universities covet students whose employers pay for their tuition - and they offer far more advanced programmes of study than StraighterLine provides. But now, StraighterLine CEO Burck Smith says gleefully, "if they want these students later on, they will have to accept StraighterLine credits".

StraighterLine students may well go on to further study at a conventional university, Smith says. "But if they're going to go through this pathway and a school isn't transfer-friendly, they'll go somewhere that is. It starts to shift the balance of power from the school to the student around credit transfer."

And CompuCom's Rankin says "there's no question" that other companies are likely to follow suit and use low- and no-cost programmes for employees.

That trend has drawn the universities' attention.

The American Council on Education, the pre-eminent US university association, plans to set up a blue-ribbon commission to explore alternatives to conventional teaching using new technology, says Molly Broad, president of the ACE.

"This is a period of significant transformation," she says. Broad sees higher education approaching a point at which people will be able "to snap modules together or link them in ways that produce what are sometimes called stackable credentials", including credits from, say, community colleges, universities, life experience and other sources, including open courseware.

"There certainly is, I think, going to be competition, and by and large I think competition is a good thing," Broad says.

A handful of conventional universities have already embraced the low- and no-cost education movement. Albany State University in Georgia, for example, encourages incoming students to take StraighterLine courses before they even arrive, accumulating credit towards their degrees and improving graduation rates.

"The resistance will be there for at least a little while longer," says the university's president, Everette Freeman, who faced opposition to the idea from his own faculty. "But it will change. It's on the wrong side of history."

At the very least, says MIT's Carson, "You're going to see widened educational experiences. Will they be the equivalent of a campus-based experience? I don't know."

Whatever happens, learning organisations based on open courseware are making waves, says Shai Reshef, founder and president of University of the People and an entrepreneur who once ran a for-profit higher-education company that he sold to Kaplan. "What we're doing is basically showing two things: first, that education can be way cheaper than it is right now, and second, that there must be an alternative."

Even people in the movement, however, wonder whether it will - or should - supplant conventional higher education.

"It's an open question whether this is something that complements the current model of education or replaces it," says Carson.

P2PU's Schmidt admits that there is "a part of me that is really nervous about some of these changes", even if they provide a practical solution for many students and increasing number of employers.

"There's something really fantastic about the idea of the university," he says. "And over the past few decades it feels like we've eroded what's important about it, which is to be that space for people to make that transition from youth into adulthood. We've dumbed all of that down to, 'all you need is this list of skills and then you'll be a useful participant in the workforce'."

I'll teach you this for nothing: key players in the open tournament

MITx

This programme, announced in December by the Massachusetts Institute of Technology, which pioneered the open courseware movement in the US, will provide already available open courseware to anyone who wants to use it, free of charge. It will also offer (and charge for) certifications of completion for students who prove that they have successfully finished a course. MITx also is offering a free online platform that other institutions can use as a foundation for their own online initiatives. The MITx project will be used by MIT as a massive laboratory to study and further develop strategies for online learning.

OERu

A New Zealand-based collaboration among accredited universities worldwide, OER university proposes to bring together universities across the globe to provide "credible credentials" for students using free (but, organisers say, rigorously assessed) open educational resources for very low tuition fees. Founded in 2009 and still in development, it has signed up partners including the University of Southern Queensland and the University of Wollongong in Australia, Athabasca University in Canada, Otago Polytechnic in New Zealand, the University of South Africa, and the State University of New York's Empire State College. It has support from the United Nations Educational, Scientific and Cultural Organisation.

Peer 2 Peer University

This California-based organisation was founded in 2008 with support from the Hewlett Foundation and the web-browser company Mozilla, the company behind the Firefox browser. It uses open education materials to provide opportunities for a free education to students worldwide. Volunteer teachers guide students through open courseware and online study groups, at no cost, and there are some volunteer teachers and a shared-governance model of oversight. The project is being incubated at the University of California, Irvine, and is led by Philipp Schmidt, a South African IT consultant.

Saylor.org

Also launched in 2008, Saylor.org was founded and financed by software billionaire Michael Saylor to push the idea that education should be free. Using open educational resources, it offers more than 200 free higher education-level courses organised into 13 areas of study, from art history to mechanical engineering. Starting this spring, students will earn "electronic portfolios" that they can show to prospective employers to detail the work that they have done. The Saylor Foundation is also running a campaign to persuade authors to provide their textbooks under Creative Commons licensing for students to use without charge.

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University of the People

A not-for-profit institution based in California, University of the People offers online education to students in more than 120 countries for a small, scaled application fee, with potential plans to add an examination fee. It claims to be "the world's first tuition-free online university dedicated to the global advancement and democratization of higher education", and it aims to "provide access to undergraduate degree programs for qualified individuals, despite financial, geographic or societal constraints" using open courseware and open education resources with peer-to-peer teaching by volunteers and in online discussion rooms. The organisation was founded in 2009 by Shai Reshef, an Israeli entrepreneur who previously ran a private, for-profit education-services company that he sold to the US private for-profit education company Kaplan. The provost, David Harris Cohen, was formerly a vice-president of Columbia University. With support from the Clinton Global Initiative, the University of the People provided free access to online higher education in Haiti in 2010 following a catastrophic earthquake.