heh, I actually had this discussion with the professor I an TAing for. The (graduate) class is entirely a class project (it is an ASIC design class), and, if you finish the class project (you can tape out your chip), you get an A.

We have a set of homework assignments to help the students learn the tools (kind of a "hello world" script for the project), and I asked if we just tell them we don't look at them and they are entirely for your benefit. The professor said you if you do that, there will be a decent amount of students who will just not do the assignments and later on complain that they have no idea how to use the tools.

The solution we came up with is to have a set assignment due date so students feel like they have to do them.

Personally, I am surprised that graduate students need that sort of motivation to do the work.

Tried that after discussion with students, with the result that no one did homework and the learning outcome completely collapsed.