Academic Earth - Thousands of video lectures from the world's top scholars.

What I think can speak to its power a lot more than just some virtual degree which will probably be overlooked at, is an awesome product/project/etc created by virtual university graduates and publicized as so.

Creating these virtual degrees is pointless and loses respect really quickly. Just like security certifications serve only as a filter for the lowest candidates and don't actually add much to some qualified.

Projects, interests and output talks, b.s. walks. (This is coming from someone who ended up getting a CISSP... sigh)

Isn't it called experience?

Honestly, I think the proliferation of certificates and degrees has had a negative affect on the value of higher education, RE: that "marketable degree" you mentioned. Not to mention that some (myself included) could argue a 2 year tech degree is currently more valuable than any non technical bachelors.

I find it a little ironic to decry the "ivory tower" in a discussion about a site filled with free, online lectures from ivory tower universities. They are providing much of the learning for free at this point, so the only thing missing is the "marketable degree at a low cost." The "marketable" part is largely a function of the selectivity of the university in question, so I doubt that a low cost degree from a new institution will be highly marketable any time soon. You pretty much need to convince society first that your university is prestigious and selective and the best students all want to go there, a veritable Catch 22.

Such strong language. I did pose it as a parenthetical question...

Anyway, I think automated grading could work for anything math-based, as well as for some computer programs. Consider that much of learning is done through homework and exercises that build upon previous exercises. I spent many hours learning by working through problems and checking my answers with an answer guide. (And being infuriated when I found mistakes in the answer guide!) Doing homework isn't a complete education, but it sure is a part of one. And yes, as long as the exercises are well designed, they make you able to think.

Needless to say, grading essays and whatnot is another ballgame altogether.

TopCoder uses fundamentally automated grading for its contests, and people learn much about programming through it -- the teaching happens from human to human, but the presence of an immobile, unthinking obstacle to overcome doesn't at all hinder the learning process.

Saying it would work with mathematics is making a strong assumption about the kind of math classes people would be taking while using this service.

Depends on the assignment?

Basic programming? I am working on that: http://www.spoj.pl/AKADEMIA/

(note: Polish only)

Right, everything's out there if you're willing to dig for it. It would be nice to have everything in one place, though. I'm not saying it's hard, it would just be nice if it were all organized ahead of time.