It's definitely controversial if seen from an American perspective.

But it's much less controversial if seen from a German perspective. So perhaps you need to understand Thiel's German background first. Germany offers many successful alternatives to university.

Now combine it with Thiel's libertarian views: Apparently, Thiel tries to set up alternatives to college privately.

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EDIT (for clarification):

I'm not saying that Germans would like this particular experiment. But they usually agree that university is just one out of multiple desirable options to gain a qualification.

In other words, I'm saying that thinking about alternatives to university is very German. This leads me to the idea that the motivation for this experiment may have its roots in Thiel's past.

Saying this as a German.