The credit-hour has long been the fundamental currency of higher education. Pay your way through the required time in a course and earn a passing grade, and eventually with the right number and combination of credits, you get your degree--usually in two or four years.

But what if you could earn a degree as quickly or slowly as you can learn, regardless of whether you plodded through 80 hours in a classroom lecture?

That could be the next wave of higher education, as schools come under more pressure to cut costs while proving the value of expensive degrees and competing with the growing number of high-quality free online courses. Call it the decoupling of instruction and testing.

The disruptive idea is called “competency-based education,” and it’s gaining ground in the higher education world. A small handful of universities, such as Southern New Hampshire University, Northern Arizona University, and Western Governors University, are at the vanguard of this new model. The concept got a major endorsement in March when the U.S. Department of Education issued a letter to encourage schools to apply for accreditation for these experimental programs.

The most closely watched test so far is now set to launch in November as the University of Wisconsin system begins accepting applications for its new “Flex Option” degrees.

The program is targeted at more than 700,000 Wisconsin adults who never attempted or finished their diplomas, and is meant to help them jump in and get degrees at their own pace. The first available degrees are a liberal arts associates degree from University of Wisconsin Colleges; B.S. degrees in biomedical sciences diagnostic imaging, information science and technology, and nursing from University of Wisconsin, Milwaukee, as well as a certificate in business and technical communication. But the options will probably soon expand.

The model is fundamentally different, however, than any other adult bachelor programs that you’ve heard of. Students will pay a flat subscription fee of $2,250 for three month’s of “all you can eat” access. During that time. they’ll be able to use the school’s instructional content online, its advisors, and other resources. More importantly, they’ll be welcome to try to pass as many “competency tests” as they want.

In theory, students could wrap up an entire degree in three months without touching any official course material--perhaps because they chose to get their learning elsewhere or already know most of the required information through their professional careers. There will also be a cheaper $900 option for students who want to focus on one skill for each three-month period while balancing other life demands.

There are, of course, enormous challenges in making the Flex Option work, and there will rigorous evaluation of retention and graduation rates in its initial years. “We are in essence creating a virtual university--a new one,” says Ray Cross, Chancellor of UW Colleges and UW-Extension. “What is a full-time student in a self-paced competency-based model? Well, we’ve got to define that.”

Only 10 students will be accepted for each degree program in January 2014, but as the program expands, Cross says the “sky is the limit,” especially given how many students are open to self-taught online courses around the world.

The program’s goal is to break even and be self-supporting within six years. The key factor, in addition to whether it can maintain quality, will be how “scalable” it ends up being and how many new students it helps the school system reach, says Cross. “Traditional higher education at this point is not scalable ... and this has the potential to be incredibly transformative, if it is scalable. If it’s not, I’m not sure it’s worth the effort.”

A number of professors and instructors, whose direct value is not as obvious in a model that values independent, engaged learning more than falling asleep in class, have deep skepticism about the idea. As The Chronicle of Higher Education puts it, the fear is that if the tests are not rigorous enough or do not test for the right kinds of learning, then the program could just become just another “diploma mill.”

Many others in the higher education world will be watching. The Lumina Foundation just awarded the university a $1.25 million grant to evaluate the program and document its creation so that it can be replicated at other schools. And Cross says that he’s already gotten inquiries from many other schools around the country. “They are waiting for us to pave the way--to find out if our model works,” he says.

For public universities, new ways of thinking about fundamental business models are becoming a necessity. “Our reliance on state funding is shrinking, and that’s true in every state that I'm aware of,” says Cross. “But it’s increasingly difficult for students to afford higher education costs at all levels. That is not a sustainable trend. It just is not. We need to seek alternatives.”

He’s not writing an obituary for the traditional college degree yet, however--he foresees an expansion of the Wisconsin systems reach, even internationally. “Traditional models of higher education [aren’t] going to go away--not at all. It just means that if we are going to serve the public in its entirety, we’re going to have to do something differently.”