To my surprise (although it took a bit of digging), there actually ARE free universities, both online and physical. Here's a roundup:
University: University of the People
Format: online, based in Pasadena, CA
Degrees: Associate of Science; Bachelor of Science
Programs: business administration, computer science
True Cost: "free tuition", $100 "test administration" fee per course, $50 application fee. Total cost for AS degrees: ~$1,800. Total cost for BS degrees: ~$3,600. However, as of now, the UOP is NOT charging the test administration fee for any classes, because they are not yet accredited.
Accreditation: unaccredited, currently seeking accreditation from U.S. Dept. of Education.
The Rundown: Unlike most unaccredited free diploma/certificate/degree programs, I am impressed by the fact that the UOP is actively seeking accreditation. Even more impressive, is that they took their current lack of accreditation into account in deciding not to charge exam processing fees as of now. Waiving fees in light of a lack of accreditation shows a certain level of integrity on the part of the UOP. The mission statement of "the global advancement and democratization of higher education" is admirable. I hope they succeed, expand, and ultimately make an accredited university education much more accessible to everyone, regardless of financial situation.
University: Trinity Graduate School of Apologetics and Theology
Format: online, based in India
Degrees: Bachelors of: Theology (BTh), Ministry (BMin); Postgraduate Diploma in Christian Apologetics (PGDA); Masters of: Biblical Studies (MBS), Divinity (MDiv), Ministry (MMin), Religious Education (MRE), Theology (MTh), Biblical Archeology (MBArch); Doctors of: Biblical Studies (DBS), Ministry (DMin), Divinity (DDiv), Religious Education (DRE), Theology (ThD), Apologetics (DrApol)
Programs: Theology, Ministry, Apologetics, Biblical Studies, Divinity, Religious Education, Biblical Archeology
True Cost: according to the website, everything is 100% free.
Accreditation: unaccredited in USA, accredited by the ICAATS (International Counsel for Accrediting Alternate and Theological Studies), which is an India-based, (Indian) government-recognized, private Christian accrediting counsel. It should be noted that I could NOT access this organization's website, and their blog was last updated in February 2010.
The Rundown: If you're interested in Christian-based religious education but don't necessarily want to actually go into ministry "professionally", this could be a good school for you. The courses appear to be quite thorough, and the variety of degrees offered is impressive. Based on the weak (to say the least) accreditation, a degree from this school will be unlikely to advance you far in a ministerial career. That said, if you're just looking to educate yourself and/or maybe to add some letters after your name, this could be a good thing.
University: College of the Ozarks, "Hard Work U"
Format: campus-based, located in Point Lookout, MO
Degrees: Bachelor of Arts, Bachelor of Science, Teaching Certification
Programs: full array of the usual undergraduate programs, including a few pre-professional programs.
True Cost: Tuition of $16,900/year, fully covered for all admitted students via scholarships, work-study, and grants. Students still have to pay for room and board, books, and Health/Technology/Services fees.
Accreditation: Accredited by the North Central Association of Colleges and Secondary Schools, Missouri Department of Elementary and Secondary Education, Commission on Accreditation for Dietetic Education, Missouri State Board of Nursing, Commission on Collegiate Nursing Education
The Rundown: The school lacks any graduate programs, but does offer an impressive array of undergraduate programs. While the guaranteed tuition coverage makes CofO a relative bargain for a private school, it still comes out costing only slightly less than a public university because you still have to pay room, board, fees, and books, AND the work-study that every student must do to pay their tuition consists of 15 hours a week, which means that if someone wanted to work during school to cover their room/board costs, they'd likely end up working 25+ hours a weeks PLUS doing a full-time course load. No wonder they call themselves "Hard Work U".
University: The Cooper Union
Format: campus-based, located in New York, NY
Degrees: Bachelor of Architecture, Master of Architecture II, Bachelor of Fine Arts, Bachelor and Masters of Engineering
Programs: Architecture, arts, civil engineering, mechanical engineering, chemical engineering, electrical engineering
True Cost: Every student receives a full scholarship "valued at $35,000/year". Of course, again, the student is still responsible for their own room, board, books, and fees.
Accreditation: Appears to be fully accredited in the various fields of study it offers, but precise accreditation organizations were not found on the website.
The Rundown: For those interested in architecture or engineering, this seems like it would be a great school. Like CofO, you still have to pay your own room, board, fees, and books, BUT at least the financial aid is given in the form of scholarships instead of work-study, meaning it could be feasible to work less than 20 hours a work while enrolled full-time at this school. CU is pretty selective, only admitting 7% of applicants.
University: Uniformed Services University of the Health Sciences
Format: campus-based, located in Bethesda, MD
Degrees: Masters, Doctor of Philosophy (PhD), Doctor of Medicine (MD)
Programs: Molecular and cell biology, public health, healthcare administration and policy, military medical history, tropical health and hygiene, clinical psychology, emerging infectious diseases, neuroscience, medical and clinical psychology, preventative medicine and biometrics, medicine
True Cost: Free tuition and fees, $26,000/year living stipend. Truly a free education.
Accreditation: Fully accredited.
The Rundown: For anyone interested in the health sciences, this would be an excellent school at which to receive a graduate education. Fully accredited, completely free, competitive admissions.
There are other free schools (ie U.S. military academies, tiny private colleges, unaccredited schools of every ilk) but they hardly warrant an entire write-up.