'Business model of elite universities set to collapse': Top Silicon Valley voice warns of AI disruption

Indian-American entrepreneur and venture capitalist Vinod Khosla on Sunday said that artificial intelligence may significantly undermine the traditional value proposition of elite universities and reshape the structure of high-status professions. 

In a post responding to a report on AI's impact on knowledge-based fields, Khosla wrote: "Interesting but plausible assertion: The business model of elite universities — acting as costly gatekeepers to a kingdom of guaranteed high earnings — is poised to collapse. When the ROI of a $300,000 law or medical degree evaporates, the institutions built on credential inflation will be next."

"The star litigator of 2035 won't be the one who memorized the most precedent; it will be the one who can ask the AI the smartest question. This is the dawn of a new kind of expertise — one rooted not in what you know, but in how you work with what the machine knows."

Khosla's comments came in response to a report titled "The end of prestige: How AI is quietly dismantling the elite professions." The report describes how generative AI tools are increasingly being adopted in law, medicine, finance, and consulting to perform tasks traditionally assigned to junior professionals.

According to the report, one law firm partner used an AI system called CASEY to generate a regulatory analysis within seconds — a task that would otherwise take a junior associate days. The report also cites the deployment of systems like Harvey at Allen & Overy, Med-PaLM 2 in clinical settings, and BlackRock's integration of generative AI into its Aladdin platform.

The report argues that highly codified professions are vulnerable to such automation, and that credential-based systems — including expensive degrees — are being challenged by tools that perform core tasks faster and at lower cost. "When a profession's value is based on exclusive access to codified knowledge or repeatable process, it is vulnerable. Prestige does not protect it."

It also states that automation is altering — not fully replacing — professional roles, eroding the billable work that once supported elite compensation structures.

Khosla's post sparked a discussion, with some agreeing with his views. A social media user said that why one should pay for regurgitated knowledge when tech can democratize expertise. "Elite universities charging $300k for degrees built on credential inflation? Classic D.C. bloat. AI exposes the scam—why pay for regurgitated knowledge when tech can democratize expertise?" the user asked. 

The user, however, said that the real issue was bureaucracy, which was clinging on to outdated models. "Bloated bureaucracies clinging to outdated models while taxpayers fund their irrelevance. America’s future demands innovation, not Ivy League gatekeeping. Redirect that cash to vocational training, AI research, and merit-based systems where skill beats pedigree. Let the diploma mills collapse—efficiency always wins."