What would happen if the marginal cost of education were zero? It's already happening with music and video online. That is just one of a few fascinating issues that were discussed at the Hacking Education event hosted by Union Square Ventures.
To a great extent, homeschoolers are already there. If you are determined to not spend, you can provide a challenging and diverse education for your kids using primarily the library and free online resources. It may not be 100% free, but it's pretty damn close. So we know what a "free" education looks like. The question becomes how to bring those benefits to the kids trapped in the school system? Unfortunately, it gets complicated because they school system provides so much more than just education. School lunch is the only decent meal a lot of kids will have each day. It may be the only time all day some kids feel safe from abusive parents or drug laden neighborhoods. It may be the only time all day some kids have any adult supervision at all. The right wing "shut down the schools and hope for the best" approach isn't really going to cut it.
Is free education even possible? Certainly, anybody that is motivated can use the marginally free Internet to become proficient in just about any skill that you desire. Unfortunately, the majority of kids probably aren't that motivated. Move education online and let the chips fall where they may could lead to a lot of uneducated chips. Whether or not those chips are really worse off than they are today trapped in the system is debatable.
I'm a pessimist. I think the education bureaucracy is too entrenched to ever achieve real change in the system. There may be some interesting results on the margins, but they will stay on the margins. The real change will all happen outside of the system. In theory, if enough people leave the system real change may be forced on it. I wouldn't bet on it though. The system is designed to avoid change, and parents are lazy. It's a deadly combination.