I watched a passionate TED talk about problem-based learning in primary schools.
The university I went to followed this model religiously. 2/3 of our time was spent on semester-long projects. It works. The average time to complete a comp.sci. master's degree at this university was 5.0 years, where the average in other traditional universities in Denmark was > 8 years when I last looked at the numbers.
Besides the benefits mentioned by the speaker in the above video, there can also be a strong social aspect in being divided into small, tightly-knit groups where people would help, motivate and look after each other - and learn how to forget their egos in the name of making the project work.
