An American online university started by an Israeli entrepreneur has opened an operations center in the West Bank.

Shai Reshef, the founder of University of the People, a nonprofit institution that offers free online education to students in more than 120 countries, said in an interview last week that his agreement with ASAL Technologies, a Palestinian software and information technology services company based in Ramallah, was just the first stage of a plan to move the university’s entire back office to the West Bank.

University of the People uses specially adapted Open Course materials to offer courses in business administration and computer science. “Those are the skills most likely to help our students find jobs,” said Mr. Reshef, an entrepreneur who started and sold two for-profit education companies before putting $3 million of his own money into his new venture.

Based on a peer-to-peer learning model in which students teach one another, the university has also recruited volunteer mentors from Brigham Young, Columbia, Harvard, Insead, N.Y.U. and Yale.

The tuition is free. Students pay a one-time application processing fee on a sliding scale of $ 10 to $50, depending on their income and country of residence, with a similar scale, going up to $100, when they complete their exams. However for many potential students even $10 is prohibitive, said Mr. Reshef, who recently initiated a $6 million fund-raising drive to provide scholarships for the poorest students and to allow the university to become self-sustaining.

“We’re not trying to create Oxford or Harvard,” he said. “This is low-cost, high-quality education for people who can’t afford anything else.”