In this modern world, knowledge is power as said by Bacon and the whole nature of knowledge is transformed. However, for Syed Naquib Al Attas, "the test of true knowledge is in man himself". Through knowledge man knows himself and his ultimate destiny, and in thus knowing he achieves happiness, that then knowledge, in spite of being imbued with certain elements that determine the characteristics form in which it is conceived and evaluated and interpreted in accordance with the purpose aligned to a particular worldview, is true knowledge, because it fulfills the man's purpose for knowing. Attas in his book "Islam and Secularism" writes about the nature of knowledge, he writes about two kinds of knowledge. The first one includes the knowledge of the essentials of Islam, their principles, their meanings and purpose and correct understanding and implementation in everyday life and practice. The second kind of knowledge refers to knowledge of the sciences, and is acquired through experience and observation and research. It is discursive and deductive in nature and it refers to objects of pragmatic value. The Fardh Ayn knowledge and Fardh Kifaaya knowledge, one you must acquire and the other you should. 
"The first knowledge unveils the mystery of Being and Existence and reveals the true relationship between man's self and his Lord, since for man such knowledge pertains to the ultimate purpose for knowing, it follows that knowledge of its prerequisites becomes the basis and essential foundation for knowledge of the second kind."
For Attas, the purpose of seeking knowledge is to inculcate goodness in man as man and individual self, not merely in man as citizen or integral part of society, as citizen in his own microcosmic kingdom, as spirit. This is stressed rather than his value as a physical entity measured in terms of the pragmatic or utilitarian sense of his usefulness to the State and society and the world. Knowledge is not primarily to produce good citizens but to produce good men.
Education means ta'dib, in contradistinction with the generally accepted tarbiyah, is of paramount importance and must seriously be considered. Tarbiyah conveys the meaning of 'to nurture', 'to bear', 'to feed, foster, nourish', 'to domesticate'. Its application in the Arabic language is not restricted to man alone and extends to other species: to minerals, plants and animals; one can refer to cattle farming as a form of tarbiyah. Education is peculiar only to man, the activity involved and qualitative elements inherent in education are not the same as those involved and inherent in tarbiyah. Another important aspect is that tarbiyah also refers to the idea of possession, and it is usually the 'possessor' who exercises tarbiyah on the object of tarbiyah. God is already ever exercising His Dominion over all. In the case of man, it is usually the parents who exercise tarbiyah over their offsprings. And when the exercise of tarbiyah is transferred over to the state, there is danger that education becomes a secular exercise, which in fact, is happening.
Again from the linguistic point of view, we must see that the fact that the term 'ilm' has been applied in Islam to encompass the 'totality' of life - the spiritual, intellectual, religious, cultural, individual, and social. Its character is universal, and that it is necessary to guide man to his Salvation. No other culture or civilization has ever applied a single term for knowledge to encompass all activities in man's life.
We know that from the earliest periods Islam began its educational system significantly with the mosque at its centre. The masjid continues to be its centre even today, and developed other educational institutions such as maktab, dar ul uloom and the madaris.
Alija Izetbegovic, a Bosnian intellectual, wrote in his book -
"This tendency of integrating religion and science - an Islamic tendency in the best sense of the world - can be seen in the simultaneous construction of mosques and schools. The first order to build schools near the mosques dates back to the second caliph 'Umar ibn al-Khattab. This order was repeated by Caliph Haroun al-Rashid (786-808). The parting of mosques from schools came about much later, through the creation of Nizamiyyah schools, but
The school programs continued to be based on the principle of ‘bipolar unity’."
"This tendency resulted in a phenomenon known only in the Islamic cultural circle: the mosque-school, a unique construction with a double function which has no adequate name in European languages. At most, we find it in French in the form of the mechanical compound 'mosque-ecole'. This characteristic building is the material or technical equivalent of that primeval Islamic postulate of the unity of religion and science with which the very revelation of the Qur'an started: Read, in the name of your Lord . . . . "
There is historical evidence that the first mosque, Masjid an-Nabi, which was built by Prophet Muhammad (صَلَّى اللّٰهُ عَلَيْهِ وَسَلَّمَ) was a school at the same time (it was called Suffah). As per Alija, the idea of Islamic educational institutions is very human, they represent the man.
University, derived from the Latin word "universitatem" clearly reflects the original Islamic kulliyah or totality.
Attas writes - "The university must have been conceived in emulation of the general structure, in form, function and purpose, of man. It was meant to be a microcosmic representation of man- indeed, of the Universal Man ( al Insan al kulliyy)".
It's amazing that Alija Izetbegovic and Syed Naquib Al Attas thought the same way, they both compared it to man.
Universities were to encompass the whole of man but in this modern world it no longer reflects man. Like a man with no personality, the modern university has no abiding, vital centre, no permanent underlying principle establishing its final purpose. It still pretends to contemplate the universal and even claims to possess faculties and departments as if it were the body of an organ but it has no brain, no soul. Its development is not guided by a final principle and definite purpose, except by the relative principle urging on the pursuit of knowledge incessantly, with no absolute end in view. It points to itself, knowledge for the sake of knowledge, profane science instead of science as Rene Guenon has put it. These universities do not lead to certainty or true knowledge, they are productive of perpetual confusion and scepticism.
"Even if it can be argued that the modern university is in fact emulating man, yet it is the secular man that is portrayed; the rational animal devoid of soul, like a circle with no centre. The various faculties and departments within them, like the various faculties and senses of the body, have in the modern university become uncoordinated, each preoccupied with its own endless pursuits."
Maryam Jameelah writes a very similar thing about modern university, in her book Islam and Western society, she writes -
"Is Western civilization conducive to human welfare from an intellectual standpoint? One of its proudest boasts is its system of universal, compulsory education. The question is, what kind of education? In western-type schools, colleges and universities, one finds no love of knowledge for its own sake. Western colleges and universities have become immense degree factories. Students aspire to a degree not for competence in their chosen field but merely for social and economic advantages. In view of this totally materialistic view, the whole Western system of education is breaking down."
This type of “education” which the “developing” countries are imitating with great zeal, is much worse than illiteracy and complete ignorance. It is, in fact, not education at all in its true sense but mis-education. Like every other institution of technological society; education proceeds in a mass, impersonal regimented manner with the aim narrowed down to only literacy and technical “know-how.” While this may serve the economy, it scarcely responds to the deepest human needs. This is why schools in the Islamic world cannot be classified according to the European criterion of secular versus spiritual. Such institutions were considered by all Muslims to be only natural, as they stemmed directly from the spirit of Islam. The same attitude has been maintained up to the present day, and wherever it is different, it can be attributed to foreign influence. The original state always corresponds to the basic Islamic concept of the unity of religion and science. The mosque -school is one of those symbols to which nothing can be added and from which nothing can be subtracted. The removal of God from science making it profane science, is from where we moved towards these modern universities. When we removed God from the picture and put a man, the cruel materialism degraded knowledge for power and reduced it to the limited utilisation in the material world.
Modern universities are anti-man, anti-human. The Islamic educational institutions are not anywhere near these "degree shops". I would love to conclude my quoting Syed Naquib Al Attas here -
"The modern university is the epitome of man in a condition of zulm, and such a condition is maintained by the encouragement and elevation and legitimization of doubt and conjecture as epistemological tools of scientific enquiry. The Holy Quran repeatedly repudiates such methods, branding them contraries of knowledge."