Generative AI (GenAI) has not broken higher education; it has exposed long-standing systemic fractures. This paper argues that traditional pedagogies, rooted in formalist epistemologies, are misaligned with the realities of a world mediated by thinking machines. Blending systems analysis with epistemological critique, it diagnoses higher education’s foundational incoherence and introduces two critical frameworks — epistemic laundering and epistemological vector space — to map and address this dissonance. Building on this foundation, the paper proposes Critical AI Literacy as a model that emphasizes epistemic awareness alongside technical fluency. It provides a structural analysis of GenAI’s limitations and outlines practical strategies including RAG tutors, cognitive partnerships, interactive content generation, and skill-gap training. Ultimately, this paper frames GenAI not as a disruptive threat, but as a catalyst for reimagining learning design, moving beyond performance-driven education toward authentic, adaptive expertise in a dynamic knowledge landscape.
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