Inventables announced a filament extruder competition the GE Garage at Maker Faire on 5/19/2012. The contest is to design a machine to extrude ABS or PLA filament from pellets to 1.75mm using less than $250 worth of materials. The extruder must be able to add the colorant as well. The first person to upload a solution wins. Inventables plans make pellets and colorant available to people to play with.
Filament is running about $40-$50 dollars. That is about 5-10 times the cost of raw pellets. This would be a great resource for a MakerSpace, HackerSpace, club or school.