We consider the simplest one-constant model, put forward by J. Ericksen, for nematic liquid crystals with variable degree of orientation. The equilibrium state is described by a director field and its degree of orientation, where the pair minimizes a sum of Frank-like energies and a double well potential. In particular, the Euler-Lagrange equations for the minimizer contain a degenerate elliptic equation for the director field, which allows for line and plane defects to have finite energy. We present a structure preserving discretization of the liquid crystal energy with piecewise linear finite elements that can handle the degenerate elliptic part without regularization, and show that it is consistent and stable. We prove Gamma-convergence of discrete global minimizers to continuous ones as the mesh size goes to zero. We develop a quasi-gradient flow scheme for computing discrete equilibrium solutions and prove it has a strictly monotone energy decreasing property. We present simulations in two and three dimensions to illustrate the method's ability to handle non-trivial defects as well as colloidal and electric field effects. This is joint work with S. Walker and W. Zhang.