The debate about online education rages on, and rather extreme positions have been staked out on both sides. On one side are the 'disruptors,' who see the short-term financial problems as a call for massive, urgent change in the form of MOOCs and so forth. On the other side, we have the 'status quo(t)ers' who point to long-term data e.g. employment benefits enjoyed by college grads over the past 30 years or so. Both of these extreme positions miss important points about why higher education has become so expensive, and what is required to restore its value to our young people. Most faculty feel powerless to bring about the changes that are required, while defending the most valuable aspects of American higher ed.
Of course, the cost problem is central to these debates. Tuition has inflated many times faster than CPI for several decades. The enormous financial risks that high tuition poses to our young students and their families is not acceptable. But in order to address the problem, we need to ask where this extra cost came from. It is important to remember that rapidly increasing enrollment necessitates large upfront expenditure, as schools invest in facilities (dorms, dining halls, buildings and classrooms etc.), administrative services, and faculty to accommodate burgeoning enrollment. State and federal funding levels have been roughly constant for many years, while tuition inflates due to facilities and administrative costs due to expansion. We have to bear in mind that most of our colleges weren't built for expansion: most of them were built decades ago to provide a higher education to a relatively small number of students. They are thus inherently slow to adapt to the enrollment surge, and so expansion has a high upfront cost.
Moreover, as I have noted many times before, the 'prep problem' is pushing a large amount of cost through our higher ed systems. When students take ~1 year of remedial high school coursework in college, that increases the cost of college to everyone, and leads to a wide divergence of outcomes among our college grads:
Lately, I have been thinking more about 'mission creep' in American higher ed: the tendency for our colleges to de-specialize and take on more and more roles unrelated to their core mission. We see evidence for this in our curriculum, which is increasingly designed to cover all the bases and provide a generalized educational experience for all. Many schools seem to believe that they must, for purposes of reputation and accreditation, provide courses in everything, and push students through hyper-generalized mush that does very little for students' individual needs. The result is, of course, more expense for all. This also gives rise to grade inflation and the problem of indistinguishable transcripts. On the whole, it has become much harder for students to distinguish themselves on an individual basis: much of what they do in college is ~identical to what everybody else does... and most students receive roughly the same grade. Consider the opposite: higher education a la carte, which would provide to a student only what (s)he needs or wants or can afford to pay for. That concept would be rather rather revolutionary in today's American colleges!