I think this is important for universities to understand: online education doesn't mean that traditional education systems are obsolete. It means that, one can utlize the best parts of the online systems to make quality education available to many more students than would otherwise have been possible. Gatech seems to have done just that: not cut down on their TA's/Classes, but added more to serve the growing online community, and used Udacity as a platform for content sharing.
I was finishing my Masters when Coursera, Udacity exploded on to the scene and my Advisor remarked at the time "In a couple of years, we probably won't need to teach Calculus anymore!". Somehow that one thing really stuck in my mind: what really helped me learn personally was always being able to ask questions, explore and find answers when I was stuck; if I'm unable to do that, I lose any sense of progress and quickly lose interest. I'm really hoping what my advisor said then doesn't really happen.
Udacity person here (Director of Content Development - but this is my own personal commentary)! You are exactly right - Sebastian has gone pretty public on record in explaining the initial rollout of Udacity (competing with colleges) wasn't right for us.
We absolutely value the college experience. I, personally, didn't complete college; but I consider it a lot like my military experience. It helps develop the "whole person concept" - there's more than just the skills/tasks for the job that helps develop someone into a productive member of society.
But, once that person is a productive member of society, once they've established that maturity; that's where products like our Nanodegree program fall in to place. We're uniquely positioned to offer educational opportunities in that skills-gap between college and career, between life events (like stay-at home mothers) and re-entering the career field, between your current level/position in your company and the next.
These fields move so quickly... a 4yr degree and completely taking over your life - when you have other commitments (children, a career, etc) - is unreasonable. We are life-long learning and firmly believe every X years (3-5 maybe? society will define this), you're going to need to get yourself back on track given your goals. That's where we fit in - we have no intent to replace college.
I was finishing my Masters when Coursera, Udacity exploded on to the scene and my Advisor remarked at the time "In a couple of years, we probably won't need to teach Calculus anymore!". Somehow that one thing really stuck in my mind: what really helped me learn personally was always being able to ask questions, explore and find answers when I was stuck; if I'm unable to do that, I lose any sense of progress and quickly lose interest. I'm really hoping what my advisor said then doesn't really happen.