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One of the most powerful aspects of my MIT education was the residential experience. Filling one's head with facts from an on-line course would duplicate about 50% of the MIT experience. Education is about more than just collecting facts - there is a critical social component as well. I think that no matter how technically deep one could go in an on-line course, it would still be "MIT-lite".
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Mix of on-line and residential
Several people have mentioned that it would be valuable to mix an on-line and residential experience. The SDM program allowed for distance students to do exactly that. There was a requirement for a certain amount of face-time along with video-conference distance learning. I was a local student but the distance students did believe this was a good mix.
It is critical to have face-to-face time with classmates and professors, especially for working in teams. Team work is an essential part of technical education because most technical projects are too complex to approach in isolation. Also, residential life experience is valuable for young people as they become independent. However, the present residential model is just too expensive. We have to widen the availability of a quality technical education. Having some portion of the coursework available on-line and applicable to an MIT degree could help make the education more affordable.
What I learned at MIT did not come from the classroom.
Looking back over the decades that things that proved most valuable in my career and personal life were learned in labs, seminars, extracurricular activities, and living groups. The residential experience, the technology and research focus of the community, and the ready access to faculty interaction made the MIT tuition worthwhile.