I'd go so far as to say that actually teaching students things is the least important service performed by universities even for undergraduates. Far more important for students' future careers is signalling their performance over the course of three years of relatively autonomous study within a controlled environment of their choosing, and the commitment that entailed. Not to mention the huge variety of extracurricular opportunities offered that are particularly hard to replicate through the medium of a website.
Performance could still be measured by grades even in a purely online university.
Extracurricular activities are still possible, people could join study groups within their local area and socialise there, possibly also discounted travel to visit with study groups elsewhere. In addition you could spend the money you saved via cheaper college fees to indulge in some pretty kick ass hobbies.
I'd go so far as to say that actually teaching students things is the least important service performed by universities even for undergraduates. Far more important for students' future careers is signalling their performance over the course of three years of relatively autonomous study within a controlled environment of their choosing, and the commitment that entailed. Not to mention the huge variety of extracurricular opportunities offered that are particularly hard to replicate through the medium of a website.