College will always convey a certain image: Gothic buildings filled with postadolescents listening to tweed-clad professors. But the Internet is blurring that picture, and State U is quietly morphing into College.com. To be sure, a virtual university is no place for Felicity or her just-out-of-high-school friends; they want the full campus package, kegs and all. But “typical” college students–18 to 22 years old, living in dorms, studying full time–make up only 16 percent of enrollments today, says Arthur Levine, president of Teachers College at Columbia University. They’re far outnumbered by the 79 percent of adults who lack diplomas. Many of these folks have kids, work irregular hours or travel, which makes night school impossible. The result: millions of adults are dialing for diplomas. They’re attending start-up schools you’ve never heard of–and prestigious ones like Columbia, Stanford and Duke. By the end of the year, according to researchers at InterEd, 75 percent of all U.S. universities will offer online course work, and 5.8 million students will have logged on. Study any time! College has never been more convenient.

Many cybereducators hope to get rich in the process. Online courses constitute just $350 million of the $240 billion higher-education industry today, according to Merrill Lynch, but will grow to $2 billion by 2003. The stock market has been so enamored of online education (or “e-learning”) that venture capitalists have poured millions into the sector, funding companies like UNext.com, University Access and Pensare. Universities like NYU and Columbia have set up for-profit Web ventures, which they hope to take public. (Disclosure: Kaplan, Inc., a division of NEWSWEEK’s corporate parent, The Washington Post Company, also offers online degree programs.) But while administrators dream of swelling endowments, some educators decry the online institutions as “digital diploma mills,” offering subpar education. Others worry online ed could endanger some brick-and-mortar schools. Says Columbia’s Levine: “What happens when California looks around and says, ‘Do we really need nine public research universities?’ "

Until last month, many Americans had never heard of online education. Then Michael Saylor, a Virginia software billionaire, announced plans for a $100 million Virtual U. (That was before his stock tanked.) His vision sounds fanciful–Warren Buffett teaches finance while Michael Jordan hosts Dunking 101–and even futuristic. But like all online programs, it’s rooted in older forms of “distance education,” from correspondence schools to university courses delivered on TV or videotape. Internet courses trump telestudy by letting students interact via e-mail and discussion boards. Boosters say students actually get more faculty contact online than in a lecture hall. “Distance learning has always been frowned upon,” says Vicky Phillips of Geteducated.com, a higher-ed consulting firm. But as it gets wired, “it’s no longer a fringe activity.”

As students prove willing to sign up for click-on courses, new institutions are being born. As a young Navy sailor, Glenn Jones tried in vain to learn Russian by correspondence course. The experience led him to search for a better way to educate the masses. In the ’80s he started offering classes via cable TV. Then in 1995, Jones, a rich cable entrepreneur, founded Jones International University, a campusless college whose employees work in a Denver office park. Classes take place in cyberspace, where the school offers bachelor’s and master’s degrees. Last year JIU became the first purely online college to win regional accreditation. Today it has just 125 degree-seeking students, but its namesake sees a huge upside. Says Jones: “There’s no reason we couldn’t have a million students.”

As more brand-name schools enter online learning, the concept is even attracting corporate high fliers. Since last May, Chris Colbert, president of a Boston advertising agency, has spent 20 hours each weekend holed up in his bedroom study, logged on to the online M.B.A. program at Duke University. Getting the degree involves more than just dialing in: Duke’s “hybrid” program requires students to spend five weeks on campus, and an additional two weeks each taking classes in Germany, Brazil and China. Between campus visits, Colbert’s weekends unfold much like this typical Sunday. He reviews a finance lecture from a CD-ROM, checks his class e-mail and prepares for a chat session with classmates collaborating on a case study. “It’s wild to be 41 years old and freaking out about grades,” says Colbert, who’s pulling mostly A’s.

Colbert seems to be learning, but some academics contend online students are being shortchanged by not studying exclusively on campus. University of York history professor David Noble, the most prominent critic, says the concept is being promoted by profit-hungry administrators who don’t care about students’ welfare. “Students don’t want this stuff,” Noble says. Carole Fungaroli, an adjunct English professor at Georgetown, says older students need a campus experience as much as 18-year-olds. “The magic that happens between students and professors on campus is irreplaceable,” Fungaroli says.

Her colleagues also worry that the online U’s may demean the jobs of professors. Companies like Jones’s are “unbundling” professors’ jobs into two functions: a handful of well-credentialed “content experts” who write the curriculum, and armies of “instructional faculty,” who actually implement the courses. Online schools say the instructional faculty (who have day jobs) are better able to connect with working adult students. But traditionalists say full-time faculty are as essential to a university as its library. To fight the practice, the American Association of University Professors is trying to prevent online colleges from winning accreditation.

Online teachers like Rick Keating don’t feel exploited. Keating, 41, has a Ph.D. in English, an M.B.A. and a day job as an Air Force major. Today he teaches three online courses for Jones and another for the University of Massachusetts. On this afternoon he dials in to find 34 e-mails from students. Later he’ll read and respond to each, post this week’s lecture and monitor the discussion board. The classes work, he says, because online students are more motivated than folks who doze through classroom lectures. “I don’t have any duds in my courses,” he says. This summer he’ll jump a new hurdle: teaching Shakespeare online.

For veteran academics, Internet teaching presents new opportunities. This winter Kipp Martin, a University of Chicago management-science professor, has been taping a class with help from University Access, a company largely staffed with former television executives who help professors revamp courses for the Internet, then market them to other schools. Pensare, another prominent e-learning firm, is helping other business professors repackage teaching to sell to the corporate-training market. Martin, who’s paid in stock options, says teaching to a camera takes getting used to. But he’s impressed by how producers have jazzed up his business-math course. “They have this feature where you could actually see the different terms come out of the formulas and become one,” he says. “It was something I’ve never done on the blackboard.”

That kind of innovation isn’t the norm. While private companies try to re-invent teaching as a multimedia experience, most universities simply install cameras in lecture halls to turn professors’ ruminations into Webcasts. The most progressive cybereducators argue that this “candid classroom” approach fails to take advantage of the Internet’s richness. “They take a physics class with 1,000 kids falling asleep and think if it goes online it’s going to be exciting,” scoffs Roger Schank, director of Northwestern’s Institute for Learning Sciences. As tech-savvy start-ups rewrite the rules, some worry whether tradition-bound colleges can compete. Says Levine: “The question is, are the brick-and-mortar schools going to move fast enough?”

Even when professors get the knack of online teaching, is it effective? There’s voluminous research, but no definitive conclusion. Researcher Thomas Russell has collected 355 studies, all showing no significant difference between what students learn in a classroom or far away. But most of those studies deal with television courses; Internet courses are new enough that research is still evolving. However, a study commissioned by teachers unions says most existing studies used flawed methodology. Its conclusion: the research on distance learning has a long way to go.

Whether the classes work or not, they aren’t a cakewalk. On a campus, classmates provide moral support; working online, it’s hard to get a sense if you’re on pace or lagging. And while most traditional universities stick to the traditional grading regimen of midterms, finals and a paper or two, newer online schools often assign several papers each week. The assignments don’t win points for difficulty. (Example: “Write a one-screen summary in which you discuss what you learned during this workshop.”) But even busywork takes time.

One result of these hardships: more students drop out of online courses. “That’s been the Achilles’ heel of distance programs throughout history, and it still exists today,” admits Brian Mueller of the University of Phoenix, which began offering online degrees in 1989. The key to boosting retention, he says, is creating a highly social online experience. In the Phoenix M.B.A. program, the same half-dozen students progress through all of their classes together, bonding via modem. But online study still isn’t for everyone. Phoenix has 12,500 students in its online programs, but despite traffic and inconvenience, five times as many students show up in the physical classrooms it operates in 23 cities.

Once the course work ends, it’s unclear how widely employers will accept the dot-com diplomas. “There’s a lot of mystery and confusion among recruiters about the value of an online degree,” says Mark Oldman, cofounder of Vault.com, an employment-research firm. Recruiters are asking questions like “What’s the difference between a cyberlecture and the Discovery Channel?” he says. Oldman predicts acceptance may vary depending on the field. Law firms and academia may never fully embrace them; less conservative businesses may be more flexible. The military, public schools and technical firms seem more accepting, especially of engineering or computer degrees. Established schools argue recruiters won’t necessarily know a degree came from cyberstudy. “There’s no asterisk on the diploma–it’s the exact same degree,” says Andy DiPaolo, assistant dean at Stanford, which offers online engineering degrees.

Meanwhile, the students who’ve served as e-learning guinea pigs progress toward graduation. Diann Ferreira, a 55-year-old employment counselor in Ashland, Wash., is already planning the party she’ll throw when she earns her B.A. from Jones International in August. She figures the degree could earn her a $10,000 raise, enough to let her retire five years early. But just as important will be her sense of accomplishment at finally finishing college. “It will make me feel better about myself,” she says. The diploma will hang in her den–right over her computer.