"In fifty years, if not much sooner, half of the roughly 4,500 colleges and universities now operating in the United States will have ceased to exist. The technology driving this change is already at work, and nothing can stop it. The future looks like this: Access to college-level education will be free for everyone; the residential college campus will become largely obsolete; tens of thousands of professors will lose their jobs; the bachelor’s degree will become increasingly irrelevant; and ten years from now Harvard will enroll ten million students."
Nathan Harden has predicted the end of universities as we know them more often, but in this article he provides a detailed account of the why and the how of their disappearance. The root cause of the demise of universities as we know them is technology, that is the Internet. Much as new technology has upset the record industry, so it will wreak havoc with traditional education, with a lowering of the price, ubiquitous access, a wide choice of courses, increased efficiency, and even increased quality. Of course, the last does not hold for the few who can afford to attend classes at an elite university, but for the many who go to "Nowhere State University". Naturally, the new model comes at a price. The college experience gets lost, interactivity in class disappears. But, "Online education is like using online dating websites—fifteen years ago it was considered a poor substitute for the real thing, even creepy; now it’s ubiquitous." With the technology, new business models emerge. As with all disruptive innovation, it is not so much the technology iself, but the business model around it that does the disruption. Here it is the scalability of MOOCs, the fact that the development costs of a course may be shared by thousands or even hundreds of thousands.
Although the article is long, it is well worth your while. There's one thing you should keep in mind, though: in many respects it fits the US situation only. For example, few if any European universities have a public mandate but are run as businesses like universities in the US. Also, the college bubble with students having over $20,000 debts, is not a universal phenomenon (although with the current high tuitions, the UK is rapidly heading that way). And yet, don't dismiss it because of the lack of fit. Education is going global, the venture capical-backed online platform providers such as Coursera and Udacity already see business opportunities outside the US; and if they don't see those themselves, traditional universities will tell them as they are lining up to be allowed to sell their courses and brand name through them. (@pbsloep)