I've used them as supplements for masters and upper division undergraduate classes. My feeling is that they add a dimension that you don't get in the classroom but they do not substitute for the classroom. That said, on-line discussions are far better than the old correspondence course approach.
I do believe that an on-line masters program could be very effective and certainly much more convenient for one who does not live close to the program.
Surely, there are folk who chime in to this discussion board who have taught at American Military University or other on-line programs who can contribute better insights than me.
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