1. Pre-selecting the best, so that employers don't
have to spend money on the selection process.
2. Getting similarly-minded people to know each other.
People keep assuming that universities are an education business. They aren't. They're a research business, with education as a side job. The only reason they do that is to provide grad students (indentured servants) to the professors, who themselves are only as good as their last grant.
For one, just look at the operating cost of the top research universities. I pay $50,000 a year at my university. That's a drop in the bucket of the actual operating cost. What really pays the bills? Grant money, patents, etc.
Professors are at universities to do research. Teaching is a necessary evil.
1) Colleges DO NOT filter out bad students. I know good and bad programmers who graduated out of my college.
2) The student community formed is also very important. Student communities really foster creativity and help students encourage each other. Online you are alone, isolated. This is a general problem of online human interaction, you are more alone and isolated than usual.