No topic in higher education is more hotly debated today than online education. Much of the conversation and speculation revolves around "massive open online courses" (MOOCs), on which hundreds of thousands of students have enrolled. But MOOCs are just one part of a much broader range of online educational technologies - and perhaps not even the most important part.

Clearly, the extensive deployment of online education is still in its infancy, and it is too soon to predict the outcome from a handful of experiments. But one thing is clear: online education offers tremendous opportunities for universities to improve the way they teach, to reach more students and, potentially, to decelerate the rapid rise in the cost of education relative to family income - which, if unimpeded, will make higher education increasingly inaccessible.

Stanford University's experience with forms of online education started in the early 1970s when closed-circuit television was used to transmit courses to engineers in Silicon Valley. Over time, delivery shifted to the use of the internet and online courses became an effective way to reach a wider, geographically dispersed audience while also allowing students to watch lectures when it was convenient for them. Many other institutions have deployed basic online technologies for similar situations.

More recently, Stanford was the first university to have a major presence on iTunes U, and since 2005 there have been more than 56 million downloads of Stanford programmes and courses - ranging from iPhone app programming to string theory to the history of the 20th century. This year, our experiments on iTunes U introduced several novel features, including an interactive format, online assignments and the use of social media for topic discussion. We continue to believe that venues such as iTunes will be attractive for distributing material to self-motivated learners. The popularity of free online courses from the Khan Academy (a not-for-profit educational organisation) mostly aimed at middle school and high school students is another sign of the importance of such courses.

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During the past two years, several events occurred that greatly expanded the potential for online education. The first was a set of experiments, originally undertaken by my colleague Daphne Koller, that looked at replacing large, in-person lectures with a combination of interactive online material and small-group working sessions with students.

This concept - termed "flipped classroom" - has the potential to enhance the effectiveness of large lecture courses. Indeed, such approaches may mean that in the future professors will spend much less time lecturing, but instead will use online lectures from master teachers and spend more time working closely with students.

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The second event occurred last year. Several Stanford faculty offered free online computer science courses that, while not offered for credit, did offer recognition by the instructor for students who completed the course. More than 350,000 people ranging in age from 18 to 60-plus from some 190 countries enrolled on these first MOOCs. Clearly, there is great demand for online education, but these early MOOCs also posed many challenges.

Perhaps the biggest is the wide range in student preparation and ability. This has led to difficulty for some students in keeping up with the material, high dropout rates (typically only about 10 per cent of the students finish courses) and challenges in constructing assessments that work for people of such varying abilities. How these issues evolve as the technology and pedagogy improve and as nominal charges are made for courses remains to be seen.

I believe that this technology is still in its infancy and that now is a time of great experimentation. Our faculty are developing platforms for online courses in several Stanford spin-offs, including Coursera, founded by Koller and Stanford associate professor Andrew Ng, which now has more than 15 university partners that will offer courses on the platform. In addition to free offerings such as iTunes U and the Khan Academy, edX - a Massachusetts Institute of Technology-Harvard University joint venture - is also creating a platform. We will learn a great deal from the next set of experiments, as more institutions explore online offerings with a wider range of disciplines represented.

Although many experiences offered in a university will be hard to replicate online (especially the four-year residential experience that is the cornerstone of many undergraduate programmes), I believe we will find that online technology will improve so that the range of courses that can be effectively taught expands significantly. For example, an online course in entrepreneurship run by Stanford associate professor Amin Saberi enrolled more than 80,000 students from more than 150 countries, and almost half chose to do the course project.

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This sort of intensive, team-oriented course is the type that one might think would be hard to put online. Saberi gets the students to form virtual teams to develop product visions, work on business plans and engage in peer review for grading: to date, they have formed more than a dozen companies to explore the commercialisation of their concepts.

Although we will learn a great deal from the many online experiments taking place in the coming year, I predict that two early observations will be reinforced. First, online courses will be in great demand by students, both as their primary source of education and as a supplement to traditional courses. Fortunately, I expect that there will be lots of free, or nearly free, offerings available.

Second, while the gold standard of small in-person classes led by great instructors will remain, online courses will be shown to be an effective learning environment, especially in comparison with large lecture-style courses.

Perhaps the most important question facing universities and colleges in the West is whether online education can provide a way to control rising costs without decreasing student learning. I believe it is our best hope.

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John Hennessy is president of Stanford University