The creation of the massive open online course (MOOC), a new form of digital learning, has enthralled some, infuriated others, and changed the conversation about higher education in the United States and abroad. To some, MOOCs herald the dawn of a new era in human capital, one that will mean the end of college as we know it. Enthusiastic observers quickly likened MOOCs to other "disruptive innovations," arguing that free online courses would send higher education the way of the newspaper and the record store. The movement has caught the attention of policymakers from the statehouse to the White House. At a time when rising tuition costs and student debt threaten to stifle college opportunity, MOOCs provide free access to courses and career preparation. Critics, sensing higher education's vulnerability, have harped on low MOOC completion rates and warned about creating "Walmarts of higher education." Lost in this polarizing debate is a clear assessment of how this new medium is actually affecting postsecondary education, if at all, and how it could be useful in the future. The reality is, MOOCs are a tool, not a solution. Like any tool, they are likely to be more useful for some jobs than for others. What problems are low-cost online courses well designed to solve, and what problems may be better left to other strategies? How should policymakers employ MOOCs, and what reforms can encourage innovation? The first section of this report examines the MOOC movement, providing a snapshot of its origins and a sense of how the platforms work. The second section lays out the potential effects that MOOCs could have on higher education. The third section outlines some early lessons from the first two years of the movement. The fourth section discusses the implications of these early lessons for policymakers. Regardless of how researchers measure their impact, it seems clear that MOOCs are neither the cataclysmic disruptor that advocates predicted nor the flash in the pan their critics were hoping for. Deployed strategically, MOOCS could change the entire conversation about higher education reform and teach educators how to improve schooling world wide. [This paper was funded by Google.]