The first time I taught online, my student and I each downloaded a whiteboard program, and I called him from my landline phone (which has a headphones jack) for the audio. Now there are dedicated teaching solutions, which include not only whiteboard and audio, but webcam and media upload (documents, pictures, video clips) functionality.
Simply put, there are pros and cons to both methods of teaching.
Presence of a live tutor
For the most part, this is the greatest factor in favor of live teaching. Many students are reassured by the tutor’s presence, and they may tend to work harder and take the teacher more seriously. It’s also easier for the tutor and student to read each other’s facial expressions and hand gestures. I suppose there are some students who become anxious in the presence of a tutor, but they are the exceptions.
Clearly, this factor favors online teaching. There is no commuting time, and either party can connect from multiple locations (anywhere with internet access). If you live in a remote area, without access to quality tutoring, the choice is a no-brainer.
Kids today have grown up with computers. Many students actually concentrate better when viewing a screen. You can use noise-cancelling headphones and microphones to enhance the online experience.
In an online group setting, social distractions are minimized. However, I strongly believe that one-on-one tutoring is the way to go for SAT prep, and I all but refuse to teach even small groups. Groups are better for both teacher and student financially, but given the unusual nature of SAT prep, you get vastly inferior results.
Online tutoring is usually cheaper than live teaching. Neither party has travel costs.
Computers can freeze or crash, internet connection can be lost, and other hardware problems (such as loss of audio) can ensue. However, the technology has been around for awhile, and I’ve found these problems to be infrequent and generally easy to deal with.
Unless homework is scanned and uploaded, the tutor loses access to some information (e.g. how students solve math problems on practice tests).
Some virtual classrooms allow the sessions to be recorded. This can benefit the serious student.
I’ll also point out that online tutors and students don’t share each other’s germs.
My conclusion is that there’s no automatic choice. Each student has to weigh the pros and cons, given her particular needs. In general, my online teaching experience has been very positive with motivated students. But if a student’s work ethic is shaky, or he has special needs, I favor live tutoring.