I have no idea whether there's a legal basis for the argument, I'm just stating my opinion on what would be a fair outcome.
> They want all the benefits plus a healthy refund.
I don't think this is an accurate portrayal of the situation, unless you think the entire value of a college education is instruction, grading, and the piece of paper at the end. the school I went to was very much like this: I went to class, got good grades, graduated, and got a good job. no fun, no frills, just business. it was pretty cheap though, so I can't say I didn't get my money's worth.
I don't think people pay $60k a year for the "just business" experience. if they're not walking around the beautiful campus, going to events, or using expensive science equipment, they're not getting their money's worth anymore. online class is a sad substitute for this experience.