I like google docs and have been using it in our department as a way to share and record our work. The issue that comes to mind is that it's abit cumbersome to move around in. For students the issue might be that the boxes might be limiting when they're trying to record information.
Using a spreadsheet to collect information is only one way to use Google Docs. Google Docs is also a powerful word processor and I expect that for most student's assignments, a collaborative word processing document would be most appropriate to use.
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