A guard helps a student cross an intersection in Pelham, New York February 8, 2013. Credit: Reuters/Adrees Latif

(Reuters) – An education technology conference this week in Austin, Texas, will clang with bells and whistles as startups eagerly show off their latest wares.

But the most influential new product may be the least flashy: a $100 million database built to chart the academic paths of public school students from kindergarten through high school.

In operation just three months, the database already holds files on millions of children identified by name, address and sometimes social security number. Learning disabilities are documented, test scores recorded, attendance noted. In some cases, the database tracks student hobbies, career goals, attitudes toward school – even homework completion.

Local education officials retain legal control over their students' information. But federal law allows them to share files in their portion of the database with private companies selling educational products and services.

Entrepreneurs can't wait.

"This is going to be a huge win for us," said Jeffrey Olen, a product manager at CompassLearning, which sells education software.

CompassLearning will join two dozen technology companies at this week's SXSWedu conference in demonstrating how they might mine the database to create custom products – educational games for students, lesson plans for teachers, progress reports for principals.

The database is a joint project of the Bill & Melinda Gates Foundation, which provided most of the funding, the Carnegie Corporation of New York and school officials from several states. Amplify Education, a division of Rupert Murdoch's News Corp, built the infrastructure over the past 18 months. When it was ready, the Gates Foundation turned the database over to a newly created nonprofit, inBloom Inc, which will run it.

States and school districts can choose whether they want to input their student records into the system; the service is free for now, though inBloom officials say they will likely start to charge fees in 2015. So far, seven states – Colorado, Delaware, Georgia, Illinois, Kentucky, North Carolina, and Massachusetts – have committed to enter data from select school districts. Louisiana and New York will be entering nearly all student records statewide.

"We look at personalized learning as the next big leap forward in education," said Brandon Williams, a director at the Illinois State Board of Education.

IF DATA LEAKS, WHAT REMEDIES?

Federal officials say the database project complies with privacy laws. Schools do not need parental consent to share student records with any "school official" who has a "legitimate educational interest," according to the Department of Education. The department defines "school official" to include private companies hired by the school, so long as they use the data only for the purposes spelled out in their contracts.

The database also gives school administrators full control over student files, so they could choose to share test scores with a vendor but withhold social security numbers or disability records.

That's hardly reassuring to many parents.

"Once this information gets out there, it's going to be abused. There's no doubt in my mind," said Jason France, a father of two in Louisiana.

While inBloom pledges to guard the data tightly, its own privacy policy states that it "cannot guarantee the security of the information stored … or that the information will not be intercepted when it is being transmitted."

Parents from New York and Louisiana have written state officials in protest. So have the Massachusetts chapters of the American Civil Liberties Union and Parent-Teacher Association. If student records leak, are hacked or abused, "What are the remedies for parents?" asked Norman Siegel, a civil liberties attorney in New York who has been working with the protestors. "It's very troubling."

VENTURE CAPITAL MAGNET

Fans of the project respond that the files are safer in the database than scattered about school districts. Plus, they say, the potential upside is enormous, with the power to transform classrooms across the U.S.

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