Privacy Fears Over Student Data Tracking Lead to InBloom's Shutdown

A year ago, every public school student in New York State fell under the watchful eye of InBloom, a data analytics company. Schools sent the company an enormous batch of data spanning 400-odd fields that included a wide range of personal details, from test scores and special-education enrollment to whether kids got free lunches. The idea was to compile enough information so teachers or software could tailor assignments to each student’s needs. InBloom had contracts to do the same for millions of public school kids across nine states, tracking their work to draw conclusions about their academic performance. InBloom promised to analyze its data and make the results accessible to teachers and parents. That made InBloom the hottest company in the emerging field of personalized learning, pitched as a way to help overcrowded, underfunded schools to better teach each student. That was until April 21, when InBloom abruptly announced it soon planned to shut down.

For many parents, the software got a little too personal. Although there weren’t any documented cases of InBloom misusing the information, parents and privacy advocates around the country argued that digital records on kids as young as 5 could easily be sold to marketers or stolen by hackers. Six of InBloom’s nine client states had pulled out over privacy concerns by the time the company said it was closing shop. “The risk far outweighs any benefits,” Karen Sprowal, a mother of a fifth grader, testified before a New York State Senate committee in November. “Just know that there’s a lot of parents like me that’s out there that say, ‘Hell, no.’ ”

Some children in all 50 states have schoolwork evaluated by data analytics software that tracks their progress on classroom or home computers, a growing part of what the Software & Information Industry Association estimates is an $8 billion market for education software and technology services. Nonprofits and publishing companies such as McGraw-Hill Education (APO), Pearson (PSO), and News Corp. (NWS) have introduced student databases or schoolwork-tracking software for PCs and mobile devices, and are under pressure to demonstrate that their data are secure and won’t be misused. So far this year, laws limiting or banning the sharing of student data with marketing firms or other third parties have passed in eight states, including New York, Virginia, and Kentucky; dozens more have similar legislation pending, and Big Data is starting to feel the backlash. “We’ve never seen anything like this,” says Aimee Rogstad Guidera, executive director of Data Quality Campaign, a nonprofit that advocates for the use of data in education.

Led by the Council of Chief State School Officers, InBloom was founded in 2011 as the Shared Learning Collaborative, a nonprofit funded by the Bill & Melinda Gates Foundation and the Carnegie Corp. of New York. It designed a secure service that states and school districts could use to store data and connect to personalized learning software. In 2013 the company renamed itself InBloom and marketed itself as a better way to evaluate student performance than rival services. It raised $100 million from charitable foundations.

But the company failed to convince people it adequately protected the data. More important, it resisted letting parents opt out of the program, says Randi Weingarten, president of the American Federation of Teachers (an affiliate of the AFL-CIO) and a former adviser to the Shared Learning Collaborative. “It boils down to trust, trust, and trust,” she says.

InBloom Chief Executive Officer Iwan Streichenberger says the public just didn’t understand what the company was trying to do. “We tend to be too defensive about privacy and not proactive and positive enough about the benefits of data,” he said at an industry conference the day he announced his company’s closing. “We believe in personalized learning, or the use of data to drive instruction—I do. But I think what we’ve realized is it’s still a very unknown concept for a lot of people. So they don’t understand why they should go down this path.”

InBloom says it’s erased its student data, and rival companies are revising their privacy policies or shifting target audiences following its collapse. Startup Cerego, whose partners include the University of Texas at Austin and the prep school Doral Academy, says it’s mostly focused on adults, such as nurses taking certification exams. Co-founder Andrew Smith Lewis says he’s not interested in personal information and is paying close attention to InBloom’s problems. “We just don’t want to creep anybody out,” Smith Lewis says. Tyler Bosmeny, CEO of startup Clever, which manages data for 20,000 schools, says industry conferences didn’t much concern themselves with student privacy a year ago but are now fixated on the issue. Google (GOOG) said on April 30 that it has stopped automatically scanning student e-mails to collect data for ad purposes.