The project that is expected to highlight the education technology conference set to open this week in Austin, Texas is a $100 million database which tracks students and their academic performance from kindergarten all the way through high school. The database contains a trove of information including the children’s names, addresses, and in some cases even social security numbers.

Although the potential of such database is not to be ignored for its education value, among parents, the news of its existence has sown seeds of unease. The biggest concern is the fact that although the information remains the property of the state government, federal law allows for sharing of it with private entities and then used to sell commercial education-related products.

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.

The enthusiasm among educational entrepreneurs is exactly in proportion to the parents’ concern. The businesses operating in the sector call the data contained within the database a treasure trove and one of them – Jeffrey Olen who is a product manager for CompassLearning – said that getting their hands on the data would constitute a great win for companies like his.

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.

So far, the concerns over privacy haven’t done much to discourage states from taking part. At least seven states – Colorado, Delaware, Georgia, Kentucky and Illinois among them – have already committed to entering at least some of the data they collect from selected school districts. While Louisiana and New York have gone further and plan to turn over almost the entirety of the information they collect for inBloom to oversee and manage – and potentially sell.

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.

Although inBloom is committed to vouchsafe the data, its own terms and conditions seem to insulate it from any kind of blow-back should the information be stolen or become public.

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.”