FORTUNE — From business plans to election outcomes, predictive analytics have come a long way in eliminating uncertainty. Next on the list of targets: student GPAs.
New technology from Desire2Learn, an education company offering online learning tools to colleges and high schools across the country, is able to predict a student’s final grade — down to the percentage — months before the final exam, says Desire2Learn CEO John Baker.
The predictions are in real time, meaning they are not set in stone, and a boost in effort or studying can easily change the estimated final grade. And that’s the point, says Baker; for students and teachers to recognize a student is headed toward a failing grade before it’s too late in the semester.
“The biggest thing,” says Baker, “is not just driving towards, ‘okay, here’s how you’re going to do,’ but really helping to [build] an education system that personalizes the experience to each individual.”
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The new technology, simply called the Student Success System, is able to make predictions by incorporating a student’s understanding of key concepts of a given course and whether or not they are keeping up with the required homework. Teachers can track a student’s progress throughout the semester to ensure they stay on track to pass the class.
This new system acts as a complement to the company’s existing Degree Compass platform, which uses a student’s academic history to suggest courses that fit their learning style and offer the best chance for a passing grade. Desire2Learn bought Degree Compass from Austin Peay University in January for an undisclosed sum and has since run more than 700,000 course enrollments through the program, says Baker. As a result, Degree Compass can successfully predict letter grades with 90% accuracy — all before a student ever begins taking the class. (It is too early to tell how accurate the Student Success System is, says Baker.) Four schools — Austin Peay, the University of Memphis, and two community colleges — currently use Degree Compass, with others expected to join in the near future, says Baker. The Student Success System will roll out to a few dozen Desire2Learn clients beginning this summer.
At Austin Peay, Degree Compass has already made a difference for students. Since implementing the program in spring of 2011, Austin Peay has seen a 2% increase in students passing classes university-wide and a 4% jump among Pell Grant students, who often have fewer college-educated supporters in their personal circles, says the technology’s creator and university provost Tristan Denley. “When you see this same kind of increase in student success, which is literally all across the board freshmen through seniors at every level, it’s difficult to look in another direction to find the cause,” says Denley. These increases are significant, he adds, because it expedites the graduation process and saves students time and money.
Failing a class and having to retake it can add thousands of dollars to a student’s total tuition costs. Only 60% of full-time students complete a four-year bachelor’s degree program within eight years, according to a 2011 study by completecollege.org. In California, whose state public university system has suffered dramatic cutbacks and overcrowding, only 15% of all public university and college students graduate within four years of enrolling, according to the study. The University of California system claims that 60% of freshman enrolled in the system’s public universities graduate in four years.
While predictive analytics make sense at the collegiate level to help combat unnecessary spending, some are concerned about implementing such technology in K-12 schools, says Andrea Coleman, CEO of the innovation office for the New York City Department of Education.
The NYC Department of Education — the largest public school system in the U.S. — entered into a three-year contract with Desire2Learn in 2011. It is currently using the company’s learning services to explore the impact of personalized education tools in more than 250 middle and high schools in the city. They are not, however, using Desire2Learn’s predictive analytics tools, says Kathy Walter, executive director of product development at the NYC Department of Education. One concern is that students will stop challenging themselves and simply take classes they will probably pass, a shortcut that could have long-term disadvantages.
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Austin Peay’s Denley doesn’t view such an approach as a problem at the collegiate level. “It’s in no way about trying to make a student have an easier path,” he says. “It’s about trying to guide their path in ways that they can be most successful.”
Desire2Learn is optimistic that schools across all academic levels will begin to use the predictive analytics systems in the near future. The Ontario-based company raised $80 million last September, including a $50 million investment from venture firm NEA, the firm’s largest education tech investment. (NEA also invested in more than 10 other online learning companies like Coursera, BenchPrep, and Edmodo.)
Desire2Learn CEO Baker, who was never an educator but grew up with parents who were teachers, started the company in 1999 to “have an impact on the way the world learns,” he says. With a boatload of venture capital and the ability to foresee academic success, it looks like Baker is on track to pass with flying colors.
