Bill and Melinda point to an obsolete education—built for the industrial age, not the digital age—as a keystone to the problem. The Gates Foundation pointedly asks, "What good is it for kids to graduate in 2006 from a school system that was designed for 1956?"

In this out-of-date structure, Bill says that some students do not value their own education. "Millions of kids are dropping out," Bill says. "Of minorities, half drop out. Overall it's about a third."

When a student drops out, they are apt to find themselves in serious trouble. "There won't be jobs for those kids," Bill says. "It's a bad thing for them. It's a bad thing for the country." Bill and Melinda say America's standing in the world will slip with an undereducated workforce.

The problem extends beyond students who drop out. Those who stay in school are losing ground, too. "Of kids who are going to college, more than 40 percent are doing remedial work," Melinda says. "All these kids are dropping out, [but] the ones making it through are not even prepared for college."

An eye-opening school swap »