Their crusade to fix schools earned a "needs improvement," so they have a new plan. The most surprising beneficiaries? Community colleges.

(Fortune Magazine) — When Bill Gates gets worked up about something, his body language changes. He suspends his habit of rocking forward and back in his chair and sits a little straighter. His voice rises in pitch. Today the subject is America’s schools.

It’s "a paradox," he says in an exclusive interview with Fortune, that "America has been so successful with such terrible education." We’ve gotten away with it, he says, by pampering an elite 20% - those who attend top colleges and the best public high schools and private academies, as Gates did himself before famously dropping out of Harvard.


Melinda and Bill Gates at Hidalgo Early College
High School in the Rio Grande Valley in Texas.

But now that has to change, he insists. With low-skill jobs vanishing and global competition on the rise, "the imperative is to not just do well for the top 20% but to do well for everyone." How to do it, however, is a question that has taxed his prodigious energy, brainpower, and resources. Now Gates has a new approach that includes a surprising element: community colleges.

Since 2000 the Bill & Melinda Gates Foundation has invested $2 billion in public education, plus another $2 billion in scholarships. Most of it went into efforts to improve high schools that serve poor and minority students - mainly breaking up big, urban high schools and creating smaller, friendlier, and in theory more scholastically sound academies. (All told, the Gates Foundation gave money to 2,602 schools in 40 school districts.) Overall, it hasn’t worked.

"We had a high hope that just by changing the structure, we’d do something dramatic," Gates concedes. "But it’s nowhere near enough."

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