The federal government has recently released two significant pieces of guidance aimed at shaping how artificial intelligence (AI) is used across all sectors – including education. First, the U.S. Department of Education has issued a Dear Colleague Letter providing instruction on how federal grant funds can be used to support the integration of AI tools in teaching, learning, and student support services. Second, in its AI Action Plan, the federal government outlines a long-term vision for responsibly leveraging AI and to advance innovation. To help educational entities understand the practical implications of these new directives, we have summarized the key takeaways from each below.
U.S. Department of Education Issues New Guidance on Use of Federal Funds to Support AI in Education
On July 22nd, the United States Department of Education released a Dear Colleague Letter (DCL) providing anticipated guidance on the responsible integration of AI in education and affirming that existing formula and discretionary education grant funds may be used to support AI initiatives as long as they comply with applicable statutory and regulatory frameworks. This guidance follows the March 2025 Executive Order on “Advancing Artificial Intelligence Education for American Youth” and signals a commitment to fostering AI innovation in both K-12 and postsecondary education settings. Read more here. Below are highlights from the DCL:
1. Federal Funds May Be Used for AI Instructional Materials
Education entities are permitted to use federal education funds to develop or procure AI tools to expand access to personalized AI learning materials for all subjects and all grade levels and to train educators, providers, and families on how to use AI.
Best Practice: Ensure that any AI instructional tool purchased with federal funds aligns with these objectives and provide training for educators and end users on how to use the tool effectively and responsibly.
2. AI Tutoring Systems Are an Eligible Use of Funds
The Department permits funding of intelligent AI tutoring systems, which offer real-time assessment and support. Hybrid tutoring models combining human tutors with AI tutors are also permitted and monitored for student safety and security.
Best Practice: When implementing an AI tutoring tool, retain educator involvement and consider equity and accessibility when choosing platforms to ensure all students benefit.
3. AI May Support Career and College Readiness
AI tools that assist students in identifying career interests, navigating course and financial aid planning, and transitioning to college or the workforce are permissible use of federal funds. The use of AI tools to identify students who might need or benefit from additional services is also permitted.
Best Practice: Evaluate AI tools in alignment with your district or institution’s college and career readiness goals, and ensure systems include safeguards for data use and accuracy.
4. Responsible Use Principles Must Guide AI Implementation
The DCL emphasizes AI use must be educator-led, ethical, accessible, transparent, and privacy-compliant. Stakeholder inclusion (end-users and parents of students) and adherence to the Family Educational Rights and Privacy Act (FERPA) and other federal privacy laws are required.
Best Practice: Establish internal policies to vet AI tools for privacy, accessibility, and ethical use.
White House Releases AI Action Plan: What Educational Institutions Need to Know
On July 23rd, the United States White House released an AI Action Plan that lays out the federal government’s vision for promoting the responsible development and use of AI. While the document contains policy recommendations rather than binding regulations on educational institutions, it provides strong signals about the federal government’s priorities and plan for AI implementation. Below are the primary recommendations for educational entities:
1. Federal Funding for States Tied to Encouraging AI Innovation
The Action plan warns that states with “burdensome AI regulations” may risk losing access to federal AI funding. This demonstrates that the federal government will favor jurisdictions that provide a more AI innovative landscape as opposed to policies or regulations that restrict AI advancement.
Best Practice: Review any current or proposed AI or technology related policies to ensure they do not create unnecessary obstacles to AI adoption. Consider language that supports innovation of AI in the classroom, but also at the administrative level, while maintaining student safety, data privacy, and educational integrity.
2. Avoid Overly Restrictive or Ideologically Driven Policies
The Action Plan emphasizes that AI systems must be “free from ideological bias” and support “truth-seeking over social engineering”. There is a clear push and preference for a fact based focus and minimal bias. Similarly, the Action Plan emphasizes the importance of maintaining free speech rights through the use of AI.
Best Practice: Institutions should aim for balanced AI policies that guard against misuse and bias without stifling legitimate educational uses of AI. Be mindful of how classroom AI tools are framed and ensure compliance efforts do not unduly restrict innovation or free speech.
3. Promote Digital Literacy and Responsible Use of AI
The Action Plan encourages schools to teach AI literacy and supports the responsible integration of AI in classrooms. AI is seen as a key education tool to enhance individual student preparation for the real world and to enhance the United States as a leader in AI.
Best Practice: Consider ways the educational institution can expand student opportunities to use and become familiar with AI. Promote professional development and student education opportunities that encourage AI innovation. Educate students on how to evaluate AI-generated content, ethical use of AI, and how to use AI responsibly but effectively.
4. Privacy and Security Remain Vital
While promoting innovation and condemning strict regulation, the Action Plan calls for vigilance against misuse and notes that AI systems should be secure, privacy-compliant, and trustworthy. It also urges transparency from AI creators.
Best Practice: When working with AI vendors, ensure service agreements include clear terms on data privacy, student data protection, data breach protections, and do not unfairly place liability on the educational institution.
5. Expect Ongoing Changes in the Legal Landscape
The Action Plan asks federal and state governments to review and potentially repeal AI regulations that “unnecessarily hinder” AI development. Because of this, state and local AI policy may evolve and change in the coming months.
Best Practice: Have someone monitor, or keep an open conversation with legal counsel, legislative advisor, or trade association on state developments and changes regarding AI.
