Dear Colleague Letter Issued by U.S. Department of Education Regarding Federal Grant Funds to Improve Education Outcomes Using Artificial Intelligence

07.30.2025

On July 22, 2025, the U.S. Department of Education (“USDOE”) issued guidance regarding the use of artificial intelligence in educational settings through a Dear Colleague Letter (“DCL”) to current and future federal grant recipients.  This guidance follows President Trump’s April 23, 2025 Executive Order on “Advancing Artificial Intelligence Education for American Youth”[1] and represents the federal government’s efforts to integrate AI technologies into educational environments. 

The DCL provides that school districts may utilize existing federal grant funds to support AI initiatives, provided they align with applicable statutory and regulatory requirements.  Education institutions can use federal education funds to develop or procure AI instructional tools and train educators, providers, and families to use them.  Funds can also be used to leverage AI to help students explore career pathways, to utilize virtual academic advising, and to assist educators to identify students in need of additional support.  In addition, the USDOE provided guidance on key educational functions and principles for responsibly using AI.

The DCL highlights the USDOE’s recognition of the potential benefits AI technologies can provide in educational environments, and discusses important considerations for school districts.  First, school districts must comply with applicable legal regulations for the use of federal funding to be permissible, including the Family Educational Rights and Privacy Act (“FERPA”).  The DCL also emphasizes the importance of transparency and stakeholder engagement when adopting the use of an AI system, and outlines the necessity of AI tools being accessible by members of the educational community. 

Recent Efforts for Additional Federal Grants for AI in Education

Secretary of Education Linda McMahon also announced her fourth proposed supplemental grantmaking priority focusing on advancing AI in education, which has been published in the Federal Register for a 30-day public comment period ending on August 20, 2025.  This proposed priority outlines the following key areas for expanding responsible AI education, including:

• Integrating AI literacy into teaching practices to improve student outcomes; 
• Expanding AI and computer science education in K-12 schools and higher education institutions; 
• Supporting professional development for educators on teaching AI and computer science fundamentals; and 
• Using AI to personalize learning and support differentiated instruction, improving outcomes for students at all levels. 

The proposed priority encourages the use of AI technologies to enhance classroom efficiency, reduce administrative burdens, and improve teacher training and evaluation.

School districts should view the USDOE’s guidance both as an opportunity, and compliance imperative.  The USDOE’s efforts to promote AI literacy emphasizes the need for school districts to train their educators with regard to AI literacy and to teach students how to use AI technology.  At the same time, school districts must ensure that any AI initiatives using federal funds strictly adhere to the responsible use principles outlined in the DCL, particularly with regard to data privacy, accessibility, and stakeholder engagement.  If they have not already done so, school districts should consider developing comprehensive AI policies or guidance documents for their school communities.[2]  

Thank you to law clerk Anastacia Son for her extensive work on this Alert.

[1] Read more about that Executive Order here: https://www.aalrr.com/newsroom-alerts-4124.

[2] Review AALRR’s AI ToolKit here: https://www.aalrr.com/EdLawConnectBlog/dont-start-from-scratch-our-ai-policy-toolkit-has-your-district-covered.

This AALRR publication is intended for informational purposes only and should not be relied upon in reaching a conclusion in a particular area of law. Applicability of the legal principles discussed may differ substantially in individual situations. Receipt of this or any other AALRR publication does not create an attorney-client relationship. The Firm is not responsible for inadvertent errors that may occur in the publishing process.

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