🛝 EdTech Funding Stabilizes at $2.8B, AI Reading Tools Lack Proof, Special Ed Teacher Crisis Deepens

Welcome to Playground Post, a bi-weekly newsletter that keeps education innovators ahead of what's next.

This week's reality check: While over half of students and teachers are using AI for school, 80% of students say no one taught them how. Meanwhile, investors are cautiously returning to edtech, AI reading tutors are everywhere despite limited research, and special education shortages show no signs of improving.

💎 Data Gem

In fall 2025, 54% of students and 53% of teachers indicated they used AI for school - increases of more than 15 percentage points compared to surveys from one to two years prior. However, over 80% of students said teachers never explicitly taught them how to use AI, according to a new RAND study.

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EdTech Funding Stabilizes at $2.8 Billion But Remains Far From Peak

Global edtech startups have raised around $2.8 billion in seed through growth-stage funding so far this year, roughly flat with 2024 levels. 

That's a fraction of pandemic-era highs, but it signals stabilizing investment after years of decline.

U.S. funding is slightly stronger at $1.2 billion, putting 2025 roughly on par with 2023.

The shift in what's getting funded is revealing. Investors are backing healthcare education and training, plus K-12 AI tools that customize lessons and reduce teacher workload. 

What's not hot? Coding academies and teaching platforms, thanks to coding automation tools.

The largest rounds this year include Amboss ($260M for medical education), Lingokids ($120M for early childhood learning), EdSights ($80M for college retention chatbots), and MagicSchool AI ($45M for teacher productivity tools).

M&A activity is picking up too. 

CareAcademy sold to Activated Insights, OnlineMedEd sold to Archer Review, and Modern Campus took a majority stake deal with Providence Equity Partners.

The optimist case? Owl Ventures projects the global education market will surpass $10 trillion by 2030, with AI as the primary driver.

The funding data suggests investors are being selective, favoring companies solving clear pain points - particularly around teacher time savings and healthcare training - rather than betting on broader transformation plays.

AI Reading Tutors Are Everywhere. But Do They Actually Work?

AI-powered reading tutors are now common in early elementary classrooms. Amira Learning has statewide contracts in 10 states, and major curriculum providers like McGraw Hill and Curriculum Associates have integrated similar tools.

The promise is solving one of education's hardest problems: giving every student regular reading practice with immediate feedback. 

In classes of 20+ students at different levels, one-on-one attention is nearly impossible.

But research on their effectiveness isn't conclusive yet.

"There are a few studies, but none of the rigorous studies that we would need to be confident in the use of AI," said Matt Burns, a University of Florida professor studying AI integration in early reading.

One study showed Amira had small but statistically significant positive effects on K-3 DIBELS scores in Louisiana. Research also suggests 25-30 minute sessions are optimal. But there's no clear evidence these tools outperform other alternatives, including teacher-led practice.

AI can accurately parse children's speech and filter classroom noise. Companies train their engines on kids' voices specifically, but accurately recognizing speech isn't the same as improving reading outcomes.

The widespread adoption ahead of conclusive research suggests schools are betting on promise rather than proof. Companies with solid efficacy data will have a clear competitive advantage as the market matures.

Special Education Teacher Shortages Remain a Civil Rights Crisis

Forty-five states reported special education teacher shortages during the 2024-25 school year. 

The field has been the top staffing shortage area since the 1990s, but the problem is getting worse.

7.5 million students ages 3-21 received IDEA services in 2022-23, up nearly 20% since 2000-01. 

Meanwhile, 72% of 4th graders with disabilities scored below basic in reading on the 2024 NAEP, compared to 34% of students without disabilities.

Derek Cooley, special education director at Michigan's Godwin Heights Public Schools, sees staff turnover constantly. "We used to have staff that would spend their whole careers in special education. We just don't see that anymore."

Research confirms the impact: high special educator turnover is "especially detrimental to students with disabilities" and their academic performance, according to a May study from the Center for Analysis of Longitudinal Data in Education Research.

What keeps people in the field isn't just passion. It's manageable workloads, strong mentoring, and practical supports like tuition reimbursement.

Some promising solutions are emerging. 

Hawaii pays special educators $10,000 extra annually and saw retention improve. Michigan's MAASE helped unions negotiate higher wages for paraprofessionals who complete specialized training. Eighteen states now differentiate compensation for special education teachers, though most pay less than the $5,000 that research suggests makes a meaningful impact.

But compensation is only part of the solution - working conditions, administrative support, and professional development matter equally.

The U.S. Commission on Civil Rights called this a civil rights issue in September. When districts can't fully staff classrooms, they fail to deliver on IDEA's promise of free and appropriate public education for students with disabilities.

⚡️More Quick Hits

This week in education:

• NYC expands after-school access  -  Mayor Adams announced 10,000 new after-school seats at 75 schools, part of a $331M investment toward universal K-8 after-school programs

• Immigration enforcement disrupts schools  -  Charlotte, NC saw 20%+ student absences after immigration crackdowns; students now carry passports to elementary school and wear whistles to alert others if they see agents

• DEI legal confusion spreads  -  Districts like Decatur, GA rescinded then reinstated DEI policies after courts blocked federal enforcement; tracking tools monitor 227+ active legal challenges

• Austin ISD closing 10 schools  -  District plans closures as enrollment drops and budget pressures mount from demographic shifts and charter competition

🔎 Worth Checking Out

Monthly roundup of resources you might like:

• State of Computer Science 2025 — State-by-state tracking showing 32 states now require high schools to offer CS courses and 12 mandate CS for graduation.

• K-12 Lens 2025 — Report showing teacher shortages declining to 66% of districts (down from 81%), but persistent gaps remain in special education and substitute roles

• Universal Connectivity Imperative — Data on the "homework gap": 84% of students have school devices in class, but many districts no longer allow take-home access

• National AI in K-12 Survey — Full survey data showing declining public support for AI tools across multiple use cases.

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