The LIFE with AI Act focuses on giving parents and students more control over how schools use their personal information, especially when artificial intelligence and educational technology are involved. The bill creates a "Golden Seal of Excellence in Student Data Privacy" that schools can earn by implementing systems that notify parents in real-time whenever their child's data will be used in educational technology, and allowing parents to easily approve or reject that use through a simple online form accessible on phones and computers.

The law also makes it easier for parents to opt out of having their child's basic information (like name and address) shared publicly. Schools must now provide a simple form that takes no more than five minutes to complete, available year-round on mobile devices. Additionally, the bill prohibits schools from using student photos to train facial recognition AI systems without explicit parental permission, and prevents schools from working with yearbook companies that use facial recognition technology or sell student data collected during yearbook creation.

The bill expands what counts as a student's protected educational records to include any data related to academics, attendance, health, and discipline maintained by schools or their contractors. Finally, it requires that when schools contract with third-party companies to provide educational technology, those companies must follow strict privacy rules and cannot use student data for purposes beyond what parents have approved. Schools that don't comply with these requirements will lose federal funding.