WSJ What’s News - The Growing Backlash Against Google’s AI Tools in Schools

Episode Date: October 1, 2026

A.M. Edition for Oct. 1. The Trump administration rolls out a new plan to lower drug prices in Medicare, while also sending out $500 checks to nearly 100 million people, a month before voters head to the polls in the midterm elections. Plus, bonds sell off globally, with yields in the U.S., France and U.K. hitting fresh records today. WSJ’s Nicolas Miller explains what that means for mortgage rates and homebuyers. And as test scores plummet, WSJ investigative reporter Shalini Ramachandran details the growing backlash against widespread use of Google’s AI tools in American classrooms. Daniel Bach hosts. Sign up for the WSJ’s free What’s News newsletter. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

The Trump administration rolls out a program to lower drug prices in Medicare. Plus, Europe's luxury carmakers want a piece of the U.S. gas guzzler SUV market. And with falling test scores, the widespread use of Google's AI tools in American classrooms faces a backlash. The kind of broad takeaway we're getting from talking to all these parents, teachers, clinicians as well, counselors, is that these AI tools in the classroom have not helped. students learn and in fact have taken away from their abilities to learn. It's Thursday, October 1st. I'm Daniel Bach for the Wall Street Journal, filling in for Luke Vargas. And here is the AM edition of What's News, the top headlines, and business stories moving your world today.

President Trump has started sending $500 checks to nearly one million health care policyholders just a month before the midterm elections. The checks come with a signed letter touting the administration's record on lowering health care costs. The payments are being drawn from surplus user fees collected under the Affordable Care Act, and come as the Trump administration is rolling out a new Medicare program that matches the cost of high-price prescription drugs to what people pay in other developed nations. But after carve-outs with major pharmaceutical firms, the plan applies to just four companies, slashing projected savings from nearly $12 billion down to $440 million for the next seven years. Journal editor, John Joshua Jamerson says both moves are an attempt to shore up voters worried about affordability.

The context for this is that voters have felt for months that the cost of living was getting too unaffordable in the United States. And the administration, especially as the elections get closer, some Republicans have said that some of the president's priorities, such as focusing on the Kennedy Center or a new ballroom at the White House, have proven to be distractions away from the issue that voters keep saying is most important to them. And we've seen this in our Wall Street Journal polling that health insurance was the second biggest cost strain for them right after groceries. Just in the last couple of weeks, new polling from the Wall Street Journal has found that

among the top 10 policies with the highest support among both Democrat and Republican voters were issues around health care. For example, the number two issues that voters from both parties agree that the government should focus more on is the requirement. that health insurance companies cover services and medicines prescribed by doctors. I think the question with just a little over a month until election day is whether these policies that the president is rolling out are coming in enough time to really change voters' minds about which party they feel like they want control of Congress next year.

Midterm years are historically a really bad year for an incumbent president, and with approval ratings as low as this president, conventional wisdom would say that his party has a long way to go. We're exclusively reporting that Senate Democrats are challenging the legality of the Trump administration's plan to take a stake in Venezuela's second largest oil producer. As we mentioned earlier this week, North American Blue Energy Partners is hoping to ramp up production on oil fields said to contain 65 billion barrels of oil. But according to a letter from four high-ranking Senate Democrats sent to President Trump's top lieutenants, the Pentagon's deal to take a passive 35 percent stake in the firm stands on shaky legal. ground and undermines the Latin American country's pursuit of a democratic transition. The Trump administration has said the agreement would lower fuel costs for Americans,

and the oil would be used to boost the Strategic Petroleum Reserve, which is now at its lowest level since 1982. Meanwhile, in an attempt to shore up fuel elsewhere, President Trump has announced that South Korea plans to invest about $54 billion in a natural gas project in Alaska. The pipeline is around 800 miles long and connects Alaska's north slope to an LNG export terminal. The colossal package of investments we are announcing today is a major step toward securing our critical energy supply chain, ensuring American energy dominance and making our partnership with South Korea and the entire Pacific region stronger than ever before. But according to a South Korean government official, the deal has not yet been finalized. Trump didn't describe the project.

is pending, but the announcement was made in the Oval Office alongside Alaska Senator Dan Sullivan, who is facing a tough re-election race in the state. Gasoline prices in Alaska are going to tumble. Well, as soon as the war ends, which is going to be soon. Trump praised Sullivan for pushing the deal forward. The announcement was the second time in recent days that the president promised big projects to help elevate Senate candidates. On Monday, Trump made a similar announcement about a steel plant in Iowa. U.S. Treasury yields hit a fresh high last night, adding to sky high mortgage rates. House buyers now face a double whammy of mortgage rates above 7% and higher home prices.

Normally, increasing the size of the down payment would help offset the monthly mortgage bill. But since 2019, home prices are up more than 50%, and many buyers are struggling to find cash to boost their deposit over the typical 10 to 15%. And as real estate reporter Nicholas Miller explains, that scrambled the usual playbook for adjusting to higher borrowing costs. When mortgage rates rise, sellers often have to cut prices to keep buyers in the market willing to buy. But over the last few years, a lot of homeowners have opted to stay put rather than sell in order to preserve the 3% or 4% mortgage rates that they secure it after the pandemic. So the situation now is if they can't get the price they want, prospective sellers will just stay in their current home. And that's really weighed on available inventory. So it's a unique situation where both supply and demand are down.

And even though buyer demand has lagged in the face of high rates, economic uncertainty as well, home prices have continued to rise. And that makes things really hard for buyers. And so down payments have increased modestly this year, but many buyers are already stretching as far as they can to put as much money down as they possibly can. Whether that means getting help from family or tapping their fore R1Ks to afford a larger down payment. According to economists creative mortgage structures, which allow a lower fixed rate before resetting

to market rates are expected to gain traction. But Nicholas notes that while more buyers are willing to gamble on future rates in a high rate environment, hesitant lenders may mean many people will struggle to qualify. After a sales collapse in China, Europe's luxury carmakers are planning to go big in America. And by big, we mean giant SUVs. Detroit currently dominates the big SUV category, including luxury models. It's a style of vehicle rarely seen in Europe, but with share prices of the big European names trading at multi-year lows. Journal Autos reporter Stephen Wilmot says higher margins are looking attractive.

This week, we've seen BMW tell investors in Munich that it's looking at an even bigger SUV in the US and it already has. It's largest as the X-7 currently made in Spartanburg, South Carolina. and now it's looking at making an even larger SUV. Just a few weeks ago, Volvo said much the same thing. And Audi actually this summer launched the Q-9. It's the first full-size SUV it called it. It's a small but very profitable category. The rule of thumb is the larger the vehicle, the larger the profits.

It really is about making up for lost ground in China wherever they can. And the US is the second largest luxury car market in the world after China. So it's the obvious place to go. The other reason is emissions rules. So President Trump has rolled back the previous framework for regulating emissions in the U.S., which meant that carmakers used to have to balance their gas guzzlers essentially with smaller, more fuel-efficient vehicles. Now they still have to do that a bit, but nothing like to the same extent, which just strengthens a business case for rolling out these bigger vehicles.

There are currently few details on new Volvo and BMW models, but both companies have factories in South Carolina. Audi makes the Q9 in Slovakia. Vehicles imported from the European Union are subject to a 15% tariff imposed by President Trump. Deliveries will start in November. Danish dairy giant Arla is trying to capitalize on booming consumer demand for protein-rich dairy items, investing millions in sites producing skier and cottage cheese. Maha influencers and new diets promoted alongside weight loss drugs have led to, a surge in demand for protein-heavy products, prompting major food retailers like Nestle and Danone to invest in things like protein drinks. Apple's recent launch of a folding smartphone is driving demand for cheaper foldables in China. In the four days after the release, sales of Huawei's

Pura X-Max phone jumped 77% from the same period a week earlier. And Xiaomi's 18-fold, another passport-sized folding phone, notched record of first-week sales. And demand And for semiconductors push South Korea's monthly exports above $120 billion for the first time. Samsung and S.K. Hinex both posted record earnings and revenue in the second quarter and are expected to extend that streak through the end of the year, fueled by the insatiable demand for chips to power artificial intelligence. Coming up, Google's push into schools has created a huge launchpad for its AI tools to reach kids. But parents, teachers, and even the company's own researchers admit the potential for cognitive

and emotional harm. That story after the break. No Tech Giant has been more aggressive in putting artificial intelligence in front of children than Google. Its Chromebooks and software are used in classrooms right across the country, putting its AI tools in the hands of kids. But according to our reporting, many students are becoming academically and emotionally dependent on AI. Journal investigative reporter Shalani Ramachandran joins me with more. Shalany, along with our colleagues, Georgia Wells and Molly Reindman, you interviewed dozens of teachers, school officials, parents, students. Tell us about what you found. What I found was that when students are in school, they're being pushed Google's AI tools

because they're so ubiquitous on their school devices. And what's happened is that Google Search has AI overviews and an AI mode chatbot that is sort of readily available in front of them. It's not something that school officials can turn off in their administrative controls. And basically what it's led to is that children are using it for putting in all their homework, their schoolwork, and they're kind of farming out their thinking and their work during the year, leading to declining test scores. In one of the sort of largest worldwide assessments of students, student scores fell to their lowest average in a quarter century, when scores just released and U.S. reading scores fell 14 points from the last time the survey was taken in 2022. And what the kind of broad takeaway we're getting from talking to all these parents, teachers, clinicians as well, counselors,

is that these AI tools in the classroom have not helped students learn and, in fact, have taken away from their abilities to learn. As one Georgia teacher put it to me, she said that they no longer trust what's going on in their own brain. So that's the academic part. There's a really strong emotional part that a lot of the teachers and counselors have been telling us about. Counselors and adolescent psychologists said that students' loneliness and social skills are worsening as they confide in AI tools. And that can be particularly risky for vulnerable kids, particularly kids who are neurodivergent. We've had other diagnoses like ADHD or autism. And some of the observations we heard about talking to counselors around the country, they would say things like, you know, the kids, they first go to the tool for help on homework,

and then they realize, hey, this thing can help me with all kinds of things. Like, if I have a problem with my parents or if I'm mad at my friends, I can talk to it about the thing I'm going through. And because it's pretty sycophantic, it validates their feelings and makes them feel like, yeah, I am right. Yeah, my parents do suck. So the counselors told us that it was starting to cause sort of rifts in the social fabric of adolescence as kids are. confiding in these tools. You mentioned you spoke to current and former Google employees. The company's own research has raised concerns about the cognitive and emotional harm you've detailed there. What is Google saying now about how this technology can be used and how they're working to tackle

these problems? Yeah. Google says that its studies show that AI tools paired with teacher-led instruction can help students learn more effectively. And they said that teachers around the world use AI every day because it helps solve classroom challenges and freeze up their administrative burdens and they can focus more on the students. And they said that they've put in place particular scaffolds and training for their sort of education and pedagogy focused AI where they're saying that they believe it will encourage critical thinking and their specific protections for users under 18, including to prevent emotional dependence. And they said that in some of their studies that they funded that they didn't see that kids were in a broad way offloading their thinking,

that they were more focused on using the AI for learning. And what about from governments and education departments? What did you find there about the work that's being done to help shape safer use in classrooms? Well, what's kind of interesting is there's been the swinging of the pendulum backwards. So I would say a year ago, it seemed like a lot of the school districts had decided, you know, we have to embrace AI in our classrooms because we want our kids to be. be future ready. And this is part of what the companies were also encouraging in their conversations with school district and school officials. And Google, in fact, has a program where it courts top

school officials and teachers and trains them on its AI tools. But what's happened is there's been a parent backlash that's kind of grown even stronger after bad test scores that were released in recent months. And that's really poured fuel on this parent backlash. And it's resulted in a number of city governments starting to take really dramatic steps to close off AI access for students while they evaluate these tools effectiveness in learning. Right. And Google says these tools can be wonderful for children and for learning. It even markets Gemini as your AI study buddy to students. Globally, more than 170 million students and teachers have access to free and paid AI tools through its software partnerships. But how does the company respond to critics who say it's

It's pushing its products to get people hooked on them. So they basically say that they reject any notion that they're trying to get people hooked on a product. And they say that their core educational tools are purpose-built for the needs and requirements of education contexts and not designed for engagement. And they say that they continue to update Gemini to provide more mental health support and that they work with academic experts, parents, and teens to help ensure their models are safe and appropriate. Journal investigative reporter Shalanyat Ramachandran. Thank you so much for joining us. Thank you for having me. And that's it for what's news for this Thursday morning. Today's show was produced by Hattie Moyer. Our supervising producer is Sondra Kilhoff. And I'm Daniel Bach for the Wall Street Journal. We'll be back tonight with a new show. Until then, thanks for listening.