This chapter provides a comprehensive examination of the multifaceted impact of Artificial Intelligence (AI) on the cognitive development, academic trajectories, and creative output of contemporary youth, specifically Generation Z and Generation Alpha. As AI transitions from a supplementary tool to a foundational infrastructure in global education, it necessitates a radical re-evaluation of pedagogical frameworks. This analysis synthesizes the shift from "one-size-fits-all" instruction to AI-driven personalized learning paths, examining how Intelligent Tutoring Systems (ITS) address the "Two-Sigma Problem." The chapter further explores the dichotomy of AI as a creative collaborator versus a replacement for original thought, addressing the philosophical shifts from content creation to algorithmic curation. Critically, the discussion evaluates the ethical dimensions of AI integration, including data privacy, algorithmic bias, and the risk of "cognitive offloading." Special attention is given to the Indian context, analyzing how the National Education Policy (NEP) 2020 and initiatives like the National Digital Education Architecture (NDEAR) aim to foster a "Future-Ready India." The chapter concludes that while AI offers unprecedented cognitive scaffolding, its success depends on a human-centric approach that prioritizes critical thinking and ethical agency over mere technical proficiency.