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Hmmm... Why would they go to school then, if they have personal teaching AIs? The point is to interact with the teacher and with each other, not to be all in a classroom and everyone alone (well, with the AI).
With the poor demographics and the example you gave from Japan (which I've seen too), we might have cases where such setups with teaching AIs may be useful, provided there are not enough teachers in certain areas to teach the few children who are in different stages in their learning process and interested in different subjects.
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