With the growth of technology, artificial intelligence has reached every section of human life and the education sector also. There has been a tremendous increase in the use of AI in the education sector. It has brought about remarkable effects in education by transforming the methods of teaching, and learning environment, increasing students’ engagement, and streamlined administrative processes. The paper explores not only the scope, impact, and challenges related with AI but also the ethical risk of expanding the use of AI in the education field. Comprehensive literature review, case studies, and findings of the study investigate the tremendous potential of AI in ameliorating education outcomes along with the ethical risk being faced by educationalists, investors, and policy formulators that should be confronted through effective governance and human management in innumerable AI-deal decision making tasks. To establish that AI provides an inclusive and ethical education rather than aggravating existing inconsistencies, the paper concludes with policy recommendations. Utilization of AI potential to create an unbiased, answerable, and student-oriented educational approach is possible only by confronting these challenges.