Work-integrated learning (WIL) is increasingly vital in higher education, serving as a bridge between theoretical knowledge and practical industry application. The emergence of generative AI tools in educational sectors marks a significant transformation, offering both remarkable opportunities and intricate challenges. This detailed exploration focuses on the impact of generative AI in education, incorporating perspectives from industry experts to shape our understanding of the future in software development education. Our discussion includes pedagogical suggestions, emphasizing the influence of generative AI tools, such as chatbots and content creators on the quality and efficiency of educational materials and support services in WIL contexts. Additionally, we examine the reception and user experience of these AI tools among students and educators in WIL programs, and their effects on participation and motivation. This study offers insight into the changing dynamics of higher education with the incorporation of generative AI, highlighting the necessity for preparedness, comprehensive approaches, ethical academic practices, and project-based learning methods.