Investing in Transforming Education: Tackling the Lack of School Counselors with Policy-Based Solutions in Educational Technology and Telehealth

The American education sector is currently facing a significant challenge: an acute lack of school counselors, especially in rural and marginalized communities. By 2025, states such as Alabama, Mississippi, New Mexico, Arizona, and West Virginia are contending with major staffing shortages, with and Alabama fulfilling just 80% of its anticipated requirements. These deficits are intensified by factors like remote locations, rural demographics, and chronic underfunding, leading to what experts describe as "youth mental health care deserts" . Nevertheless, this urgent issue is also prompting a surge in policy reforms and new investment prospects in educational technology (EdTech), telehealth, and workforce development. For investors, the convergence of policy changes, funding, and technological innovation creates a strong case for supporting solutions to this widespread problem.

The Crisis and Policy Responses

The lack of school counselors goes beyond staffing—it reflects deeper systemic shortcomings. For example, Alabama’s ratio of school psychologists to students—over 7,500 to 1—demonstrates the overwhelming burden on current staff, who must balance administrative, academic, and emotional responsibilities

. States are implementing focused strategies in response. Texas, for instance, , offering greater incentives for rural service and raising repayment limits for psychiatrists to $180,000. Likewise, New Mexico to remove cost-sharing for behavioral health care and create a behavioral health executive committee. These efforts are part of a larger movement where states use financial incentives, telehealth growth, and workforce training to tackle shortages.

On the federal level, the Bipartisan Safer Communities Act (BSCA) has set aside $1 billion for the recruitment and training of mental health professionals, including school counselors . Still, proposed reductions in the Department of Education’s budget and shifts in funding priorities could threaten diversity, equity, and inclusion (DEI) initiatives . Despite these obstacles, states like California and Iowa are leading with creative approaches, such as loan forgiveness and higher Medicaid reimbursement rates, .

EdTech and Telehealth: New Investment Frontiers

Government-driven attention to mental health and workforce expansion is spurring growth in EdTech and telehealth solutions. In 2025, the U.S. EdTech industry is

, reaching $549.6 billion by 2033, fueled by the need for resources to address counselor shortages. Startups such as MagicSchool AI and Elevate K-12 are seizing these opportunities. MagicSchool AI, which streamlines administrative work for teachers, raised $45 million in Series B funding, while Elevate K-12 addresses teacher shortages through live-streamed classes .

Telehealth companies are also playing a pivotal role. Firms like GoStudent and Brighterly are utilizing AI and customized learning to deliver remote academic and mental health services, helping to fill gaps in rural communities

. For instance, EdSights created a chatbot to boost college retention, attracting $45 million in investment . These platforms support state policies that encourage telehealth, such as Texas’s $11.68 billion allocation for behavioral health in 2023, which included $28 million for mental health loan repayment .

Workforce Training and EdTech Innovation Aligned with Policy

Investors are increasingly focusing on companies that support policy objectives to grow the behavioral health workforce. Agile Mind, Authentica Solutions, and eSpark Learning are using data analytics and adaptive technologies to meet a variety of educational needs

. At the same time, Pear Deck Tutor, now under GoGuardian, provides live academic help, reflecting a move toward AI-powered tutoring .

The growing use of AI in education is not without debate. For example, Duolingo’s AI-centric approach has raised concerns about excessive reliance on technology and diminishing the role of educators

. Nonetheless, blended models that combine AI with proven teaching methods are gaining support. Companies like SanaLabs and OpenClassrooms are transforming conventional education through mentorship and competency-based learning .

Market Trends and Financial Outlook

The financial environment for EdTech is shifting. While global investment in edtech steadied at $2.8 billion in 2025, funding is increasingly directed toward high-impact startups. Companies like Lingokids and Amboss secured $120 million and $260 million, respectively, reflecting strong investor interest in AI-based solutions

. Additionally, mergers and acquisitions are focusing on workforce development and student support, indicating a preference for scalable, results-oriented business models .

In the United States, the market is forecasted to reach $236.1 billion by 2033, propelled by companies like Leap Scholar and Vidyaa expanding into rapidly growing global markets

. These developments underscore the sector’s ability to adapt and thrive, even as funding patterns shift.

Conclusion

The shortage of school counselors is a complex issue with far-reaching effects on student health and learning outcomes. Yet, it also opens doors for investors to back solutions in EdTech, telehealth, and workforce training that align with policy priorities. As both state and federal governments continue to emphasize mental health and education reform, businesses that innovate in these fields—whether through AI, telehealth, or workforce development—are well-positioned for substantial growth. For investors, the challenge is to identify ventures that not only address current needs but also support the long-term goal of a fairer and more robust education system.