Google offer free services on the basis that you allow them to process data so they can target adverts. They have a DB registration which covers this use so when you sign up with them, you are accepting that.
Might be worth looking at the T&T for the edu version and not the public version as your info is completely incorrect. They even give you options to completely disable all adverts and scanning from in the admin systems, which are set no adverts by default.
Google are quite clear that you are responsible for making sure that you are compliant with local law. When you accept their terms and start uploading data, if your data subjects at some point object and wish to be compensated for you spewing their data to a tax avoiding advertising giant, then it won't be Google that will be their first port of call. Schools seem to be walking into this with their eyes squeezed tightly shut - perhaps if they don't look, it won't exist. But hey, everyone is doing it, so it must be OK - right?