The rapid integration of AI-driven platforms, such as generative large language models and automated code assistants, has significantly transformed the educational landscape for Information Technology students in the Philippines. While these tools offer significant productivity gains, this study investigates the burgeoning negative effects associated with their unregulated use within academic settings. Drawing on mixed-methods data from 2024–2026, including surveys from over 226 participants in the Philippine higher education sector, the research identifies three primary areas of concern: cognitive skill atrophy, ethical vulnerabilities, and infrastructural inequality. Results indicate a "high concern" (Mean: 3.59/5.0), regarding technology over reliance, with approximately 35.3% of students reporting a perceived decline in independent critical thinking and manual debugging proficiency. Furthermore, the study highlights a significant academic integrity gap, where the ease of AI-generated shortcuts leads to an "illusion of competence" in software development and systems analysis. These challenges are further exacerbated by the Philippine digital divide, where students in under-resourced rural areas are more susceptible to AI-driven misinformation and technical exclusion due to poor connectivity and a lack of proper institutional oversight. In light of these findings, the study suggests that without robust pedagogical frameworks and clear institutional policies, such as those proposed by the University of the Philippines and PIDS, the over-dependence on AI-driven platforms may result in a generation of IT professionals with diminished problem-solving capabilities and weakened ethical standards. The study concludes with a call for "human-in-the-loop" educational strategies and curriculum-level interventions to effectively mitigate these risks and ensure the long-term industry readiness of Filipino IT graduates.