Can Large Language Models understand how students learn? As LLMs are deployed for adaptive testing and personalized tutoring, this question becomes urgent -- yet we cannot answer it with existing resources. Current educational datasets provide only question identifiers and binary correctness labels, rendering them opaque to LLMs that reason in natural language. We address this gap with FoundationalASSIST, the first English educational dataset providing the complete information needed for research on LLMs in education: full question text, actual student responses (not just right/wrong), records of which wrong answers students chose, and alignment to Common Core K-12 standards. These 1.7 million interactions from 5,000 students enable research directions that were previously impossible to pursue, from fine-tuning student models to analyzing misconception patterns. To demonstrate the dataset's utility, we evaluate four frontier models (GPT-OSS-120B, Llama-3.3-70B, Qwen3-Next-80B variants) on two complementary task families: Knowledge Tracing, testing whether LLMs can predict student performance on questions, and the exact answer a student will give; and \textbf{Pedagogical Grounding}, testing whether LLMs understand the properties that make assessment items effective. Our evaluation reveals significant gaps in current LLM capabilities. Every model barely achieves a trivial baseline on knowledge tracing. All models fall below random chance on item discrimination, indicating that LLMs do not understand what makes one problem more diagnostic than another. Models do show competence at judging relative difficulty (up to 68.6%), but this partial success only highlights the gaps elsewhere. These results establish that substantial advances are needed before LLMs can reliably support personalized learning at scale. We release FoundationalASSIST to support progress on these foundational challenges.