Police said about 50 children and two adults were involved in the crash in Stanley at about 08:22 BST.
The BBC understands there were 28 casualties in total. Police said most were "not serious".
The pupils - from St Bede's, Lanchester; and Tanfield School; both comprehensives - are aged 11 to 18. Scene of Stanley bus crash
Thirteen ambulances were sent to the scene of the accident at the junction of Shield Row Lane and the A693.
Among the casualties was a 12-year-old boy from Tanfield School flown to hospital by air ambulance with severe facial injuries.
His condition was stable on arrival at the Royal Victoria Infirmary (RVI) in Newcastle, the Great North Air Ambulance said.
A 54-year-old bus driver from Stanley was trapped, but later freed and airlifted to the RVI with serious injuries. Scene of Stanley bus crash
The driver of the other bus, a 27-year-old man from Newton Aycliffe, was taken to hospital with minor injuries. Police said a single-decker bus and a double-decker bus had collided. Some children were taken to the nearby Oxhill public house where they were met by teachers from their respective schools. Scene of Stanley bus crash
A 15-year-old pupil from St Bede's, identified as Jennifer, said: "At first I just thought the bus was stopping really fast and then obviously we collided with the other bus.
"There was a girl at the back and she'd bust her nose and smacked her head off the post. We had to try and get off as quickly as we could."
Police said the roads in the area remained closed.
Supt Colin Williamson, of Durham Police, said: "We can now confirm that all drivers and passengers of both buses have been safely removed from the vehicles and taken to hospital if necessary. Scene of Stanley bus crash About 50 children were involved in the crash
"Those not requiring medical treatment are now with family members."
Caroline O'Neill, head of education at Durham County Council, said: "We are working very closely with both school communities to ensure all support needed is offered to the young people involved and to their families. "We are also liaising with our partners in the police and will assist in their investigation in any way we can."
