The bus was being taken for repairs when the fire began Tuesday morning. The students were already aboard a different bus, and the driver got out safely.
Police blocked off the busy area around 7th Avenue and 35th Street for about a half-hour.
Thick black smoke filled the area. The upper half of the bus was blackened and the windows were blown out. The seat cushions were disintegrated. A minor explosion was heard inside the bus as it burned.
People on the street took photos of the dramatic scene.
The NYPD said in response to a passerby's concern that there was no suspicion of terrorism.