I didn't see it live, but I was in third grade and the next day my teacher left class abruptly for about 20 minutes. When she came back, I asked her where she was and she told me she was going on the next space shuttle. Oh the tears.
There is an excellent documentary on Netflix about it right now; Challenger: The Final Flight. Amazing stuff; i'm a bit too young to remember the actual day but i can't imagine seeing it live as a student...