Homeschooling is only an option in limited circumstances. The parent has to be capable of it, and most are not. Also, to be of financial benefit, the money saved must be greater than the income lost during the time the parent is teaching. As this is seldom the case, I think it’s just another example of idealism being substituted for real world solutions.
Another point: you can’t compare our mosdos hachinuch to Yankel’s grocery for two reasons. One, as TLIK said, is that they fundraise under the assumption that the cost of services provided exceeds the income from those receiving the services. Yankel’s Grocery doesn’t fundraise.
Also, it costs Yankel a specific amount for any given product, whereas any specific student doesn’t necessarily cost the school a great deal of money. True, if taken to its extreme, nobody would pay any tuition, but my point still has validity insofar as any specific decision to expel a student isn’t necessarily motivated by direct financial loss, as would Yankel’s decision not to provide a family with free food, but rather, as a matter of policy.