Joseph:
I was once extreme in my opinion about this, as you seem to be. But there is a harsh reality that I do not need to face as an outsider to the office of the school. I do not need to pay their bills. I will not be the one cornered by the electric company when the bill goes unpaid, and I will not be the target when the gas bill, the mortgage, and salaries of the faculty and staff fall into default. Who pays the bills? Some years ago, there was a bit more generosity among state and local governments. Not any more. Now what? This is a dilemma. Arguing one side of that equation is a dishonest debate. That’s why I suggest there be some creative minds here to brainstorm for ideas, as the traditional approaches seem to have failed.
Throwing kids out is intolerable. I will refer you to discussions at conventions of Torah Umesorah where the subject has been raised several times, and I recall hearing a recording of one of those presentations. The Roshei Yeshivos were unanimously against expelling a student for inability to pay, and the intensity of their resistance to the practice is amplified when the matter involves midyear. Exceptions for end of year expulsions can be made under specific situations, where the family has obviously spent sizable sums of money for optional luxuries, such as overseas travel vacations, purchasing expensive new cars, and still failed to address the outstanding tuition balances.
Aside from the throwing out of kids, the shaming of children is a tool used way too often in chinuch (sometimes by parents, more often by mechanchim). There is no heter according to halacha for this. Some of the greatest of Gedolim addressed this subject, with minimal impact. Emotional murder, spiritual murder, and physical murder are quite similar in the severity of the issurim involved. Any of these done for financial reasons is a good reason for someone to be expelled from chinuch as a career.