Schools are only built to house a certain number of students. If the number goes over capacity the needed facilities won't be available. It will lead to large classes where there is far less individual attention and lot more stress on teachers. Stressed teachers don't function as well so this will also negatively impact the students.
In general, it's not fun for youth to go to school nearly everyday for 12 years straight. When there are too many children in one school, it can serve as a major issue for both students and teachers. For one, supplies will be needed sharing and there might not be enough for some students. As for the teachers, it is obvious that anymore than 30 students in a class it hard to manage- and not to even mention the amount of homework that would be needing graded. The sheer number could be enough to set the teacher back and inhibit classes from reaching goals and put them behind.