How do the characterization and conflicts question the conventional psychological and social setbacks of institutionally educating children?
From Flannery O'Connor's "Everything that Rises Must Converge"
Wow, that's quite a question. If I'm reading it correctly, inherent in the question is the assumption that Julian's problems are caused by the educational institution. I'm just not willing to go that far; it seems pretty clear that Julian's character, choices, and conflicts all stem from his efforts to teach his mother some kind of a lesson. That's personal, not instuitutional.
Julian is a recent college graduate. "'He wants to write but he’s selling typewriters until he gets started,'" says his mother. He's still living at home but can't wait to move out. We don't know what his degree is, but he's clearly not motivated to do much more than he has to in order to buy his cigarettes and live his self-centered life. We know his mother has gone without to ensure he had everything he needed. She has also coddled him and made him too soft, perhaps, but he is clearly in control of his own choices and actions by the time we meet him.
He's angry at his mother for her condescending ways and her prejudice--which we understand way more than we understand his condescension and prejudice. He thinks he's being friendly to blacks, somehow compensating for his mother's racism; yet
"he had never been successful at making any Negro friends. He had tried to strike up an acquaintance on the bus with some of the better types, with ones that looked like professors or ministers or lawyers."
It's clear Julian, too, was prejudiced and was only interested in befriending the "right kind" of black friends and even then, only so he could bring them home and cause his mother to have a figurative stroke.
Julian's conflicts are with everyone in this story--blacks don't see him as a sympathetic character, and he's so angry at his mother he spends his waking hours trying to seek some kind of revenge. He creates these conflicts himself, and he's going to have to live with the consequences (the most significant of which is his mother's death, of course).
The "conventional psychological and social setbacks of institutionally educating children" should be well known and documented in order to be considered conventional. While there are clearly flaws with the educational system--including the segregated schools particularly in the South, for this story--it's a system that regularly turns out reasonably well adjusted students and citizens. Julian is a product of both his education and his upbringing, it's true. What's also true is that Julian has his own motivations and makes his own choices. Blaming the educational system seems too simple and easy an out for this grown man.