Early in Chapter 2 the headmaster at Yancy Academy sends Percy’s mother a letter. It informs her that he won’t be invited back the following year to the school.
This is for a combination of academic and behavioral reasons. Academically, Percy’s grades have gotten worse. He wasn’t doing well before the supernatural events in Chapter 1, but now he is failing his classes. Behaviorally, he’s getting in trouble for how he acts with both fellow students and teachers. He’s getting in fights with the students, and mouthing off to the teachers. The final straw is when he calls Mr. Nicoll “an old sot.”
Now, symbolically, the letter also informs Percy’s mother that despite her efforts, her son really doesn’t fit in the mundane world. However, the letter does not literally say that.