Mr. Squeers, though he runs a boys' school, is an uneducated man. We are given hints of this from the start. He is said by the narrator to have a "coarse manner," which would be inconsistent with somebody well educated. We are told too that
he appeared ill at ease in his clothes, and as if he were in a perpetual state of astonishment at finding himself so respectable.
A person with the proper education to own and run a reputable school would not find himself surprised to be in ill-fitting and just-barely-respectable clothes such as those Mr. Squeers wears when Nicholas meets him.
The idea that Squeers is uneducated is reinforced when Nicholas's sister Kate asks, "Who is that vulgar man?"
In fact, as Nicholas will soon find out, the idea of the school as a place of learning is a complete sham. It is, instead, a place where people shove their illegitimate children, stepchildren, or otherwise unwanted children in order to get rid of them as cheaply as possible. The tuition is only twenty pounds a year, and there are no vacations, so the guardians of these children don't have to worry about seeing them ever again.
In order to make a good profit, the two Squeers, husband and wife, starve the children, don't replace their clothes, sell the spare clothes they bring, and keep them in abusive and abysmal conditions. The school is isolated, and nobody can see what the brutal Squeers are doing to their students.