But we homeschool. It makes individuals out of teacher and student.
Ten families with 25 children ranging from K-12? Fine. Where is this hypothetical school supposed to be located? In someone's basement? I don't think so - most suburbs, especially, have zoning laws. Piano teachers can't even have students come to their homes in many areas. Now you're talking about rent, and insurance, and equipment, and books, and utilities. Do the ten parents form a corporation? Are they themselves entirely legally liable if one of them gets disgruntled and decides to sue? Add attorney fees to the pot.
Now let's talk about "getting paid handsomely." When you add medical insurance, social security, unemployment, workman's comp, and medical/life insurance benefits, you have to essentially double the salary the individual will receive. Thus someone earning $25,000/year as a teacher will actually end up costing the employer about $50,000. Nor is it realistic to expect one teacher to teach 30 kids ranging from K-12 for $25,000 a year; women did it in the good old days when it was that, marry, or starve. That was then, this is now.
This little private school solution is wonderful for those who have the means, time, and energy to do so. It is NOT a universal solution for the hundreds of thousands of public school students in any given city - many of whom have mothers who work, who don't want to help organize and serve on the board of a "small school of ten families," and many of whom would not educate their children AT ALL if education weren't compulsory.
As a final point, are these little cottage schools of ten families going to educate the autistic? The retarded? Those with severe cerebral palsy?