This pseudo caste system was probably beneficial to you in the upper caste, but I don't think students in tier 3 and below saw their lives improve.
It is hardly a child's responsibility to suffer from the violence, bullying, and general disinterest in any academic achievement by another group of children.
In both middle school and high school, I was bullied incessantly by kids who were doing just fine, academically. Some of them went on to be quite successful people. Bullies nonetheless.
It would be so convenient (and karmically just) if all the awful kids went on to be dropouts and losers in life, but sometimes it doesn’t work out that way. Sometimes they’re smart kids, but they’re just assholes.
I guess I was projecting from my own experience – my bullies were rather dumb, and I got rid of them when they dropped out.
I'm afraid I don't have a good solution for that.