1. Middle income parents don't want children to fall down from the social ladder.
2. Education is still their best bet. Well you definitely have better tools but they don't have access to them (easily).
3. When everyone is competing for better education, it becomes an arms race, with people throwing in literally millions of bucks for
1) (学区房) Apartments that are in good school districts. The usual trick is to purchase a very small apartment (may still cost some 2-3 million USD in Beijing for example for a something like a 20 m^2 one). One recent policy (before this one) is to completely remove those districts and randomly pick schools for the kids (I think it's still based on geography but a larger one)
2) For-profit school (what this news is about). Parents are willing to pay good teachers some 150-200 USD per hour for these schools. Since most For-profit schools just hire the best teachers of the public schools this poses a couple of major issues: A) Teachers are inclined to make as little effort in public education as possible, and B) It poses a tremendous pressure on the parents and the kids, monetary and psychological. Some kids literally burn candle every day, 7/24.
Now you combine all these and no wonder those kids will NEVER want to give birth to their own kids and go over the hell again.
But I don't think these policies will work. The policy-makers are just cutting off the shaft and ignoring the arrow. You see, the competition is still there, and even more because parents have to figure out new ways to join the arms race, which guarantee that they will waste a lot of money trying new things. I figured the whole bureacratics probably received some order from high-up, maybe Xi himself, but chose to do lip service instead of spending real money.
One golden rule about government policy (to tell if it's real or not) is to see whether they are going to spend money on it.