At the beginning of the movie, Neil's dad says that the principal thinks Neil is taking "too many extracurriculars". Mr. Perry's solution is to order Neil to drop his favorite one, the school paper. Since none of Neil's extracurriculars have anything to do with becoming a doctor, and since Papa Perry clearly doesn't want Neil to drop all of them (after all, they look good on the college apps), why not let Neil pick the one to drop? I mean, if you're gonna micro-manage a decision that unimportant, why not just keep him at home so you can make sure he cuts his food to the right size bites? (Never mind the question of "what business does the principal have telling somebody their kid is taking 'too many extracurriculars' in the first place?" Real-life principals LOVE kids who can do all that and still keep their grades up like Neil did.)
The problem might b that Welton isn't exactly about real education. It seems to be a training center for future leaders and power-holders. Typically, schools like that tend to cut out any education that detracts away from power-and-money-seeking, such as drama education that might expose students to what it's like to live in other people's shoes, or to freely express themselves. It wasn't really about Neil taking too many extracurricular activities, it is about the specific activity Neil chose. The money-and-power hierarchy has to sustain itself somehow, and the best way to do that is to give almost unlimited authority to power-holders, so that the students will further commit themselves to a life of endless competition for the top. How to make that prize attractive so they'll submit to all this competition and stress "for the greater good?" You make the prize attractive by giving the students a firsthand taste of what powerful people are allowed to get away with. It's like when a father is allowed to repeatedly abuse his son, and then when his son grows up he acts like that towards his own son because that way he can finally exercise power in his life.