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Schools do take up a lot of space, but with only 2 teachers (versus 6 at highschools) the workforce isnt that great. Like I'm TehQ said, build one for every residential area, although students will come from the entire island.
That being said, I'll usually just build 1 school, and let the little beggars fight it out to see who gets an education. if you have a massive population, then you can afford more schools, in which case you may just want to supply schools to service demand.
It all depends on how you build your city. I tend to start with some kind of citycenter around the palace, farms and mines around the center and industry near my dock. After a time I usually create a small block (5 to 10 appartments/tenements, a church, some entertainment) on the other side of the island, to house my distant miners or the workforce of my tourist-section. That way I have created two distinct residential areas, both of which get a grade school, if there is room, of course. Note that I will only build one high school and one college, both half staffed (6 profs is too expensive and unneccesary), per island, unless some silly mission requires me to build more.
A lot is down to personal preference, if you are the type of ruler that likes to see its children roaming the streets instead of leanring to read, that's entirely up to you, you are El Presidente and your rule is law.
BTW, from the T4-wiki:
So far it almost sounds like schools are cosmetic and have no deep impact on my island.
I see what you mean, but then you are not looking for info in the right place. The Kalypso-forums would be a better place, so I took the liberty (for he is a good presidente) to see what they had to say about the matter.
both these topics should be interesting for you:
http://forum.kalypsomedia.com/showthread.php?tid=16408
http://forum.kalypsomedia.com/showthread.php?tid=17295
It looks like you could skip 'm, but, since you indicated in your post that you want to make an Industry-heavy (high school jobs) island i'd say you dó need a gradeschool, since intelligence makes your peeps work faster and also graduate faster if they attend a high-school after gradeschool.
Hope that helps!
edit-sorry, steam f-ed up the links....
Grade Schools give the children something to do. The advantage of grade schools is the "modes" you can set the schools to, Spelling Bee, Youth Organization, etc. Children will go to school simply if there is a school to go to. If there is no or not enough grade schools, children will start to fill up churches and cathedrals, which can be a pain.
Not having enough grade schools for all your Island's children has no real negative effect besides losing the "mode" bonus and your churches are flooded with kids.
High Schools and Colleges function nearly the same as eachother. High Schools and Colleges will ONLY fill up IF there is a job on your island that requires a certain level of education AND there is no citizen available to work that job. Think of HS and College as training centers that train citizens as a jobs become available. When there is no available High school or college level jobs on your island, you can be sure that the college and HS are empty.
THAT is why you often see colleges or high schools empty, while grade schools are almost always full.
Like the women, men have jobs that only they can fufill. So might might have an all boys school too.