Education in the "Dark Ages"

The term "Dark Ages" is very misleading for a number of reasons. In its original context, it was never meant to imply that the people of Europe in the Early Middle Ages (500 A.D. to 1000 A.D.) had "lost their knowledge" and become ignorant after the fall of Rome or that they had taken a step backward in any way. During the late classical period, most of the regional leaders were civil leaders (governors, senators, mayors, etc.) who were highly educated and spent a great deal of time writing letters back and forth about what was going on in their regions. In other words, their writings shed a "great deal of light" on what was going on in the government, how land was being managed, emerging cultural trends, etc. Military leaders were important but in most cases, they were subject to civilian oversight or they were a civilian leader first who was later given control of the military. Even when a military leader took direct control of a region, (which was fairly rare) they often "promoted" themselves into a position of civilian leadership and tried to act like a civilian leader.
After the fall of Rome, the biggest impact was the loss of the large, coordinated military that could defend a continent. Rome's army had required tremendous resources to support it and those resources were no longer available. The army, badly battered by a series of Germanic invasions and lacking sufficient resources finally collapsed. All defense in western Europe became local (the Eastern Roman Empire, centered around Constantinople, had more resources and managed to keep their armies intact and survive). Invaders still had to be fought, bandits still had to be dealt with, people still had to be protected so what arose in western Europe was a system of military leadership instead of civilian leadership. The positions of Duke, Count/Earl, Baron, and Knight all originated as positions of military leadership. (Some of the other noble ranks added at later dates had other functions but in the beginning, they were all military). These military leaders simply didn't write nearly as many letters to each other since most of their issues were local rather than regional. They wrote fewer letters to subordinates since they could simply send a rider with a message a few miles down the road. They had no need to contact someone hundreds of miles away about grain shipments since resources were locally sourced (lengthy trade routes still existed but they were much more dangerous and carried a lot less trade than during the classical period under Roman rule). These military leaders could certainly read and write but they spent far less of their time writing letters and recording governmental activities for a higher governing authority. Instead, they spent far more of their time doing what was important to them: training troops, building castles, fortifying towns, tracking down bandits, and fighting wars with their neighbors.
Thus the "Dark Ages" initially got their nickname among scholars simply because there were very few writings by the leaders of the day that "shed light" on the big picture of life in Medieval Europe. They weren't ignorant, it was we who were ignorant about them. They didn't live in intellectual darkness, we simply couldn't learn very much about them because very little literary light was being shone on them.
The church was one source of information about medieval Europe. It was full of educated men (and women) who enjoyed writing. The problem was that very few of them wrote about secular or military affairs, most of their writings were about ecclesiastical or theological issues. The few who did write secular histories are our primary sources for the first part of the Early Middle Ages. Charlemagne's conquests leading up to 800 A.D. restored some stability to Central Europe and helped bring many of the smaller local governments together into a larger regional entity (The Carolingian Empire). Because of this, we begin to see more secular writings appearing after this time and the founding of the first universities (to provide trained administrators for the government) took place between 800 A.D. and 1000 A.D. By the High Middle Ages (1000 A.D. to 1300 A.D.) literature and epic storytelling had made a strong comeback, a growing group of secular, non-military intellectuals was writing histories and treatises on a variety of topics, and universities were becoming more common. Plenty of "light" was being shed on the High Middle Ages so the term "Dark Ages" was never really applied to it.
Current research shows that, far from stagnating intellectually, western Europe continued to advance in mathematics and technology after the fall of Rome. Greek mathematical and scientific texts were widely read while Greek literature and histories were generally shunned because of their "pagan" nature. (The Renaissance was NOT a period of sudden mathematical and scientific growth, it was a period of dramatic literary and artistic growth as Europe rediscovered the Greek classics after the fall of Constantinople. The mathematical and scientific development that people sometimes associate with the Renaissance actually occurred at a steady pace throughout the Middle Ages and then "came to light" during the Renaissance). In fact, the Early Middle Ages saw important improvements in agriculture, crop rotations, improvements to the plow, metallurgy and armor design, watermill design, etc. Many of the areas where they seem to have taken a step backward are because they were areas of lower priority or because of the local nature of life in the middle ages. Designing a beautiful manor house is not as important as designing a strong one when you could be attacked by your neighbor at any time. Even building and maintaining a road system that can move troops and goods across an empire is a waste of resources when traveling to the next town over is a risky proposition.
Finally, it is not true that nearly everyone in the Middle Ages was illiterate. The first question to ask is, what do you mean by the word "illiterate"? Literacy rates varied widely from time to time and place to place. To the educated elites of the day, being able to read and write your own native dialect didn't count as being literate. In 12th century England, it didn't matter how well you could read and write Anglo-Saxon, if you couldn't read and write French (the language of the ruling class) and Latin (the language of the church) you were illiterate. If we use this very high standard of literacy, that one had to be able to read and write some combination of French, Latin, and/or Greek, then literacy was very low, probably less than 10% throughout Europe for most of the Middle Ages. (How many of us would be considered literate by these standards?) If, on the other hand, we define literacy as the ability to read and write in your own native language, at least well enough write a letter to a friend (and we do have a surprising number of letters written even by peasants to each other), then a very broad estimate of 50% might be made (again, keeping in mind that in some times and places it could be much lower or much higher). If we take literacy to mean the ability to sound out letters and read a sign then the literacy rate would be even higher than this.
Medieval people were also not ignorant. They actually knew a great deal about the world around them, though, admittedly, much of their knowledge was wrong. They could tell you the history of their town, explain where China was, tell you how to cure the pox. This is not to say that their facts were correct in any of these cases but it is to dispel the idea that they were simpletons who plodded through life, disinterested in thinking or learning. They loved to hear stories about the distant past and exotic, faraway locations. They loved to learn and were every bit as inquisitive as we are today. It would seem that the biggest difference was probably that our sources of information today are much better than theirs but when we consider many of the strange ideas that populate the internet now, this may not be true.