Yes, tell them. These people are being taken advantage of by their own child.
You should bring the subject up in a conversational manner though. Say something along the lines of, "you recently saw them , and their little granddaughter says she likes her new school. And her parents seem to be very satisfied with the switch to public school."
It'd be a good idea if you actually did talk to your friend ( casually) about how her little girl is doing in school, if you haven't already. This way, if anything came up about you having a big mouth, you can say you only spoke the truth, and didn't know she hadn't told her parents about the change in schools.