There were several things that coincided.
First, Vatican II called for a reworking of catechetical texts. In many places, including most of the US, this resulted in a discarding of the old texts - the Baltimore Catechism. That wouldn’t have been bad in itself, but there was nothing to fill the gap. The CCC that we use now didn’t come out until 1992. In those intervening decades, the books and materials used by Catholic schools and religious education programs were a complete hodge podge. The basic framework that the USCCB uses to evaluate texts didn’t exist so there was no consistency or even basic curriculum standards. Even within a given series of books there was not always a logical sequence from grade to grade.
Second, our parents were brought up in an environment where **their **parents entrusted a lot of their religious education to the schools. But the schools, even Catholic schools, were moving toward a “religion begins at home” philosophy. But not only didn’t they provide support for parents to do this, they didn’t even tell them what they were supposed to do. Parents who grew up with religion being taught by the priests and nuns didn’t feel qualified to take on the teaching role themselves. We are still seeing this with some of our immigrant parishioners. They don’t quite understand that there is no religious education at school since in their native country, public schools also cover religion. And they are not quite sure what they are supposed to do to make up the difference.
Third, Catholic schools became optional. It used to be that Catholic parents were expected to send their kids to the parish school unless there was some dire circumstance. When that obligation was lifted, the CCD programs weren’t prepared to become the primary educator of so many children.
Fourth, many of the practices that created a culture of Catholicism were discarded or de-emphasized. Abstinence on Fridays, head coverings in Chuch, May crowning ceremonies, children’s processions, etc. These were all practices that taught the faith without the books, so to speak, and nothing took their place in the community.
Fifth, the post-WWII years brought unprecedented mobility to families. It was much more common to live far away from relatives who might have reinforced religious education and practices.
And lastly, the lessening of the restrictions on mixed marriages led to many more families where the Catholic parent did not have the confidence (backed up by the Church) to insist on the Catholic upbringing of the children.
It was a perfect storm.